There's an old axiom in the veterinary profession that the field essentially is recession-proof.

According to conventional wisdom, people will not refuse their pets needed medical attention regardless of the economy. But with a struggling stock market, housing foreclosures and even billionaire Warren Buffet saying he's feeling the pinch, is it possible for the veterinary profession to emerge unscathed?

The numbers say no.

Jon Dittrich, Profit Profile's president, says the country has endured at least three recessions in the past 20 years, and each time total veterinary profession revenue dropped.

Although health care might not be affected as significantly as other economic sectors, Adolfo Laurenti, senior economist at Mesirow Financial in Chicago, says that veterinarians still will be impacted by the slowing economy.

"Over the past couple of months, there has been a very sudden and very deep worsening of economic conditions," Laurenti says. "I think the key, regardless of the business cycle, is to be very careful and very cautious about cash flow. That's like the Golden Rule for small businesses, especially at the time of a slow-down."

Heal thyself

Dr. Anthony J. DeCarlo, CEO of the Red Bank Veterinary Hospital in Tinton Falls, N.J., says that the effects of a recession on the veterinary business depend on how an individual practice is set up. Because DeCarlo opened his business during a recession in 1986, he made the decision not to offer products and services that were sensitive to economic trends. For instance, Red Bank does not sell non-prescription foods or offer boarding — services clients can cut out during economic downturns.

DeCarlo says 90 percent of his business is medical, and that doesn't tend to fluctuate. "You may hold off on routine things, but when your pet gets sick, you really can't put that off," DeCarlo says.

According to Dittrich of Profit Profile, veterinary revenue generally comes from discretionary spending, which is vulnerable to economic swings. "If your electric company is threatening to turn off your power because you haven't paid your bill, and it's time for Fluffy to get her annual physical, Fluffy's not getting it," Dittrich says.

The American Veterinary Medical Association's "U.S. Pet Ownership & Demographics Sourcebook," which surveyed nearly 48,000 households, supports this premise. Although veterinary expenditures still are climbing, the number of patient visits is on the decline, as reported in DVM Newsmagazine. A weak economy can lead clients to bypass elective surgeries or, in the case of more serious injuries, euthanize the pet because of costs.

Quick fix

Once veterinarians see a drop in client visits or stagnating sales, the first response usually is to do one of two things: discount fees or increase advertising. Unfortunately, neither of these is effective in a weak economy, Dittrich says.

Clients tend to be loyal to their veterinarians, which means it is much more difficult for competing practitioners to poach clients from neighboring practices through advertising. Therefore, a veterinarian's marketing strategy must be for the long-term effort, not simply a short-term panacea.

As for price discounting, Dittrich notes that the rising cost of technology, equipment and specialist salaries have caused overhead to increase in recent years, leading to narrower profit margins. According to Dittrich, if an average practice cuts fees by 10 percent, it would need to increase demand by 32 percent just to make the same profit.

"Ultimately, you end up working harder and not making any more money," Dittrich adds.