When my dog Buddy ate a tub of chewing gum – around 60 pieces – we rushed him to the vet, where he stayed overnight. Thankfully he was fine. The same could not be said for our wallets.
Two aspects of the experience with the vets stood out to my inner economist. First, the bill was far higher than the initial quote. Second, we were encouraged to approve further tests, but the vet seemed uncomfortable recommending them and quickly accepted our decision not to proceed.
Experiences like this seem to be increasingly common. Prices for veterinary services have risen sharply in recent years, and many pet owners say they find it difficult to understand or predict what they will be charged.
Higher prices don’t necessarily mean that the market isn’t working as it should. But there are features in the veterinary market that limit how effectively competition works – and changes in the UK have compounded these issues. This prompted an investigation by the Competition and Markets Authority (CMA), which issued its final report in March.
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High vet bills have eroded pet-owners’ trust – but vets aren’t getting rich from their fees
There’s a reason the word “trust” appears 90 times in the CMA’s report. Healthcare is not like buying groceries or new shoes – it’s what economists call a “credence good”. Similar to car repairs, this is where experts know far more than their clients, and it’s difficult to verify afterwards whether the right course of action was taken.
For this to work, pet owners need to trust that their vet is acting in the best interests of the animal. Most vets probably do, but trust is not left to goodwill alone. In the UK, the Royal College of Veterinary Surgeons (RCVS) is the regulator of this profession, setting ethical standards that vets must follow.
Since reforms in the late 1990s allowed non-vets to own practices, the sector has become increasingly consolidated. Today, roughly 60% of practices are owned by six large corporate groups.
But unlike individual vets, these corporations are not regulated by the RCVS. Its powers apply to individual practitioners rather than the companies that own vet practices.
Vets under pressure
Many of these groups are also operating clinics, referral centres, diagnostic laboratories and pharmacies – what’s known as being “vertically integrated”.
These features create a potential conflict of interest. Corporate owners have financial incentives to encourage more treatment, while vets are bound by professional obligations to act in their patients’ best interests.
This isn’t just a theoretical concern. The CMA found that some processes, including financial targets and internal performance systems, place pressure on vets when it comes to recommending tests or treatments.
This doesn’t mean that inappropriate care is widespread. But it highlights a tension between financial incentives and clinical judgment. Even where firms act responsibly, the perception of a conflict may undermine trust.
There are, of course, reasonable explanations for rising fees. Pet ownership in the UK ballooned at the height of the COVID pandemic. Increased pet ownership means there is increased demand for veterinary care, which means higher prices. Advances in treatment have improved the quality of care while also raising costs.
Nevertheless, the CMA found that the profitability of large veterinary groups is far higher than would be expected in a well-functioning market.
Lack of competition
The issue isn’t a lack of choice but a lack of effective competition. One problem is limited transparency.
Many practices don’t publish clear price lists, making it difficult for pet owners to compare providers. And even when they try, they may not realise that different clinics are owned by the same company.
There are also practical barriers. Decisions about care are often made under pressure, when a pet is unwell. Few owners are willing to call multiple clinics or compare detailed quotes in such moments. In addition, it takes time for pet owners to establish trust in their vet. Once established, people are reluctant to switch providers.
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These features give rise to what economists call high search and switching costs. When comparing options and switching providers take both time and effort, firms face less pressure to compete aggressively on price. Even in markets with many providers, prices can remain high.
The CMA has proposed a range of remedies aimed at improving how the market works. A central theme is transparency. Practices will be required to publish price lists, provide itemised bills, and clearly disclose their ownership. The aim is to make it easier for pet owners to compare providers and encourage more effective competition.
The CMA has also introduced measures to make it easier for consumers to buy medicines elsewhere, including caps on prescription fees. However, the effect on overall bills is less clear. In the absence of price caps on other services, practices could simply offset lower prescription fees with higher charges elsewhere.
Looking ahead, the CMA has also recommended a shift to bring corporate owners of veterinary practices within the scope of regulation.
It is not clear what this might look like in practice, but the aim would be to ensure corporate owners are subject to greater oversight, more in line with the obligations placed on individual vets. This could pave the way for more substantial reforms in the future.
David Rietzke does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.