You might have heard recently that the Competition and Markets Authority, the UK’s competition regulator, has launched an enquiry into the veterinary sector. This has, of course, been reported widely in the press, and has resulted in the usual kneejerk accusations of profiteering. (To the point that concerns have been raised about the amount of abuse some members of the profession are receiving). But what’s really going on here?

UPDATE: The CMA released their report on 12th March 2024. You can read about it here.

Table of contents

Who are the CMA?

The Competition and Markets Authority are the government agency that exists to promote competition between businesses, on the grounds that fair and active competition will keep prices low and service quality high (in general). 

In their latest Action Plan, they have set out a particular ambition to “act in areas of essential spending and where people are under particular financial pressure” in the current economic climate.

What exactly are they investigating?

It’s very clear to all of us that veterinary prices have risen fast – is this due to overcharging? Or just another example of medical inflation, which typically does run ahead of conventional inflation?

But the CMA aren’t specifically looking at “overcharging” – that’s not really their job. So while they will of course be looking at pricing, it’ll be about whether there is effective competition between practices, which should keep prices as low as possible (bearing in mind that healthcare is genuinely expensive). Rather, their investigation is to focus on three related points:

Transparency and access to information

Do households have access to the information they need to make an informed choice about veterinary care? It’s mandatory for vets to offer estimates in advance, to provide information about fee structures and how fees are calculated, and to explain the different alternatives – but is every practice doing that effectively? 

Ultimately, if there is no transparency of fees, then there can be no competition. One complication here is that, after the major Competition Commission (the CMA’s precursor) report in the early 2000s, vets were told they were not allowed to discuss pricing among themselves, as this would risk forming a cartel. Unfortunately, this may have led to vets being reluctant, for good reasons, to publish price scales in case they fell foul of this rule.

Do pet owners understand the choices available to them?

Do you know who owns your local practice? Are they independent? Or are the owners very separate from the people you see day to day? The CMA is concerned that many owners may not realise who actually owns their veterinary practice.

Prescriptions and access to medicines

Is the access to written prescriptions and veterinary medicines inappropriate, or stifling competition? We’re all aware that there are cheap online dispensaries, who can undercut most veterinary practices. I actually used to run one, and we could sell medicines for less than most veterinary practices could buy them in (bulk discounts, essentially – although it’s illegal for vets to buy drugs from retailers). But are the “reasonable” fees for written prescriptions being abused?

This review only applies to pet animals

Equine and farm animal services are excluded – this review is only about companion animal services.

Does this prove that vets are overcharging?

No, it doesn’t. It means the CMA is investigating competition. As less than 45% of all vets are independents now – and a lot lower in the companion sector – there are real questions over whether the marketplace has effectively adapted to the overwhelming presence of the Big 6 corporates. 

Modern healthcare is very expensive – you don’t need overcharging to run up huge bills. 

In most practices, the bill breaks down something like this:

16% of your bill automatically goes to the government as VAT

There’s nothing your practice can do about that.

20% pays for the vets’ salary.

That’s very rarely more than £60,000 in general practice, and usually quite a lot less (the figures on Indeed and similar services tend to be skewed by referral specialists and residents). Right now there’s a severe shortage of vets, and the laws of supply and demand apply. Ironically, one of the main reasons that there’s a shortage of vets is stress, not helped by the amount of abuse from the public. Vets are on average definitely comfortably off – but there are also a lot of us earning much less than this top-end figure. And of course it doesn’t compare well to comparable professions such as NHS GPs (average £99,000 for non-partner salaried GPs) and dentists (average £86,000), although the post-registration regime is rather different. 

However, even if the vets were to be paid half what they currently are, you’d only knock about 10% off the bill.

20% pays for the salaries of the support staff 

That’s the nurses, administrators, receptionists, etc. We can’t operate without these people!

15-20% pays for the costs of drugs, equipment and other supplies

While we could use older equipment and cheaper drugs, the outcome wouldn’t be as good – and the bills wouldn’t change much anyway.

10-15% pays for the building, mortgage or loan, electricity, heating etc. 

A necessity with very little we can do about it.

5-15% profit (if you’re doing really well!)

In fact, this seems to work for the corporates too – if you look at their annual reports, most corporates make a profit before tax of about 10-20%, despite the economies of scale. Impressive when the turnover is in the £100s of millions, but still not going to make a massive difference to your vet bill.

Now, this may be complicated because of cross subsidisation

In other words, many vets charge more for medicines and prescriptions so that they can keep the professional fees (e.g. consultation charges) down. There are good reasons for this, in that it makes veterinary care more accessible. In fact, it’s similar to what the supermarkets do to keep the costs of essential staples low, by putting higher markups on more luxury items.

However, it does mean that medicines specifically can seem very expensive.

The biggest reason I don’t think that vets are systematically overcharging, though, is this:

The vast majority of the veterinary associations, and the corporates, are in favour of this review. If they were overcharging, I wouldn’t expect this response.

What should I do?

Please, please, please, respond to the investigation! Whether you think you’ve been ripped off, or you think your vet has given great value for money, please tell your story before the response closes!

You can do so online:

Respond to the CMA Review

I don’t think most practices are overcharging – I think that good veterinary services are expensive. And I think the review will demonstrate this.

However, there may well be some businesses that are overcharging. There may well be other issues that I don’t see. And I might be wrong.

And if any of those are true, we vets as a profession need to know about it, so it can be fixed.

Because despite what you may think, we’re in it for the animals, not the money.

Further reading: