I have a concern, but maybe you can tell me if it’s misguided. All of this new AI and other emerging tech is going to cost $. My local vets are fantastic, but their office is shabby and I don’t know about their ability to integrate pricey tech. It feels like if/when they do, these costs are just going to be passed down to consumers. Same goes for doctors and dentists. My dentist’s office has all the latest tech, and what my insurance won’t cover there feels like it’s increasing every month. Can you speak to this concern generally?
Glad you got to have conference camaraderie again. I have many fond memories of that within my own prior industry.
Great comment, Amy! To answer, I would say that I see a split between human and veterinary medicine in this area. The former is largely a B2C business (individual patients pay the lab directly, albeit with an insurance intermediary), while the latter is functionally B2B (lab companies bill the vet clinic who go on to bill the client/pet owner).
My experience working with AI software vendors focused on the human medical space suggests their primary business model is adding on CPT billing codes for added charges with new algorithms being run. This cost will probably be passed on to insurers +/- patients, hopefully adding enough value to compensate. The very high legal and regulatory barriers in the human sector (to say nothing of powerful physician lobbying groups) mean we're unlikely to see completely automated diagnoses from AI anytime soon.
On the other hand, without third party payment, vetmed is a lot more price sensitive. The dominant model for any type of diagnostic in the animal health space is the veterinarian at the point of care marks up the raw vendor cost of the test ~2-3x (sometimes more). For example, if Antech or IDEXX or Zoetis charges Dr. Bob $80 for a cytology, it is very common for the pet owner to pay $160+. Some markup is understandable, vets don't go to work for free, although I personally think those upcharges are getting excessive and creating barriers to care. Further complicating this situation is the fact that over the last decade or so, these companies all engaged in a race to the bottom on pathology test pricing (less so in radiology) via huge discounts. Now that these chickens are coming home to roost with investors scrutinizing financials closer in a high interest rate environment they are rapidly increasing prices, although their veterinarian clients are balking at the extent and speed.
In any event, this dynamic limits how much veterinary diagnostic companies can charge vets, because every dollar added is multiplied substantially further down the chain. Therefore, the veterinary business model I see people discussing concerns using AI to improve efficiency and "ideally" (to those in the C-suite) reduce labor costs, often via auto-diagnosis. I will be surprised if vet companies use AI for add-on revenue charges versus improving gross margins as they keep prices flat or slowly increase over time.
I have a concern, but maybe you can tell me if it’s misguided. All of this new AI and other emerging tech is going to cost $. My local vets are fantastic, but their office is shabby and I don’t know about their ability to integrate pricey tech. It feels like if/when they do, these costs are just going to be passed down to consumers. Same goes for doctors and dentists. My dentist’s office has all the latest tech, and what my insurance won’t cover there feels like it’s increasing every month. Can you speak to this concern generally?
Glad you got to have conference camaraderie again. I have many fond memories of that within my own prior industry.
Great comment, Amy! To answer, I would say that I see a split between human and veterinary medicine in this area. The former is largely a B2C business (individual patients pay the lab directly, albeit with an insurance intermediary), while the latter is functionally B2B (lab companies bill the vet clinic who go on to bill the client/pet owner).
My experience working with AI software vendors focused on the human medical space suggests their primary business model is adding on CPT billing codes for added charges with new algorithms being run. This cost will probably be passed on to insurers +/- patients, hopefully adding enough value to compensate. The very high legal and regulatory barriers in the human sector (to say nothing of powerful physician lobbying groups) mean we're unlikely to see completely automated diagnoses from AI anytime soon.
On the other hand, without third party payment, vetmed is a lot more price sensitive. The dominant model for any type of diagnostic in the animal health space is the veterinarian at the point of care marks up the raw vendor cost of the test ~2-3x (sometimes more). For example, if Antech or IDEXX or Zoetis charges Dr. Bob $80 for a cytology, it is very common for the pet owner to pay $160+. Some markup is understandable, vets don't go to work for free, although I personally think those upcharges are getting excessive and creating barriers to care. Further complicating this situation is the fact that over the last decade or so, these companies all engaged in a race to the bottom on pathology test pricing (less so in radiology) via huge discounts. Now that these chickens are coming home to roost with investors scrutinizing financials closer in a high interest rate environment they are rapidly increasing prices, although their veterinarian clients are balking at the extent and speed.
In any event, this dynamic limits how much veterinary diagnostic companies can charge vets, because every dollar added is multiplied substantially further down the chain. Therefore, the veterinary business model I see people discussing concerns using AI to improve efficiency and "ideally" (to those in the C-suite) reduce labor costs, often via auto-diagnosis. I will be surprised if vet companies use AI for add-on revenue charges versus improving gross margins as they keep prices flat or slowly increase over time.
An inspiring meeting indeed.