Shot Based Practice Analysis

The vast majority of dog owners vaccinate yearly. There is an arguably safer choice --the three year rabies vaccination option -- but many, many in the veterinarian community are not informing the guardians (pet owners) to the potential detriment of their animal companions’ (pets’) life, health, and longevity.

Could economics be a factor in this lethargic effort on the part of many vets to provide their clients with an opportunity for informed consent?

Yearly rabies vaccination is big business and materially impacts the small-animal vet practice!

We can make these assumptions based upon various surveys and studies printed by animal association groups and trade associations.
· Average vet has 2,500 dogs and cats (45% dogs).
· Cost of vial of rabies vaccine is 61 cents.
· Cost of inoculation is between $15 and $38 yearly not including office visit.
· Cost of office visit is approximately $35.
· Price markup on rabies vaccine: 2400% to 6200% and again, this does not include the office visit.

If 100% of the dogs in the average one-vet practice are annually given the rabies vaccine= 2,500*.45 (dogs per practice) or 1,125 dogs.
The gross operating profit (after cost of goods, 61cents per shot) equals:
@$15 per shot, a net of $14.39 = $16,189.
@$38 per shot, a net of $37.39 = $42,064.

If the three year option is exercised (versus a yearly vaccination for rabies), then each vet loses between $32,000 ($16,000 x 2 years) and $84,000 ($42,000 x 2 years) of operating profit in each three-year vaccination period.

Adding office visits (1 a year for 2 years x 1,125 dogs x $35 per visit) = $78,800 of potential lost revenue.
(Note: The guardian should see that his/her companion animal receives a wellness exam at least yearly, which would extinguish this loss.)

Now, consider these figures. The:
· Median number of transactions per vet per year in 1997 was 5,102.
· Median gross income per vet in 1997 was $305,000 for a one- person practice.
· Net-income median for a one-vet practice before owner's compensation as a percentage of gross income was 26.8%. Assuming $305,000, that would be$87,300 for the average 1-vet practice.
· Average transaction charge is $58.41 per vet in a one-vet operation.

If 1,125 transactions for rabies vaccine would be lost here is the impact on the one-vet practice for the two years the dog doesn't get a rabies vaccine (assuming no replacement revenue).

· Transactions go from 5,102 to 3,887 or a 22% decline.
· Gross income falls (at $20 per shot plus $35 for an office visit) by $62,000 from $305,000 to $243,000.
· Net median-income per vet in a one-vet situation could drop from $87,000 to $25,000 or by 71%!

And this is only if dogs were inoculated for rabies on a three-year cycle. The impact magnifies with cats going three years on the shot.

Source: "Financial and Productivity Pulsepoints: Comprehensive Survey and Analysis of Performance Benchmarks:Vital Statistics For Your Veterinary Practice," published by the American Animal Hospital Association, 1998.

The Small Vet (Non-emergency, non-specialist) Shot Model's Systemic Dependence on Transactions Assumptions:

- That a $25 rabies shot is eliminated for 1,000 dogs only in one year. (Cats are not considered and parvo virus and distemper shots would still be administered annually).
- Profit on the shot is $24.39 (the cost being 61 cents).
- 26% is the net profit margin.

Result: Instead of 1,000 transactions (shots) yielding $24,390, the vet would have to gross $93,807 from other areas of the practice to replace that net revenue. Furthermore, using a $54 average per transaction, the vet would have to conduct 70% more transactions - 1,737 instead of 1,000 - which would mean a 15% increase in workload (the average vet has 5,100 transactions annually) just to be at the same place. Then consider the loss of office-visit revenue and take out cats, and parvo and distemper annually, and the Small Vet Shot Model indicates red ink.

It appears that even at 20% of the gross revenue, rabies shots may constitute 100% of the net profits - or even worse, subsidize a net-deficit practice - of average small-vet practices. The loss of two years of shots, on which these practices seem dependent, would have a devastating economic impact if not replaced.

It appears that the small-vet economic model is a "shot model," based economically - by design or by evolution - on transactions rather than expertise. Such a model needs to be reexamined for validity of purpose and economic consequences.

· Vaccine-related cancer in cats: According to Colorado State University Professor Dennis Macey, "the incidence of this often fatal cancer (sarcoma-cancer development at the vaccine site) has been documented by several studies to be 1 to 3.2 per 10,000 cats receiving a rabies vaccine Š If all the cats in Denver (estimated to be 400,000) were to be vaccinated yearly for rabies, the unneeded additional vaccinations would result in an additional 26 to 84 vaccine cancer sites per year! Š I estimate 22,000 vaccine-associated tumors per year. Since surgery is usually unsuccessful, radiation treatment is necessary. Treating all these cats would cost $66 million per year."
-- "Are We Vaccinating Too Much," Journal of the American Veterinary Medical Association, 1995
· And this doesn't even consider vaccine related prolonged illness or vaccine compounded deaths or reduced longevity for cats - and doesn't consider the impact on dogs at all!

 

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