Why Are Vets Expensive?
Veterinary care can be expensive, which isn’t a groundbreaking revelation. Despite the rumours and social media comments, this isn’t fueled by greed. So, why are vets expensive?
Running a veterinary clinic involves a wide range of significant expenses, from staffing and facilities to medical supplies and specialised equipment. Veterinary practices are privately owned businesses that need to cover their own costs.
The cost of veterinary care is often pitted against the cost of human medicine, as it makes sense to compare medical treatment to medical treatment. However, it’s not an accurate or fair comparison.
How Is It Different To Human Medicine?
Veterinary clinics are private businesses that receive no government subsidies or support. The financial overhead for owning, operating, and maintaining a clinic is huge. Every piece of equipment, including human-grade medical machines worth hundreds of thousands of dollars, is purchased with our own money.
We also have to cover our staff’s wages, whereas public hospital staff in South Australia are paid by SA Health, which is a government agency.
Veterinary medicine has no equivalent version of Medicare, the PBS or insurance rebates, making owners responsible for 100% of their animal’s medical costs.
In Australia, we are fortunate to have government schemes that support our human healthcare needs. We have Medicare to help pay for doctor and hospital visits, free treatment at emergency hospitals, and the Pharmaceutical Benefits Scheme (PBS) to subsidise prescription medication.
Additionally, many people have private health insurance to help with further costs. If you have private health insurance, you are then eligible for the private health insurance rebate, which is a government rebate that helps reduce the cost of your premiums.
We often dispense human medication to our patients, and it will be more expensive than if you were to be prescribed it for yourself by a human GP. This is because, thanks to the PBS, humans can buy prescription medication for less than what veterinary clinics can even purchase it for. You may see a human GP and be bulk-billed, meaning you don’t have to pay anything. That is because, thanks to Medicare, the costs were covered by the government.
The high cost of vet care isn’t the veterinary industry’s fault; it’s just a reality. Ultimately, your pet’s medical treatment is your financial responsibility, not your vet’s. Pet insurance can help by providing funds when you need them most, easing both the financial burden and the stress that comes with unexpected medical bills. You can learn more about pet insurance here: Pet Insurance Blog
What About Wages?
Veterinarians put themselves in a lot of debt for a career that is not as high-paying as the general public assumes.
New graduate vets, who have just spent 5-7 years studying to gain their degree, have a minimum annual salary of $64,517ˆ. The minimum salary in Australia is $49,301˜. Depending on where they studied, they could have over $75,000 of HECS debt.
Wages increase with time and experience. The minimum full-time annual salary for an experienced GP veterinarian is $91,258 a yearˆ. By comparison, a GP doctor in human medicine can earn up to and around $250,000 to $380,000 annually¹. One rural practice was even advertising a GP position paying $680,000, along with free housing².
In NSW, 50% of human GPs earn over $150,000, compared to just 15% of veterinary GPs³.
When a veterinarian advises surgery for a patient, it is not in the vet’s financial interest. Instead, their recommendations are based solely on what they believe is best for the pet.
Our veterinarians are paid a salary based on their hourly rate and do not earn a commission or percentage of the work they bill.
In contrast, human GPs often earn a percentage of the billings from their consultations. This means the more work they do, the more they get paid, which is not the case for veterinarians.
For example, a veterinarian may perform a life-saving, extremely complicated, and delicate surgery that costs the owner $3500. At the end, the vet will be paid the same hourly rate as if they had not performed the surgery at all.
Getting Started
Starting a new veterinary practice generally involves a substantial investment, with costs typically ranging from $1 million to $2 million¹. The total price can vary dramatically and depends on numerous factors, including:
- Whether you are building a brand-new facility or acquiring an existing practice
- Location and size of the premises
- Profitability (for an acquisition)
- Standard of the premises and necessary renovations
- Specialisation (which impacts equipment needs)
- Equipment required
Ongoing Expenses
Ongoing expenses are also taken into consideration when starting a new veterinary practice. As an independently owned business that is not associated with a corporation, here is a breakdown of what we have to pay for just to keep the business running:
Staffing & Personnel
Employee-related costs are the most substantial part of our budget, even though veterinarians don’t earn as much money as the general population assumes.
- Wages: We pay our highly experienced and qualified staff above the minimum requirement, because they deserve it and they are worth it. Between wages, leave entitlements, superannuation and taxes, we spend a significant amount of money on our staff salaries
- Continuing Education: To ensure our team keep their knowledge up to date, we provide funding for staff to attend courses, seminars, and webinars
- Legal Fees: We consulted a lawyer to oversee our staff employment contracts
- Uniforms: A new employee needs a full uniform kit, and existing staff occasionally need their uniforms replaced
Facilities & Operations
Maintaining a safe and functional clinic is a major operational expense.
- Property: Our substantial mortgage covers the business loan, property purchase, and renovations
- Council rates and taxes
- Electricity: Even after paying to install solar panels, our annual electricity bill is still considerable
- Internet
- Water
- Temperature Control: Our two large ducted systems run constantly to maintain a comfortable temperature for patients, clients, and staff. They require regular servicing and filter changes
- Security & Safety: Our clinic’s security system is monitored by an external company and includes door alarms, motion detectors, cameras, and fire alarms. We also have fire extinguishers that are serviced regularly
- Computers & Printers: We have an expensive network of desktop computers, laptops, tablets, document printers, medication label printers, barcode scanners, a Wi-Fi router, and a Wi-Fi booster
- EFTPOS Machine: We have two machines that incur rental fees
- Office Supplies: Printer toner, paper, labels, folders and stationery
Maintenance, Cleaning & Waste Disposal
These routine costs are essential for a clean, safe, and efficient environment.
- Repairs: We use a team of external contractors, including a carpenter, plumber, and electrician, for regular repairs and improvements
- Cleaning: External windows are cleaned monthly by a professional. We also spend a significant amount on hospital-grade cleaning products and equipment for floors, surfaces, and surgical areas
- Laundry: Our washing machines and dryer are running nearly all day
- Medical Waste Disposal: To comply with EPA requirements, we store medical waste in a freezer before it is collected and incinerated
Medical Supplies & Equipment
This category includes everything from routine consumables to high-tech diagnostic machines. The equipment that we have in the clinic is worth hundreds of thousands of dollars. Our machines and equipment have an outright purchase price, but each time they are used, disposable consumables are also required. We are often buying additional equipment, replacing damaged machines and repairing our equipment.
- Medication: We maintain a large stock of medications, including both those for dispensing and expensive drugs for anesthesia and emergencies. A single bottle of some of these can cost thousands of dollars to keep on hand
- Supplies: Additionally, we spend over $50,000 annually on essential consumables like syringes, needles, gloves, and fluid bags
- Surgical Instruments & Equipment: Surgical instruments and equipment are a recurring cost for purchasing, repair, and replacement
- Autoclave (steriliser)
- Blood Machines: Our two machines for in-house blood tests are leased annually for around $4500 with additional consumables, accessories, and maintenance costs of around $40,200 per year
- Consult tables, surgery tables and dental tables
- Microscope
- Surgery and examination lights
- Operating microscope
- Ultrasound machine
- X-ray machine & Processor
- Dental X-ray machine
- Dental machine
- Anaesthetic machines
- Anaesthetic gas scavenger systems
- Centrifuge
- Oxygen and liquid nitrogen: Approx $6500 a year
- Anaesthetic monitoring machines
- Fluid pumps for IV fluids
- Patient warmers
- Weighing scales
- Distilled water filter: A $2800 to install, and about $1200 per year in replacement filters
- Washing Machines & Dryer
- Floor Cleaner: $500 to buy, and around $2100 per year on replacement parts and cleaning formula
- Ongoing Maintenance: All of our medical machines require regular maintenance and servicing, which costs thousands of dollars a year
Insurance & Registration
- Professional Coverage: This includes professional indemnity, building and contents, and personal injury insurance. We also have WorkCover coverage for our employees
- Registrations: All veterinarians must be registered to practice
- Radiation Licenses: We hold a radiation license for the building, and both of our X-ray machines require separate registrations. In addition, every veterinarian who operates them must also hold an individual license. All staff members working in the clinic are required to have radiation monitoring badges, which are examined quarterly.
Business & Administrative
- IT: We use cloud-based business tools, including email and document management
- Website: We pay for our website domain, along with a website developer to maintain our website
- Phones: Our telephone system and phone lines
- Patient Management Systems: Our patient management system for records, invoicing, and appointments costs over $6,700 per year, while our hospital management program costs over $4,500 annually
- Radiology Software: Our radiology software costs over $1900 per year
- Client Communication: We spend about $4,200 per year on text message reminders
- Financial Fees: We absorb the cost of credit card fees instead of passing them on to clients. “Buy Now, Pay Later” services like VetPay and AfterPay also incur fees
External Services
- Cremations: We pay cremation and incineration services
- Puppy School: We pay a dog trainer to conduct our Puppy School classes
- External Laboratory: We have a significant annual cost for the external laboratory services
- Delivery: We receive a lot of orders and deliveries, which come with delivery fees costing approximately $4,000 per year
- Marketing: We consult a team for marketing assistance, marketing material and occasional advertising
- Market Research: We pay to participate in market research studies that allow us to analyse industry data. These reports provide a comparison of our practice to others on key metrics, including fees, wages, and foot traffic
- Accounting: We pay an accounting firm for our accounting and bookkeeping services
- IT Support: We have an IT technician who helps with our computers, phones, printer and internet issues or new installations
How We Decide Our Costs
We are always working hard behind the scenes to keep our prices as reasonable as we can. We partner with suppliers, manufacturers, and compounding pharmacies to find the best possible prices. We change brands to cheaper alternatives, find new suppliers, and try to buy in bulk.
Every year, we pay to participate in a study that compares our pricing with that of other veterinary clinics. We look at the data from our comparative demographic (location, clinic size, socio-economic area, etc.) and aim to position our fees in or around the median range.
Products
We purchase medications and products, and then we have to decide how much to sell them for. There are many factors to consider, such as:
- The wholesale cost of the product, including any delivery fees
- The risk of the product expiring before it can be used, which is especially common for emergency-use or rarely used drugs
- The time and expertise of the veterinary team. This includes the correspondence with the supplier to order, arrange delivery, and unpack the shipment. It also covers the veterinarian’s time to review the patient’s medical history, prescribe the correct medication, calculate the precise dosage, and supervise the dispensing process. Furthermore, it accounts for the veterinary nurse’s time to prepare, label, and dispense the medication, as well as coordinate with the owner for collection.
- The cost of dispensing supplies, such as containers, sleeves, syringes and labels
- The use of our clinic’s technology and infrastructure, including our patient management software, phone lines, internet, computers, and printers
“You don’t pay me for the 5 minutes I spent to do it, you have to pay me for 10 years I spent learning how to do it in 5 minutes.”
Services
When considering how to charge for a service, such as a surgery, we factor in some of the following:
- Medications and consumables that will be used. This includes all the drugs used, from pre-medication and anesthesia to pain relief and antibiotics. It also covers sterile supplies, needles, syringes, IV catheters, fluids, sutures, surgical blades, and bandages etc.
- Specialised equipment and implants that are required, and the cost of any specific equipment or materials needed for the surgery. This could be a bone plate and screws for a fracture repair, drainage systems for abscesses, specialised instruments or equipment for ophthalmic surgery.
- Size and weight of the patient. A larger animal requires more expensive anesthetic drugs and medication, more staff assistance to move, and the surgery may take longer
- The complexity and time of the procedure. Complex or lengthy surgical procedures require more equipment, supplies, surgical instruments and cleaning
- The use of equipment such as fluid pumps, anaesthetic monitoring machines, operating microscope, patient warming machine, dental x-ray, and dental machine
- Anaesthetic requirements such as the gaseous anaesthetic, oxygen supply, anaesthetic gas scavenger, and endotracheal tube for intubation
- The veterinarian’s time that is spent preparing for the surgery, scrubbing in, preparing the patient, the surgery itself, and post-operative monitoring. The complexity of the procedure directly impacts this time
- The veterinary nurse’s time needed for admission, patient preparation, administering medication, monitoring anesthesia, assisting the surgeon, record keeping, liaising with the owner, and providing post-operative care and observation
- Patient care during their time with us. The patients require clean bedding, use of a disinfected cage/run, food, water, bowls, toileting and a walk. One patient will generally have one veterinarian, a surgical nurse, a hospital ward nurse and a receptionist involved in its care
- Cleaning. Equipment needs to be cleaned, and instruments need to be cleaned and sterilised in the autoclave. The theatre and treatment rooms need to be thoroughly cleaned, such as the surgery tables, instrument trolley, benches, and floors. We also have to clean the cage/run, food bowls and litter trays and complete a lot of washing of blankets and towels