The Decibel - The rising costs of pet ownership

Episode Date: February 13, 2024

Life has gotten expensive in a number of ways – from groceries to housing. And so too, have the costs of taking care of furry family members. More than half of Canadian households have a cat or dog and skyrocketing costs have meant some people are finding it hard to keep up with the bills.The Globe’s personal finance reporter, Erica Alini, and independent business reporter, Chris Hannay, looked into the complex web of factors that have caused rising prices. They’re on the show to explain what they learned and what pet owners can do to try and keep costs down.Questions? Comments? Ideas? Email us at [e-mail]

So that's Roger, not Rogers, right? It's Roger. Roger. Fed-toler. He's actually named after Roger Federer. Wow. The Globe's Erica Alini recently sat down with Shelley Souter to learn about two cherished family members,

her dog and her cat. And then Jeffrey downstairs. Yeah. And we spell his name J-E-F-F-E-R-Y, the British way, E-R-Y. He's 15. Like Shelley, more than half of Canadian households have a cat or a dog. And just like everything else, pet ownership is getting more expensive. The grocery aisle is, anything else we do is going up.

Like everything is going up. We know that going out for a meal, any of it. So if you have a pet and goodness forbid a sick pet, and when you're at the mercy of this system that just seems to be able to charge whatever, that's when it was like, it's kind of like the sky's the limit as a owner. you're not going to say no because, like a baby, like your child. Shelly says she loves her vet and the care they provide, but she spent hundreds on eardrops for Roger. Jeffrey has diabetes and needs expensive insulin, and a previous dog required $10,000 in cancer treatments in just four months. $1,000, $700, $400, $400, $600, $200, $2,600. These costs are climbing not just because of inflation,

but because of trends that are reshaping the industry. Erica, along with The Globe's Chris Hene, did a deep dive into why pet care is becoming so expensive. First, Chris will walk us through where we're seeing costs rise and why, and then Erica takes us to the Toronto Humane Society to tell us what these expenses mean for animal adoptions and surrenders. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Chris, thanks so much for being here.

Thanks for having me. So, Chris, we just heard from Shelly about her rise in costs when it comes to caring for her pets. But, of course, she's not alone here. The cost of pet care was actually made worse by the pandemic. A lot of people were feeling this. Can you explain how did the pandemic affect the pet industry? Sure. Yeah. So I'm a business reporter. So if you'll excuse me for a minute, I'm going to use a sort of business term called supply and demand, which most people probably heard about. So let's look at the man first. So a lot more people were buying pets. We know hundreds of thousands of more dogs and cats were making their way into people's homes. And they were spending more time with them. And so, you know, when I talked to a lot of veterinarians, one of the things they said was when people are spending more time with their pets, locked down at home, they were more likely to notice problems.

And they may also be more likely to worry about their pet's health. So the demand for, you know, quality pet food and for veterinary services and things like that went way out. Okay. Yeah. Because we often, we were hearing about like the pandemic puppies and stuff, right? People wanting a companion. So that was part of it.

But then also just you're home all day with your pet. So you're noticing things. Exactly. Yeah. So while demand was going up, supply was going down for people who are working in, for example, the veterinary industry. It was an incredibly stressful time. You know, there was a time in which pet owners weren't even able to go into clinics.

There were constraints about how many people they could see in a day. And there were some early retirements, more people quitting because of that. And that meant that there were a lot fewer services available. So it sounds like there were a few things that were going on, Chris. But what would you say are the biggest drivers of rising prices? I think the things that pet owners really felt the most, the things that were the most essential really is pet food and veterinary care. Okay. Let's start with veterinary care then, Chris. Why were prices going up in vet care? Vet prices were really going up because of that kind of supply constraint thing I was talking about before.

But the costs of running a veterinary clinic really went up in a big way. And, you know, from everybody I talked to in the industry, the number one major cost increase was staff. There were fewer people working in the industry, which meant that those that were were much more in demand. And particularly for people like new graduates coming in, they could command much higher salaries. Okay. This is interesting because I feel like recently we've been hearing about a slowing job market, right? But it sounds like there's actually a worker shortage in vet care. Do we know why that is?

Yeah, there's a huge shortage. If you talk to anybody who works in the industry, and we'll talk about sort of two things. So there's first the veterinarians themselves, the kind of doctors of the vet world. The problem there is a really big bottleneck. If you want to become a veterinarian, there's only a handful of places in Canada where you can go to learn. And it's very competitive to get into those schools. As of a couple of years ago, they were only graduating a total of about 350 people a year. In Canada, like across Canada. Wow. At the same time, there's about 400 people retiring every year. Oh, okay. So we're already at a deficit there.

Yes. And that deficit existed before the pandemic, but it got a lot worse as the number of people leaving the industry got more. The other major staffing issue is veterinary technicians. So those are kind of like the nurses for pet care. And the workforce issue there is really low pay. A lot of starting veterinary technicians may only make between 15 to $20 an hour. They may get up to $25 an hour. And in a lot of places, I mean, that is, if you're starting out and you're being paid $1818 an hour and you've just gone through school and you have, you know, student debt and things like that, it's not a lot to live on. And so the issue with veterinary technicians is that the only way to kind of keep them in the profession is to pay them a living wage. And again, that is only driving the cost of labor even higher.

Yeah. Okay. So there's a couple of different issues then when it comes to staffing with veterinary clinics. On top of that, I understand there's also this issue of private equity firms that are buying up vet clinics. Can you talk about that and how that would drive up costs? Yeah. So this is another big change in the industry. A generation ago, pretty much every veterinary clinic was a small business. It was opened by a professional. Since about 15 years ago, corporations, often backed by private equity, have been getting into the industry. And that's really accelerated over time, particularly during the pandemic. You know, one of the hallmarks of the pandemic from a sort of global finance kind of perspective was this when interest rates were very, very low and it was easy to rack up a lot of debt. So what was happening during the pandemic was that these corporations were having these fierce bidding wars for clinics because they decided they really

wanted to expand, that this was the time to expand. A lot of demand from pet owners, more people getting pets, cheap credit. And so these firms were bidding against each other for clinics. Some prices going to upwards of 25, 30 times a clinic's annual earnings. Wow. Yeah. Which, you know, not to get too jargony, but that's a lot. Yeah. It sounds like a lot. Yeah. Yeah. Can you help me understand how does companies buying up smaller vet clinics, like how does that make things more expensive?

Well, a common, there's a couple of things going on. So one, if a company is taking on a lot of debt to buy up clinics, it then has to pay interest on that debt. And so suddenly it may have to do that by charging more in revenue and cutting costs. There are sort of critics in the industry who believe that when a clinic is owned by the health professional, like a veterinarian, they are more likely that the decisions that they make are more driven by medicine and the care for the patient. And that when you have locations that are owned by corporations where leadership may be far away and maybe making pricing decisions. They may be a bit more focused on just the bottom line about the generating revenue and they may put more pressure on veterinarians or other people to increase their fees. Okay. So when it comes to that kind of pressure, then are there guidelines for how

much vets can charge for things? Like, is there a standard? Yes, there is a standard, but you're not allowed to see it. Huh. Okay. That seems strange. Provincial associations for veterinarians every year come up with a guideline for what every procedure will cost, but they're not public. They don't release that to the public. They send it to veterinarians, and I've repeatedly asked associations for those guides

and they won't give them to me and they don't release them publicly. So as a pet owner, you're just kind of, you don't really have anything to weigh the cost. Like if your vet says something is worth this much, you kind of just take their word for it because you don't really have any other way of knowing. That's right. You have nothing to base it against. So, you know, some veterinarians charge under the guidelines, some charge more than the guidelines, but you really have no way of knowing. Just as an exercise, actually, we recently called around to 16 different vet clinics and sort of asked them what they would charge for something. It was kind of like a secret shopper kind of exercise. And for this particular procedure that we asked for, the price ranged from like $280 to $480.

Like there is huge disparity between what different clinics will pay because it's not public. Wow. That's astonishing. Okay. So Chris, that's kind of looking at the veterinary side of things. The other big cost that you mentioned is pet food. So what do we know about how much prices are going up there and why? Yeah. So pet food. So what do we know about how much prices are going up there and why? Yeah, so pet food has been going up about 10% year over year, which is even faster than human food. We often talk about the prices at major grocery chains and things like that. One of the things that people in the industry point to is that a lot of pet food is heavier in grains and meat protein, which was more affected by some of the supply chain issues that we saw during the pandemic. Where there's not a lot of competition, prices tend to go up higher because people can charge more.

And one of the sort of phenomenons that often happens, again, we hear from industry, is that pet owners are very particular about pet food. Well, I should say pets are very particular about the pet food that they eat. And pet owners are very particular about pet food. Well, I should say pets are very particular about the pet food that they eat. And pet owners are very reluctant to switch brands. So those brands are very sticky, which means that they can raise their prices because they know that their consumers are unlikely to change. Another thing is that the cost of medications for pets is also going up too. Just briefly, Chris, what are we seeing there? So first in terms of the supply chain, there's a surprisingly few places where pet medication is manufactured. Most of the time when you have a pet, you go to the veterinarian. The veterinarian will write a prescription and dispense it for you. You know, for those of us who have to get

a prescription from a doctor, remember that's not what we do with human medicine. We go to the doctor, get a prescription, then we go to the pharmacist to fill it. But the situation we have in Canada is not the same situation that is in other countries. If you go to the United States, you can get a veterinarian to give you a prescription and you can get that prescription filled at any major pharmacy. And would that be cheaper actually? Yeah. So you can talk to your veterinarian if you're interested in this. In most places in Canada, if you ask the veterinarian to write a prescription, you can ask whether there might be a human equivalent.

There are certainly specialized animal medications, but there's a lot of common medication where the actual like molecule that humans and a dog might take is exactly the same. It's just about dosing. And so a lot of pharmacies can fill it. Huh. Wow. Chris, thanks so much for being here today. Thanks for having me. Coming up, Erica Alini heads to the Toronto Humane Society

with Decibel producer Cheryl Sutherland. And we're going to meet some very cutesy animals, I bet. We're very excited about meeting pets. All right, let's go. Let's go. Erica, thanks for being here. Thank you for having me. So I know you recently went to the Toronto Humane Society, along with Cheryl, and you got a sense of what rising pet costs really mean for them.

I guess before we get into that, though, I just want to know what you saw there. Like, what were the animals that you saw there? And how cute were they actually? So as expected, it was very cute. So we arrived to the Toronto Humane Society, which is a rather big building, and they were kind enough to give us a tour of the facilities. And so the first thing that we saw was the cat area. This is their catio. So we actually grow catnip out here, grow some veggies for the rabbits and guinea pigs, so lettuce, carrots, things like that.

Can you please tell me what it's called again? The catio. So it's our cat patio. And then we headed to the dog area. And it was funny because we had this giant microphones and we were expecting to get noises of cats and dogs and animals. And everything was so quiet. We could not get these animals to make a noise. We have some puppies over here. Aww.

Big paws. It's way quieter than I thought it would be down here. There's some more over here too. You guys are so quiet. Don't you know it's a podcast? Now's your chance to bark. And then finally, finally someone started barking one of the dogs. Where's my star?

Someone finally spoke up. Someone finally spoke up. Okay, so there were definitely some cute animals, it sounded like. But aside from the cats and the dogs that you saw, Erica, the Toronto Humane Society and really humane societies across Canada, they're really facing strain given the rising costs of pet care these days. So what does that actually look like for the Humane Society? There's a bit of a misconception out there that, you know, there was this adoption boom, like they draw the conclusion that people got pets during the pandemic, and then they got, you know, tired of them. And now they're, they're abandoning them.

And that's not at all what is happening. We don't have super recent numbers on this, but the latest nationwide survey that exists indicates that the actual volume of animals that are being pets that are being surrendered is going up because it's just dropped dramatically during the pandemic. So compared to the pandemic, it is going up. But as far as the latest numbers, it hasn't reached 2019 levels yet. But the tremendous strain on these organizations comes from the fact that fewer people are adopting. So it's not so much more surrenders compared to pre-pandemic, it's fewer adoptions. And there are fewer adoptions because people can't afford it. And also, you know, whereas maybe pre-pandemic, a lot of people, like a common reason for surrendering a

pet would be that, you know, maybe they had puppies and people can take care of the puppies, right? Now, like what organization here over and over again has to do with cost. Either people are losing their homes or they're moving into homes that don't allow pets because that's the only option. Or just the cost of living has increased so much that they can no longer afford to, you know, feed themselves and feed their pets. Or the pet has complex health problems and it just can't afford to care for them, to pay for the vet care. Okay. And so Erica, the Toronto Humane Society offers a service where they do provide pet food for people that might need it. So this is kind of addressing at least some of these

costs that they know are really high. Seven or eight cups in one bag for dry dog food. And they're in Ziploc bags. It's not like a brand. Yeah. So those we have volunteers bag them just so we can give out more to more people. And then we have tins of cat food or wet food. What have they seen in terms of, I guess,

recent demand for that program? We were speaking about this with the CEO, Phil Nichols, who was telling us that they were surprised by the update that this program has had. And I was just, I was literally like, my jaw almost dropped because of how profound the problem was just visually to me at the moment. Like we've run a food bank service through our shelter for decades. But it's dribs and drabs, right? Like, people come in when we're open, they go to the front desk.

But to see it kind of like, we said, we're starting at 10 a.m. People queued. And, you know, like, I got in and the line was already probably about 40 people long. And some of them had set up with foldable chairs so that they could wait. How long were people waiting for? More than two hours, so sometimes four hours. Earlier, Chris actually talked about how vet care is one of the main expenses when it comes to rising pet costs.

And Erica, I know that you spoke to Dr. Karen Ward, who's Chief veterinary officer at the Toronto Humane Society. So what did she say about what she's seeing these days when it comes to vet care? Dr. Ward said, you know, THS has a vet clinic, and the demand for that has also skyrocketed. But she also brought up a really interesting concept, the idea of spectrum of care. And so there's this idea that veterinarians may be trained and expected to provide sort of quote unquote, the gold standard of care. But that also tends to be the most expensive. And there have been a number of advancements in veterinary care, as there have been in human medicine, that have been driving up the cost of vet care.

And veterinarians who speak about the spectrum of care are saying, sometimes there can be a spectrum of options for pet owners that could be cheaper and still provide positive health outcomes for animals. And so Dr. Ward illustrated that with a recent example that she saw at THS. She recalled this female dog that she called Fluffy, which wasn't her real name. And this dog had pyometra, which is a serious infection of the uterus that can occur in dogs and cats that haven't been spayed and can be life-threatening. And it was. In this case, Fluffy's life was on the line. Fluffy was at an emergency hospital, but Fluffy's owner, who Dr. Ward called Mrs. Smith, did not have the money to pay for life-saving surgery. And that's because for Fluffy to be diagnosed with pyometra, she had already undergone a physical exam and a bunch of other tests. And this had cost Mrs. Smith around $2,000 and had completely drained her funds.

And so the emergency hospital then calls THS and says, you know, we have this dog, it needs an urgent surgery, can you do it? And THS staff did and the surgery was successful and it was a lovely happy ending and Fluffy lived. But Dr. Ward said, you know, perhaps with fewer tests or maybe with this surgery performed, you know, at a lower cost general practice clinic rather than an emergency hospital. Perhaps with all of that, Mrs. Smith would have been able to handle all the bills for Fluffy without having to rely on a clinic such as THS's, which provides below market price care and sometimes even free care to pet owners in need. Just lastly, Erica, I guess the big question here is for pet owners who are struggling right now, what are some things they that spectrum or what the spectrum looks like. So one thing is shop around and price compare. It's very difficult. Like you often won't find prices listed online because the prices can vary so much, even just depending on the breed,

the weight, the age of the pet. But if you call them and you know you want and you describe your situation, you might, you know, you're very likely to get a pretty accurate quote. And the other thing can definitely help, and that is something veterinarians are talking about to owners more and more, is getting pet insurance. Pet insurance has, you know, a lot of people are very skeptical of pet insurance because it can be quite expensive. And again, there's all kinds of limitations and what's covered and what isn't. Both Canadians and Americans, like really,

I think the uptake of pet insurance is like below 3%. It's pretty small. Very, very small in North America. But more and more because vet care is becoming so expensive, I think it's worth a second look. Erica, thank you so much for being here today. Thank you so much for having me. That's it for today. I'm Maina Karaman-Wilms.

Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show. Adrian Chung is our senior producer. And Angela Pachenza is our executive editor. Thanks so much for listening, and I'll talk to you tomorrow.