Kiwi Post: Mark Bryan writes from NZ

In our business, 44 per cent of our vets are from overseas (36 out of 82). Across all of New Zealand, the data suggests around 30 per cent of all registered vets are from overseas. In Australia, that figure is only nine per cent.

For New Zealand, a country that only produces 120 vets a year, many of whom travel overseas for extended periods, overseas vets are a critical pipeline. And for the past two years that pipe has been turned firmly off.

In the meantime, pet ownership has skyrocketed since the pandemic started, and dairy prices are at an all-time high. People locked down at home have more time to focus on their pets and find more reasons to take them to their vet. And, despite the hardships for many during lockdown, there is a large swath of the population who haven’t been able to spend their disposable income on overseas trips, and pet bills suddenly don’t seem that bad.

Veterinary shortage isn’t a new problem here in New Zealand- vets have been on the Critical Shortage List for the Department of Immigration for over 10 years. But this recent surge in demand, coupled with the lack of vets arriving from overseas has created a perfect storm where demand has way outstripped supply, and vets and their support staff are under immense pressure.

In any other industry or profession, basic economics would kick in. As demand increased in the face of limited supply, so would price, until demand levelled off. That’s happening everywhere. Food supply has been compromised and we’ve all seen the impact at the supermarket, or in restaurants.

In construction it’s the same. Limited product supply has pushed prices for basic material to all-time highs. But posh houses in Queenstown and Wanaka continue to be built, and a builder friend told me that stone masons were quoting up to three times the normal rate for people who wanted stone wall work done to enhance their new property.

The profession has always had an issue with poor pay relative to other professions. In fact, it’s poor relative to most work. True, people don’t generally enter the profession to become rich, but a decent salary for the hours most of us work doesn’t seem unreasonable. It’s not just vets of course, but nurses, techs, support staff and retail staff. All would be better paid elsewhere.

The truth is that, despite clients’ belief to the contrary, profitability for veterinary businesses is average at best, and often poor. Certainly, many veterinary businesses struggle to be financially sustainable over the long term, without their owner- operators working ridiculous hours to keep things moving. There simply isn’t the fat in the system that we need.

So, a critical supply shortage, coupled with significant demand should be the perfect environment to allow prices to rise, which would have the benefit of levelling demand and raising income for all of our people. If only it were that simple.

For some reason, veterinary businesses seems to exist in their own economic ecosystem where the normal rules don’t appear to apply. Certainly if our business is anything to go by. Raising prices for services or products is met by a chorus of disapproval- not from clients but from veterinarians.

A year ago, before our veterinary shortage was quite so critical, but when dairy prices were heading skywards, our dairy vets were worrying over how they’d cope in spring. Increased prices would lead to increased work and we were short of vets already.  I challenged them to double their fees. Farmers are hugely price sensitive- the likely outcome would be that we’d do less work, be less stressed, and make the same amount of money. The worst that would happen would be that we’d do the same amount of work and make even more money.

Of course they didn’t. I think we managed a five per cent lift in prices across the board. So this past 6 months, I’ve tried again, and we’ve embarked on a major reset of prices. Not just price, but how we price, and how we work. Again, the biggest rate limiting factor is the vets.

One argument for all of this is that vets have very high intrinsic motivation and much lower extrinsic motivation for their profession. Intrinsic motivation refers to the pleasure or satisfaction inherent in the task. Extrinsic motivation relates to external factors such as money, status and opportunities. I think this is probably true.

Another explanation is given by the concept of moral distress- vets are continually faced with issues with varying degrees of moral distress- where your ethical or intellectual code suggests one course of action but where you’re forced into another. Euthanasia instead of treatment; treatment instead of euthanasia; silver standard treatment instead of gold; putting your needs (for lunch, a cup of tea, a break, a sit down) ahead of a patient.

I think all of these are important, and I’m sure there are many other factors. But, our current model isn’t working. We can’t complain about conditions- pay, after hours, long days, lack of resource- and then turn away from opportunities to improve the poor financial sustainability of our profession which underlies all of these critical failures.

This problem isn’t new- it’s just become critically acute. We need to find a new business model that values our people, their time, their abilities and their dedication. But if we can’t fix this and change the model during a period of high demand and very limited supply, we never will.

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