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Bargaining power of suppliers

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For this discussion, suppliers were defined as wholesalers, pharmaceutical companies, financial services, management system providers, etc; companies that supply the veterinary industry with the tools to help their business. Employees were also considered a significant factor here, as they were one of the major costs to any practice.

Most groups felt that suppliers did not have much bargaining power at present and there was a feeling that, should the market change, this could reduce even further. As things stand, clients are given what their vet wants them to have; however, it was pointed out, if the client starts to dictate what they are supplied with, which is possible with the rise in information technology, the bargaining power of the supplier diminishes even further. Pharmaceutical companies act in a highly competitive market, but if, say, decoupling were introduced, they might no longer be able to negotiate prices with the veterinary practice.

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Many practices have had the same suppliers for years, it was pointed out, and although there are other options, they rarely take them up. Comparison was made to personal bank accounts, which people rarely change, despite numerous options. There was debate in some of the break-out groups about how practices select their suppliers, and the basis on which decisions are made. At the same time, there was a feeling that vets are powerless to influence the supplier; if a pharmaceutical company increased its prices by 5 per cent, there was little vets could do about this.

One group concentrated purely on insurers, as they believed that insurers were ‘ruling the industry’. There was some debate here about whether insurers should be classed as suppliers, as practices are not paying them for anything; however, it was suggested that practices needed the support of insurers, and that some might set their prices based on the fact that their clients had insurance. There was much debate on how the insurance side of the veterinary world would develop; for example, would the insurers dictate which practice a client could go to, or even open their own practices. In this group, it was suggested that, while other suppliers had a low bargaining power, the bargaining power of insurers was high and often underestimated. This was echoed in some of the other groups, with one participant stating ‘insurers will start to dictate.’

With the bargaining power of suppliers of products being thought to be low, there was a suggestion that there were risks to individual suppliers if they were not competitive.

Competitiveness was also thought to be important in the supply of vets to practice, especially if the number of vets qualifying increased. As one participant put it, ‘there is a huge difference between the number of vets and the number of good vets’ available, so it was envisaged that good vets with experience would continue to be able to demand a premium, but competition to get that experience could be fierce.

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