Is our profession heading into a bubble market?
The Society for Veterinary Medical Ethics hosted a panel discussion titled “Oversupply: Issues and Ethics” during the annual convention of the American Association of Veterinary Medicine in July in Denver.
Panelists were Dennis McCurnin, DVM, Dipl. ACVS; James F. Wilson, DVM, J.D., of Priority Veterinary Management Consultants; Mark Cushing, J.D., a founding member of Animal Policy Group; Dennis Lawler, DVM; and Paul Pion, DVM, Dipl. ACVIM, president and co-founder of Veterinary Information Network.
I was the organizer and facilitator during the morning forum, which needed an overflow room to handle interested attendees.
Drs. McCurnin and Wilson described how we got into this situation and presented information and statistics that show the potential bubble. The AVMA Workforce Study, released April 22, 2013, reported a 12.5 percent excess capacity in the profession that could continue through 2025.
We have been told for the past 25 years that we need to have veterinarians go into non-traditional employment fields. We now have veterinarians in many new and expanding areas (i.e. public health, epidemiology, shelter medicine, food safety, etc.) but still have the issue of low salaries, as many of these new areas are lower pay.
Student debt continues to increase at a higher rate than starting salaries and has been doing so for the past 15 years.
We have often compared veterinary medicine to human medicine to evaluate how we are doing. However, the two professions are vastly different once we get past four years of training.
Today there is a shortage of physicians and this is projected to reach 90,000 by 2020, according to the Association of American Medical Colleges.
On the other hand, the number of veterinarians is adequate, with a slowing demand for companion animal practitioners (our largest employment sector), according to the National Research Council (JAVMA, 241, July 15, 2012). There is still demand for Industry and research veterinarians, which usually require advanced training and board certifications.
Some demand also exists in lower-paying jobs found in epidemiology, shelter medicine, food safety and public health.
Another contrast between veterinarians and physicians is the debt-to-salary ratio. Veterinarians have an average debt of $151,000 ($162K in 2013) compared to $170,000 for physicians (Pauline Chin, NY Times, Dec. 13, 2013).
However, the average starting salary for veterinarians is reported as $65,404 in 2012 (excluding advanced education) down 3 percent from 2010 (JAVMA, 241, Oct. 1, 2012). The average starting salary for physicians (first year post residency in internal medicine) was $170,000 (AAMC). Internal medicine is one of the lowest-paying specialty areas.
The debt-to-starting-salary ratio is now 2.4 for DVMs and 1.0 for MDs. As the debt load increases for DVMs while the starting salaries and demands soften, why are we now reading about two new schools of veterinary medicine opening? They are Lincoln Memorial University in Harrogate, Tenn., and Midwestern University in Glendale, Arizona. (JAVMA, 241, Nov. 1 2012).
Each of these schools is opening with a class of 100 this fall, and additional schools are being contemplated.
Foreign veterinary schools are being accredited by AVMA’s Council on Education, or COE. The 28 U.S. colleges and schools of veterinary medicine are continuing to slowly increase numbers (up 23 percent) between 2002 and 2013, not counting the 200 students per year entering Midwestern and Lincoln Memorial or the Caribbean schools (JAVMA, 242:9, May 1, 2013).
The new total of veterinary students to graduate annually from the accredited schools in the U.S. is now about 3,986, up from the AAVMC estimate of 2,500 in 2005.
Growth is estimated by the AVMA Work Force Study at 4.5 percent from 2012-2015 (JAVMA, 242:11, June 1, 2013). Are we creating a veterinary oversupply by increasing the numbers of students graduating in future years with growing debt loads ranging from $150,000 to $300,000?
How can the schools and colleges of veterinary medicine continue to believe we have unmet job needs when salaries are level and educational costs are increasing by 6.8 percent per year? We do not yet have a drop in school applications (because we keep opening new schools), but that will be the next thing to happen.
Recent graduates continue to deal daily with a debt of $150,000 to $250,000 (some are over $400,000) and it becomes very difficult to understand how they will ever become debt free. The only solutions are to increase the income to repay the debt through practice ownership, specialty practice ownership or industry and research employment. Only a few people will be able to find this a viable career opportunity.
The debt ratio for all vet school graduates is calculated upon their debt over their first-year wages. So if they owe $150,000 and they make $75,000 in the first year, the debt ratio is 2.0. The debt ratio for all veterinary students is 2.4—the highest in all the medical professions and increasing yearly. The ratio for MDs is 1.
Does this model serve the rising number of veterinary students, interns and residents who will be entering the job market in the next 20-25 years?
Looking at the slow recovery from the Great Recession of 2008-2010 and at the 13 percent reported fall in annual visits to private practice veterinary facilities, one wonders if there will be enough demand and employment for more and more veterinarians.
What about the student debt bubble? National student debt has now risen to second place among all debt levels. Student debt ($1.3 trillion) is just behind real estate debt ($8.1 trillion) and ahead of credit card and auto loan debt (each about $850 billion). The student debt bubble may be the next to break following the housing bubble of 2008.
At the AVMA presentation, Mr. Cushing presented a rosy prognosis for future demand for veterinarians and their services based upon the predicted expansion of U.S. population growth over the next 35 years.
Even if population growth will help solve the employment issue in 20 years, how do we handle the student debt? We will not have widespread unemployed veterinarians but we will have underpaid and in-debt veterinarians. How do we get through this period without financially crushing a generation or two of veterinarians caught in this financial bind?
Dr. Lawler asked questions: Is veterinary medical education preparing students to handle a more diverse and global future? Are we heading in the right direction or do we need to take action to offset bursting the bubble? How can we train better researchers for the global world we live in? Are we preparing veterinary students for more diverse careers than simply filling the 56 percent piece of the pie chart of veterinarians in private small-animal practice?
Dr. Pion eloquently summarized the major points presented during the three-hour forum. He said he is worried and indicated that the decision-makers need to listen to all aspects of the problem. He said there is a great need to pull diverse viewpoints together for strategic planning to offset the fallout from bursting the oversupply bubble.
A very lively question-and-answer session followed and the exchange lasted into the lunch hour.
Our profession has been wonderful to most of us and we are lucky to have found this calling. However, if we are to leave a meaningful legacy we must stabilize the debt burden and the number of graduates before it is too late.
We should be thinking how we can reduce the number of years in vet school or pre-vet, as human medicine is considering. In the training of MDs the concern is to get them through the program faster (i.e., three years of medical school), not to cut costs.
We should evaluate how we might reduce the number of graduates before we arrive where the legal profession is today–only 50 percent of law graduates find employment in the legal profession.
To solve these issues we must have open communication between educational institutions, practicing veterinarians and organized veterinary medicine. If we continue down the same path we are currently on we will bankrupt the profession as we know it today.
How can a scientifically trained profession keep ignoring the facts of too many graduates chasing too few jobs with an ever increasing debt burden? Are we entering an era where we need to think about the ethics of encouraging young people to join a profession when only a few will ever have financial freedom?
Future plans are for the panel to generate a white paper and to present this program to the profession at various major meetings around the nation to inform our current and future colleagues.
The goal is for students to enter veterinary college with the information and understanding that they need to modify, streamline and handle their student loans, and to help students understand what the debt ratio implies for them and to help them succeed in their future livelihood.