With a possible price tag ranging from $50 million to $100 million, the proposed Texas Tech veterinary medicine school’s economic impact on the state and the Amarillo area is a subject of debate among industry analysts.
“Adding a school will make the market more competitive and economists are taught that more competition is better,” said Mike Dicks, director of veterinary economics at the American Veterinary Medical Association. “That may not be true for the person working in a school with high costs for seats or a student who gets trapped there when the school closes its doors and they can’t graduate.”
Dicks said student growth in the industry is 2 percent a year and two new veterinary medicine schools are scheduled to open in Tucson, Ariz., and Miami, Fla. Not counting Tech’s proposed school, Dicks said by the year 2025 the applicant to student ratio will be 1 to 1, meaning 100 percent of those who apply will make it into a school. Currently, the ratio is 1.6 applicants for every student.
“That will make it a buyer’s market, and if you are a new school and you can produce a vet for cheaper than the other schools, then you might be able to survive,” Dicks said. “If you can’t, you may be short-lived. No recent school has been able to come online and produce vet students cheaper than the ones that are already there.”
For every 100 students who go to veterinary medicine school, 39 take a full-time position prior to graduation, Dicks said. He thinks if two new schools come online, it would reduce average veterinarian income by more than $3,000.
“Whatever two schools they are, there is a supply and demand. If the supply increases faster than demand, then prices go down,” Dicks said. “The demand is not growing as fast as we’d like it to be and unless somebody does something about demand, adding more students will cause lower incomes of the graduates and more excess services than consumers would be willing to pay for at what vets are charging.”
The profession’s low unemployment rate — about 4 percent — suggests the salaries offered are sufficient and a companion employment survey indicated a “very large number of veterinarians desire to work fewer hours for less compensation,” according to the AVMA 2015 Report on the Market for Veterinarians.
“The conventional wisdom is that veterinarians don’t make enough money for the cost of their education,” said Ryan Williams, assistant professor in the Department of Agricultural and Applied Economics at Tech. “The economic data doesn’t support that necessarily ... starting salaries are not that great and some of the graduates don’t have the chops to be owners or part-owners in a practice, but those who do make a lot more money very quickly.”
With 30 accredited domestic schools, 19 accredited foreign schools, more than 200 unaccredited schools and two new veterinarian schools possibly coming soon, economists will be thinking about the costs and benefits of a new school closely.
Tech officials said a preliminary price tag for the school could range from $50 million to $100 million or more, based on the costs of the newest medical schools in the U.S., including Texas Tech’s Paul L. Foster School of Medicine in El Paso.
However, Dicks cautioned medical schools, by nature, cost more than regular schools.
A Texas Higher Education Coordinating Board report from 2009 on the possible expansion or addition of veterinary schools in the state said Tech was given authorization to build a school of veterinary medicine in 1971, but that has since expired.
In the report, former Texas A&M College of Veterinary Medicine Dean Richard Adams estimated a new building would cost between $550 million and $700 million. A&M leaders instead proposed an expansion of their facilities for $55-$60 million.
“A lot of it has to deal with existing vet schools trying to keep people out,” Williams said. “They are similar to an oligopoly power. They are a cartel.”
Economically, a school in Amarillo would add millions of dollars in local and state revenue.
Lincoln Memorial University’s College of Veterinary Medicine was built in 2012 in Harrogate, Tenn., and began accepting students in 2014. A projected economic impact report said the total estimated economic impact for its first year would be 220 jobs, $12 million in income and $4.4 million in retail sales bringing $314,000 in state sales taxes.
However, some economists in the field are skeptical of economic impact numbers.
“The technique used to measure economic impact where people give you hard numbers is bogus. It gives you a number that doesn’t exist,” said Maureen Kilkenny, senior fellow at the National Center for Food and Agricultural Policy. “The honest expectation of any new installation is in the ballpark of two times the annual outlay (expenditure) directly associated with it.”
She also collects data on veterinary costs.
Kilkenny said 37 percent of households own a dog and 20 percent of owners don’t visit a veterinarian for shots and check-ups on an annual basis. Households spend on average a little more than $227 in veterinary costs per dog each year, $90 per cat, $14 per bird and $133 per horse.
Amarillo has 73,413 households, according to census data.
“Some dog owners don’t go to a veterinarian every year because it’s not accessible, but then there’s the single elderly person whose dog is their main partner and it has diabetes and hip dysplasia,” Kilkenny said. “It’s a significant skew of a small number of elderly dogs generally owned by elderly people who will spend more money to keep their dog happy. How do you put a dollar value on a pet’s life?”