A new analysis reveals that while prices for veterinary services continue to climb, real expenditures have fallen, marking the start of an industry-specific downturn.
According to the study, published in Frontiers in Veterinary Science at bit.ly/4nDSwRg, the veterinary sector entered a contraction phase in late 2024, with forecasts projecting continued negative growth through at least mid-2026.
The veterinary industry has often been considered recession-proof, especially after demand increased following the COVID-19 pandemic, when the broader economy declined. This belief has shaped expansion strategies, staffing decisions and capital investments over recent years.
However, the veterinary economy experiences cycles of growth and contraction, similar to the business cycle of the larger economy, but these cycles don’t necessarily align with the macroeconomy’s cycles, according to the study. The veterinary industry likely experiences its own distinct business cycle.
To decipher recent trends and forecast what’s ahead, the study analyzed consumer price index and expenditure data from 2000 to 2025.
The authors’ predictive model suggests the downturn will persist into 2026, with a possible recovery in the second quarter, assuming no major changes. The study also demonstrates that the veterinary business cycle may lag behind the macroeconomy by several years, meaning practices may continue to decline even when the broader economy appears stable.
Veterinary practices can use the insights to manage risk and stabilize demand ahead of a possible recovery, the authors stated. Slower periods can allow veterinary leaders time to thoughtfully make changes that will help them navigate the negative growth period and plan for an upturn in business. Actions veterinary leaders can take now include:
- Reevaluating capital expenditures to preserve cash.
- Conducting a margin analysis to identify lower-performing services and products that can be eliminated in favor of higher-margin ones.
- Using strategic pricing strategies, such as value-based bundles, limited-time promotions and budget-friendly alternatives to premium services.
- Cross-training staff to cover employment gaps.
- Considering new services or products, such as telemedicine, wellness plans or senior care packages.
- Assessing departmental and individual employee performance, with necessary changes to increase productivity and efficiency.
- Developing future-facing marketing content, such as evergreen blog posts, educational videos and email campaigns, that can be used when the economy recovers.
- Conducting client surveys to evaluate unmet needs and financial concerns.
- Managing inventory carefully.
- Offering financing through third-party providers instead of carrying client debt.
According to the authors, now is the time for practices to be strategic, not reactive, as they navigate likely continued negative growth over the next year. Making management decisions based on the current phase of the business cycle can help practices minimize risk and prepare for a return to positive growth.