Various members of the Muttley Crew have developed these, treatment has depended on:
The degree of certainty that it is indeed 'just' a benign cyst.
Whether or not the lump bothers the dog.
Whether or not the dog is a higher risk for anesthesia.
Whether or not the dog tends to be a cooperative patient.
Most of the lumps have clearly been sebaceous cycst or lipomas - both of which are benign. If the dog is not bothered by the lump - no chewing or licking the site, no interference with daily life - I tend to watch and wait. No sense in going through an invasive procedure in such cases.
If the lump is clearly a benign cyst but it bothers the dog, I'll have it emptied. With the cooperative dogs this can often be done without anesthesia.
About half of the cysts we have emptied did indeed fill up again. Some have had cysts emptied many times, as this is the least invasive option in these specific cases.
But if a cyst is continually reoccurring, and bothers the dog, and the dog is not at heightened risk for anesthesia, I usually decide to remove it after emptying it a couple of times. If removal is a quick easy procedure I might ask if it makes sense to do so in conjunction with another procedure needing anesthesia, such as teeth cleaning. (But not in a high risk dog, as the time under anesthesia is the largest risk factor.)
With the uncooperative dogs anesthesia is needed even for emptying, so I then have to weigh up the risk vs benefit. Whenever anesthesia is needed I go ahead and remove the cyst rather than just emptying it.
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If there is any question that the lump could be something other than a benign cyst or lipoma, I want to investigate.
Often a biopsy makes sense with my cooperative dogs, as a needle biopsy is much less invasive than surgical removal. Depending on the results of the biopsy I might have it removed or continue watching and waiting.
With the uncooperative dogs anesthesia is needed, so at that point I remove the growth first and then send it off for biopsy.
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I've only had one burst, this was perhaps 20 years ago. Like yours, it was a tail cyst hiding under all that collie plumage so I had no idea it was there. Looked like a scene from a horror film. So I empathize, it looks a lot worse than it (usually) is.
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If the Cone Of Shame is really bothering Lizzie, you might try one of the inflatable tube collars. They are more comfortable. But if Lizzie is still quite flexible she might be able to get at a tail cyst even with the tube collar.
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Sending cyber cuddles to Lizzie. Hope her recovery, whatever decision you make, is easy.