Veterinary Practices NAICS 541940

May 15, 2025 - Vets Face Rising Costs: Report

• According to a recent American Animal Hospital Association report, veterinary practices are facing major financial challenges for reasons ranging from tariffs to hiring costs. The cost of hiring a veterinarian has increased exponentially, driven in part by some veterinarians bouncing from practice to practice after short stints, picking up hiring bonuses and building clientele along the way. Vet offices that cannot fully staff face the options of shortening their hours or closing on certain days. Animal hospitals have expressed concerns about the tariff uncertainty and higher costs of products such as “white goods” needed, including gauze and syringes. The report also noted that declining visits and rising insurance costs are industry concerns. Animal clinics are also seeking ways to reduce costs, such as joining buying groups, limiting medication options, and charging convenience fees to cover credit card processing fees.
• Veterinary services spending may take a hit as consumer sentiment, an indicator of discretionary spending, continues to fall in large part due to tariff uncertainty and an expectation of higher prices, according to two major indicators. The final index of consumer sentiment from the University of Michigan dropped 8% in April 2025 from the previous month, according to CFO Dive. An index measuring consumers’ expectations for the future fell nearly a third since January, the steepest three-month percentage decline since the 1990 recession. According to survey director Joanne Hsu, “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.” The Consumer Confidence Index declined by 7.9 points in April 2024, compared to the previous month. Consumer confidence levels have fallen for five consecutive months, reaching levels not seen since the beginning of the COVID pandemic, according to The Conference Board, which publishes the monthly index.

• The US veterinary practices industry is projected to grow at a 5.86% CAGR from 2025 to 2029, faster than the overall economy's expected growth, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. Consumer sentiment is likely to improve in the forecast period, which bodes well for the professional, scientific, and technical services industries, including veterinary services. Real disposable income in 2025 and upcoming years may benefit from continuing healthy nominal wage growth, lower inflation rates, and higher employment levels. Declining inflation could support a moderate increase of real disposable income of 2% in 2025 and 1.9% in 2026. Factors that may limit spending include higher interest rates and higher prices, including rising prices related to higher tariffs on consumer goods. According to the forecast, “Although progress in general has come slowly, services industries will recover more substantially.”
• Tariffs on medical supplies from China used by veterinarian offices are driving up costs for pet owners, according to a recent report by KGUN9 Tucson. The higher prices for imported medical supplies are affecting pet medications, surgical tools, and other essentials. The Trump Administration’s tariff plans are expected to increase prices for pet owners after veterinary practices pass along the higher costs. According to Douglas Patriquin, CEO of Dr. Kelly’s Surgical Unit, “Where it impacts us the most is in the consumables, the generic drugs, and the equipment we buy.” Some veterinarians are moving to domestic suppliers of medical supplies to avoid the tariff costs. According to the report, emergency vet clinics are most impacted, as they need to maintain a large stock of medications and equipment.