Feeling the squeeze: Hospitals see rising costs, cautious clients

“Affordability” has been a hot topic in political circles but it’s a reality across the veterinary industry, according to several sources.

And it’s not just an issue from the clients’ perspective, according to Meghan Bingham, CVPM, veterinary advisor with Granite Peak Veterinary Associates, a nationwide CPA and advisory firm. The affordability conversation is also an operational one.

“Practices are being squeezed from both sides, with rising labor, drug, and supply costs and clients more price-sensitive than they’ve been in years,” Bingham said. “That tension makes it even more important for practice owners to understand their numbers and make intentional decisions, rather than reactive ones.”

Bingham said that the firm has seen an affordability crunch across many of the private veterinary practices it works with. There had been a slight ease last summer, but clients became noticeably more cautious, especially as 2025 ended.

“What’s standing out is how selective clients are being,” said Bingham. “They’re still coming in, but they’re picking and choosing which services to approve. From the practice side, this isn’t necessarily showing up as fewer appointments but rather softer average transaction values and more variability week to week, month to month. Overall, affordability, or at least perceived affordability, has become a much bigger factor in client decision-making.”

Change in client attitudes

At Veterinary Services of Aiken, S.C., Hospital Manager Joan McCue, BA, CVPM, has seen a change. She reported that 2025 revenue had been up significantly until the fourth quarter, which was slower than normal. In November, their average invoice was down about 15% over November of 2024.

“The single largest employer in our city is the federal government and we also have many military members in the area,” McCue said. “I can’t help but assume that the lengthy government shutdown had an impact on those families and how they chose to manage their budgets.”

She said clients are less likely to approve all recommended services and instead are opting for the basics. They are approving core vaccines but not the ‘lifestyle’ vaccines or opting for either the lowest-priced bloodwork panels or none at all.

The hospital also has seen its costs for goods and utilities rise as well as the need to appropriately compensate its teams. It raised prices in early 2025 and she could only assume that would be the case for this year.

At Absecon Veterinary Hospital and Emergency Service, Absecon, N.J., Hospital Director Amy Gardiner said that hospital, too, is seeing affordability impacts.

While there is a strong demand for care, she said, some clients are opting for more conservative treatment plans or delaying diagnostics due to financial considerations. The hospital did implement targeted and strategic price increases in 2025 to reflect its rising costs from vendors, medications, reference labs, and other operational expenses, as well as to ensure competitive salaries for its team.

But, explained Gardiner, the hospital remains committed to “keeping care accessible for our community and balancing cost considerations with the quality of care our patients deserve.”

At Colony Park Animal Hospital, Durham, N.C., Lead Doctor Jananne O’Connell,  DVM, MVPH, said the hospital is seeing more (10%-15%) owners decline preventative care screenings, especially for young, apparently healthy, dogs and cats. The trend was increasing throughout 2025 and made more pronounced by recent price increases from the hospital’s reference laboratory.

However, the hospital, which reviews and adjusts its prices annually, will increase prices in 2026. For example, said O’Connell, its “nose-to-toes medical concern” exam has gone from $79 to $83.

Ups, no downs, in the crunch

O’Connell, who is on the AAHA board of directors, said she sees the “sticker-shock” issue as multi-factored. Those factors include recognition that:

• for a long time, veterinary wages have been stagnant as well as low for the expertise level and prices for treatments and procedures have been significantly underpriced compared to human medicine.
• costs have increased exponentially, from maintenance and replacement of medical equipment to new medications and treatments.
• veterinary graduates are demanding much higher starting salaries.
• student loan debt burden makes private practice ownership less desirable so individual practitioners have less control over client-facing costs.
• hospitals have long struggled to provide adequate employee benefits packages and to help with non-medical workplace challenges. As more private equity firms purchase hospitals, they are offering employees such organizational benefits but changing or raising prices to remain viable as for-profit companies.

According to O’Connell, in recent history the veterinary industry has shifted away from educating veterinarians about how to present treatment options at different price points along the spectrum of care. Understanding that, she said, would allow veterinarians to practice quality medicine without feeling the need to defensively provide services to prevent repercussions for taking shortcuts or not doing enough.

Efforts to ease the squeeze

“Our team works closely with every client to determine the best course of care that meets both the medical needs of the pet, and the family’s budget,” said Gardiner. Information about multiple third-party payment plans is shared at appointments.

Additionally, the hospital has a “First Aid Care” policy which allows doctors to provide essential care and medications up to a certain financial limit when clients have limited funds and can’t access or apply for financing.

At Colony Park, O’Connell said the hospital has “chosen a select few preventative care screening bloodwork panels to offer at a discount to clients to help bridge the gap between those rising costs and our desire to be able to provide our patients with top-quality medical care.”

During the government shutdown, Veterinary Services of Aiken offered clients with military or federal government employee IDs 10% off their invoices to ease their money pinch. With the new year, it will consider partnering with local shelters to possibly offer discounted initial exams after adoption.

To drive income, McCue said the hospital is being more active with its social media posts and email blasts, began seeing exotics on a limited basis, has been more actively promoting its online appointment booking capability, and has been recapturing revenue lost to third-party pharmacies by growing product sales on its online pharmacy.

Manage what you can control

Bingham offered these suggestions:

• Closely monitor costs so margins aren’t eroded while clients are more price-sensitive. For examples, pare down inventory SKUs, move to generics when possible, lean on your online pharmacy or monitor employee overtime.
• Move away from across-the-board price increases to use more strategic pricing and thoughtful adjustments on non-shopped items. Keep core services like lab work priced fairly for both practice and pet owner.
• Clearly communicate pricing to make the practice feel more approachable to information-driven consumers, to build trust, and to possibly attract new clients actively comparing options.
• Realize that while pet insurance can still be a helpful tool, especially for catastrophic or unexpected events, it’s no longer a comprehensive solution particularly when it comes to routine or wellness care. Rising premiums have made insurance feel out of reach for some pet owners, which means practices can’t rely on it alone to solve affordability challenges.
• Recognize that while traditional lines of credit like CareCredit and Scratchpay are still important, newer pay-over-time tools like Cherry and Klarna are gaining traction. Small changes in how options are presented can make care feel more achievable, while still supporting the practice’s financial health.

“Ultimately,” Bingham said, “the practices that will navigate this period best are those that treat affordability as a strategy, while continuing to protect the long-term health of the business and the team.”

Photo credit: © koumaru via iStock/Getty Images Plus

Disclaimer: Trends content is meant to inform, educate, and inspire by providing an array of diverse viewpoints. Any content published should not be viewed as an official stance, position, or endorsement by the American Animal Hospital Association (AAHA) or its Board of Directors.