Hi, Eric. I live in a Caribbean country where veterinary care is much lower cost, but because on average people are much poorer in the Caribbean region, pet care can still be out of reach for many people. From this experience, I'd like to add a potential social cost of luxury pricing for veterinary care to your observations.
People who live in the USA, and then travel to the Caribbean (and other poorer countries, including India) will immediately notice the large number of stray dogs and cats (and occasionally other animals, like donkeys or goats, as well.) So for instance, if you take a romantic walk down a white-sand beach on St. Martin, you're sure to see a fair number of loose dogs. Most of these stray dogs are malnourished, and some are violent. It's a real threat to public tranquility and safety. I have heard tourists complain about "irresponsible pet ownership," but that's not a complete explanation for why there are so many wandering cats and dogs. The reason why there are so many strays in the Caribbean is because so few animals are spayed/neutered. The key reasons for that are lax enforcement of rules regarding neutering animals, and people being too poor to have their pets neutered.
Some islands (like mine, I am happy to say) heavily subsidize neutering animals and offer other incentives to do so, making the problem of strays much less severe. But most don't, and that's why there are so many strays on the beaches, and that's why that romantic barefoot walk on the beach may well give you ground itch. (A lot of the strays have worm infestations, too, needless to say.)
On the upside, at least on islands populations are isolated. So not only do you get to see cool genetic bottlenecking effects like lots of polydactyly, but also an island that's rabies-free (as many Caribbean islands are) remains rabies-free, even if there are a lot of stray dogs wandering about. In mainland places with this problem of strays, you also have to worry that the wandering dogs might bite you and infect you with rabies. This is one of the key reasons why about 50,000 people die of rabies every year in India, and almost all of those deaths are tied to dog bites.
Pet ownership is a human universal, across virtually all human cultures. People who can't afford veterinary care don't just decide to not have pets; after all, humans were turning wild animals into domestic companions far earlier than we had medicine of any kind. What they do is have pets, and care for them the best they can given their circumstances--care which may not include prevention.
If increasing veterinary care costs in general also radically increases the cost of preventive care like neutering and vaccinations, I fear that the United States could also face the problem of strays, and possibly even a return of rabies. And that's a problem that everyone pays for, whether or not they own a dog.
Thank you for sharing your perspective, it's a great reminder of how diverse human-animal relationships are, and how veterinary medicine looks different globally. I have a little experience with the Caribbean: my wife is a Ross vet grad and I'll be teaching on the island this summer, and we adopted our newest dog Kali from the Bahamas. She was considered a "nuisance" outside the hotel where she was staying, and animal control was going to put her down. We agreed to foster her to give her a chance and she has thrived with us in Florida <3 K was infected with both heartworm and Ehrlichia, but she's recovered from both with treatment.
My wife was in the Bahamas as part of her veterinary company's charity efforts to train and support local spay/neuter efforts on the islands, because it is a huge problem as you state. Situations like those on the islands are why I bristle when some folks (particularly from Europe) look askance at the US push for aggressive spay/neuter practices; not every country can manage a bunch of intact male dogs and cats without resulting in a huge overpopulation.
Also, great point about pet ownership as a human universal! Tens of thousands of years before we had written language and organized societies, early Homo sapiens were domesticating wolves into dogs. Sailors around the world going back to ancient Egyptian times tolerated cats because they killed pests, and those little felines sort of domesticated themselves (the jury is still out on how wild house cats are!) And when people get up in arms about homeless people who own pets I remind them that they are often a useful form of protection, to say nothing of companionship and something that gives them purpose
Very cool that your wife graduated from Ross and now you're getting to teach there. If you don't mind, I'll message you about some Caribbean things as I live practically across the street. (I can often see St. Kitts from my porch.)
I'm glad you rescued Kali and she's a healthy, happy pup now. I live with some island rescue animals, too: a dog and two cats. And don't even get me started on (some) Europeans' incoherent opinions about naturalness and animal husbandry.
Because indeed, pets are a human universal, and probably my favorite trait that's uniquely human, and universal to humans. It defies every evolutionary just-so story about genetic selfishness that generation after generation, in culture after culture, humans say to a creature that will use their resources and never pass on their genes, "I love you, and I will care for you the best I can." All animals are future-oriented in some way, investing in their own offspring, and many animals will even adopt the orphans of their own species. But only humans habitually love completely unrelated animals with lifespans much shorter than our own, knowing in advance that our love will end in grief. I think pet ownership is one of the most beautiful things humans do.
Oh wow. I have so much I could say. This took me back to a piece I wrote in May 2020. All the red flags about affordability were obvious then; and in fact, there was published data going as far back as 2007 (Jason B Coe, Ontario Veterinary Medical College) and the Bayer Veterinary Care Usage Study (2011) showing that pet owners were expressing concerns about the cost of veterinary care all those years ago.
Seemingly, no one in the profession really wanted to listen? To this day I’m not sure why.
Your piece today prompted me to go back and reread what I wrote in 2020 when we were still in the early throes of the pandemic.
The focus of what I wrote was less about prices than it was about urging vets to consider adopting accessible financing options other than the “old standby,” CareCredit, and to consider creative ways to help clients better manage costs (pay-in-advance plans, pay-as-you-go, things that dentists and cosmetic surgeons had already been doing for years.)
Anyway, I hear you. But as a pet owner who founded a company based on offering alternative payment options, for many years I had zero credibility with vets. I’m not sure why that was, seeing as I represent the people vets serve every single day — clients.
Nevertheless, maybe it was just a case of being too early with the message. The market, the profession, just hadn’t gotten there yet.
If you want to read my piece from 2020, I’ll include the link at the end of my comment. And if you visit my LinkedIn profile and look through my articles, I’ve been addressing this topic for a long time.
And here is the link to the paper by Coe et al, published in 2007 in JAVMA, “A focus group study of veterinarians' and pet owners' perceptions of the monetary aspects of veterinary care.”
Thanks for sharing your comments and that great article, Suzanne! Though I have to say I chortled when I read the title "Will COVID Encourage Veterinarians to Address Affordability?" [Spoiler alert: It did not 🙃]
I'm all for the various options to help make payments easier. I've used Care Credit multiple times in the past, and pet insurance can be a godsend. Our little orange devil Ernie recently ate an earplug and went to the vet for an obstruction and insurance covered the majority of it (luckily he passed it without needing surgery).
Still, all of those options are just workarounds for the main problem: high costs. And if the profession doesn't start taking it seriously, all of the payment plans and pet insurance in the world won't save us
Such an important article, Eric. Thanks for sharing this information. As I retired veterinarian who practiced in what I call "the glory days" of the profession, I feel for both the veterinarians who don't have anything to do with setting prices and their clients.
Thank you for the kind words! I know technology has advanced a lot, our pets are living longer, and stuff like CTs, MRIs, chemo, radiation therapy, and advanced surgeries cost a lot of money. I also don't want to throw other vets under the bus and imply this stuff is a grift, because it's not, the issue is just prices have gone bananas.
One reader on Substack commented that they were given an estimate of *$4,500* for a dental! Look, I don't know the medical details of the case, and extractions can add up quickly, but I really struggle to understand how anyone could quote that with a straight face unless the cat's mouth was literally dissolving from top to bottom (and in a follow-up post they said they found another vet to do it for a fraction, so I'm sure that wasn't the case...)
Agreed. I've heard of more and more people taking their pets across the border for veterinary care, much like people leave the country to get less expensive dental care. I also wrote an article on this topic
Not a word about the sharply accelerating acquisition of US veterinary practices by private equity over the last decade? From less than 20% PE-owned (over 80% independent) in the early 2010s to around 50% PE-owned presently. Over 75% PE-owned in many metropolitan areas, like SoCal, NYC Metro, Florida, Chicago/Great Lakes, Austin/DFW/Houston, Phoenix/Tucson, Washington State. Denver/Boulder, Boston, etc. While the independent holdouts tend to be the highest-priced boutique practices.
Mars Inc. (family-owned): Banfield, VCA, BluePearl- over 2,000 hospitals, even more clinics.
Veterinary Practice Partners - PE-backed by Audax Group.
Pathway Vet Alliance (now Thrive Pet Healthcare) - backed by TSG Consumer Partners.
NVA (National Veterinary Associates) - acquired by JAB Holding Co. in 2019 for $5+ billion.
Mission Veterinary Partners, Heartland Veterinary Partners, and VetCor are all PE-backed, collectively managing at least five thousand clinics.
Well, for starters, the numbers you quote are way off. Typical estimates for corporate ownership of US vet practices is about 35%, with 65% privately owned. It is difficult to disentangle private equity from non-PE corporate clinics, but it is absolutely nowhere near half. References:
It is true that referral specialty/ER hospitals (which are a relatively small fraction of the market) are owned by corporate or other consolidators at a much higher rate than general practice clinics and other practice models. However, a big driver of that (besides the higher revenues) is the fact that those large clinics are enormously expensive and cannot easily be transferred to one or several owners with any reasonable financing. A small, 1-3 doctor clinic can easily sell to a young associate vet who takes out a small business loan for a couple million dollars. How do you do that for a 30 doctor hospital valued at $50 million? Really the only organizations who can acquire clinics that large are corporate entities (whether or not they are publicly-traded, PE, etc).
Do I think corporate clinics are part of the problem? Absolutely. there is no question the need to pay back shareholders who aren't directly employed by the clinic inflates prices. Do I think that is all or even most of the story? No. I see similar pricing behavior by independent clinics all. the. time. One of the most egregious examples I ever saw marking up my own professional services as a third-party was by a local clinic that had been owned by the same people for decades and pointedly refused to "sell out to corporate."
Most stories don't have easy bogeymen, and things are more complex under the surface, but if I had to pick a "villain," it would probably be the proliferation of MBAs and business consultants who collect fees telling independent and corporate clinics alike the answer to all of their balance sheet problems is raising prices.
You would know better, but those numbers came from my memories of reading from FTC and Elizabeth Warren's websites last year. And I believe I used "PE" to describe all acquisitions by large corporations.
FTC took three enforcement actions in JAB’s acquisition of National Veterinary Associates from 2020 through 2022, due to concentration concerns.
Also, American Economic Liberties Project put out a white paper a year or two back. They're all biased.
I'm in an affluent-ish part of DMV, every practice I've used over the last 20+ years (6 or so) has been acquired by massive entities, and, seemingly - enshitified.
I like Senator Warren, but I am skeptical of some of her claims. For example, take this statement from a news article:
"Private equity has bought about 30 percent of all veterinary practices in the United States, Warren said during an appearance at the Heal Veterinary Clinic on Monday. These firms have also vertically integrated in the industry, many also buying up the labs where medical testing is done, and the insurance firms that pay for — and more and more frequently deny coverage for — a pet owner, the senator said."
I'm not sure where her 30% number comes from, but the follow-on claim about vertical integration of labs by PE is 100% untrue. >95% (probably like 99%) of the vet lab testing market in North America (and broadly similar globally) is by 3 companies: IDEXX, Antech, and Zoetis. IDEXX is a publicly traded company that has been around since the 80s, Antech is owned by the Mars family, and Zoetis was primarily a publicly-traded pharmaceutical company that spun up a lab side hustle a few years ago. Is the fact that three corporations dominate the market great? No! But the fact that she is so wrong on a basic point makes me question some of the other claims.
The reason I'm a stickler on differentiating true private equity (PE) from other forms of corporate consolidation is there are real, meaningful differences in their purpose and business model. PE are entities where large investors (pensions, hedge funds, high net worth individuals, etc) buy up promising or troubled businesses, usually the latter, and essentially flip them or otherwise extract revenue from them. This is often done by laying off a large portion of staff, raising prices, and other tactics designed to squeeze out every dollar.
In contrast, the other business types have different incentives. Angel investors and venture capital invest in early-stage growth companies hoping for a large pay-day, knowing that many "bets" fail, so they spread their capital around to many companies. In Big Tech, the hope is a windfall from an IPO, but in vetmed, which is much smaller than tech or human healthcare, this usually means acquisition by a large company. Lacuna Diagnostics, the digital cytology company I cofounded 7 years ago, was partially supported by several VCs and then acquired by HESKA, which in turn was bought by Antech.
Publicly-traded companies like IDEXX and Zoetis have their main incentives to increase their stock price and satisfy investors during quarterly earnings calls. IMO this incentivizes a lot of short-term thinking at the expense of long-term sustainability, though companies like IDEXX would probably argue it is the cost of ensuring a viable business of almost 40 years that has created a lot of genuine groundbreaking innovations that transformed vetmed.
In contrast, the Mars family owns a big portfolio, including VCA, Antech, Banfield, and BluePearl (my wife works for BP, which is also on my disclosure page (https://allscience.substack.com/p/conflict-of-interest-disclosure-and). I have very mixed feelings about some of their business practices, but I will say that they are in it for the long-haul. They don't have to worry about the stock market, and can follow long-term plans without dealing with a shareholder revolt. Unlike PE companies, they are not looking to flip these businesses for a quick buck. They do invest a lot of their money from their food ventures back into the vet side, and BP has recently been experimenting with strategic pricing initiatives that have cut prices in some markets where they found the costs were hurting caseload and compliance with estimates.
In some markets where VCA, BP, and Banfield owned too many clinics, the FTC has stepped in too force divestments and prevent monopolization. I think this is great and whole-heartedly support vigorous anti-trust. I was a big fan of Lina Khan and hate to see the current administration reversing course on a lot of these things.
One last thing I will say, not to throw older vets under the bus, but in some cases we are our own worst enemy: Vets approaching retirement often hold most of their net worth in their practice, the associated real estate, and equipment. Many express a desire to pass it on to a younger independent vet of the next generation. But when push comes to shove, corporate consolidators offer them way more money and they take the payday over preserving independence. You could argue that this is the fault of companies dangling an unreasonable amount of money, but they wouldn't have takers if private owners chose principle over $.
In a vacuum, every individual and business is making decisions that is in their own best interest. However, this can result in negative externalities and worse outcomes for multiple parties. This is why it's important to have vigorous regulations and government enforcement of them, which I whole-heartedly support.
Fascinating. I'll read (and respond) more carefully this evening. My original point, I think, was that your essay didn't mention, or barely mentioned this consolidation and concentration of pricing power - I think. Or the vertical integration. Despite efficiencies and so on, none of it seems to help with costs for consumers. And any convenience seems to come at steep costs - my vet's "in house" mail order pharmacy has ridiculous pricing.
Veterinary medicine is just a decade or two behind human medicine with much if this, but the costs are borne much differently. Like small group medical practices, you wrote.
"Many express a desire to pass it on to a younger independent vet of the next generation. But when push comes to shove, corporate consolidators offer them way more money and they take the payday over preserving independence.. "
You left out that veterinary hospitals, like nursing homes, dental offices are being used as a money making venture by private equity funding. Perhaps if more private equity funded corporate hospitals became B-Corps, there would be a higher level of concern for the general veterinary patient/client. And don’t go blaming rising salaries. That is a mis-redirection
You raise fair points that venture capital, private equity, and corporate hospitals have different expectations for revenue and profit that can impact pricing. Human medical facilities owned by private equity have much higher costs and also a higher rate of medical issues (often due to cutting staff).
That said, there are relatively few true PE-backed veterinary practices compared to traditional corporate acquisition (which may be public or private) or independently owned, and independent clinics can exhibit the same pricing strategies.
I disagree that salaries don't have an impact. Labor is one of the largest cost centers in most businesses, and that's no exception in vetmed. DVMs are a high-skill profession that spend a decade in school for the same cost as physicians and dentists, and the pandemic saw huge attrition in some sectors and markets that necessitated rapidly rising pay to recruit and retain people. And veterinary technicians are chronically and severely underpaid, even as we try to rectify that pay gap.
Hi, Eric. I live in a Caribbean country where veterinary care is much lower cost, but because on average people are much poorer in the Caribbean region, pet care can still be out of reach for many people. From this experience, I'd like to add a potential social cost of luxury pricing for veterinary care to your observations.
People who live in the USA, and then travel to the Caribbean (and other poorer countries, including India) will immediately notice the large number of stray dogs and cats (and occasionally other animals, like donkeys or goats, as well.) So for instance, if you take a romantic walk down a white-sand beach on St. Martin, you're sure to see a fair number of loose dogs. Most of these stray dogs are malnourished, and some are violent. It's a real threat to public tranquility and safety. I have heard tourists complain about "irresponsible pet ownership," but that's not a complete explanation for why there are so many wandering cats and dogs. The reason why there are so many strays in the Caribbean is because so few animals are spayed/neutered. The key reasons for that are lax enforcement of rules regarding neutering animals, and people being too poor to have their pets neutered.
Some islands (like mine, I am happy to say) heavily subsidize neutering animals and offer other incentives to do so, making the problem of strays much less severe. But most don't, and that's why there are so many strays on the beaches, and that's why that romantic barefoot walk on the beach may well give you ground itch. (A lot of the strays have worm infestations, too, needless to say.)
On the upside, at least on islands populations are isolated. So not only do you get to see cool genetic bottlenecking effects like lots of polydactyly, but also an island that's rabies-free (as many Caribbean islands are) remains rabies-free, even if there are a lot of stray dogs wandering about. In mainland places with this problem of strays, you also have to worry that the wandering dogs might bite you and infect you with rabies. This is one of the key reasons why about 50,000 people die of rabies every year in India, and almost all of those deaths are tied to dog bites.
Pet ownership is a human universal, across virtually all human cultures. People who can't afford veterinary care don't just decide to not have pets; after all, humans were turning wild animals into domestic companions far earlier than we had medicine of any kind. What they do is have pets, and care for them the best they can given their circumstances--care which may not include prevention.
If increasing veterinary care costs in general also radically increases the cost of preventive care like neutering and vaccinations, I fear that the United States could also face the problem of strays, and possibly even a return of rabies. And that's a problem that everyone pays for, whether or not they own a dog.
Thank you for sharing your perspective, it's a great reminder of how diverse human-animal relationships are, and how veterinary medicine looks different globally. I have a little experience with the Caribbean: my wife is a Ross vet grad and I'll be teaching on the island this summer, and we adopted our newest dog Kali from the Bahamas. She was considered a "nuisance" outside the hotel where she was staying, and animal control was going to put her down. We agreed to foster her to give her a chance and she has thrived with us in Florida <3 K was infected with both heartworm and Ehrlichia, but she's recovered from both with treatment.
My wife was in the Bahamas as part of her veterinary company's charity efforts to train and support local spay/neuter efforts on the islands, because it is a huge problem as you state. Situations like those on the islands are why I bristle when some folks (particularly from Europe) look askance at the US push for aggressive spay/neuter practices; not every country can manage a bunch of intact male dogs and cats without resulting in a huge overpopulation.
Also, great point about pet ownership as a human universal! Tens of thousands of years before we had written language and organized societies, early Homo sapiens were domesticating wolves into dogs. Sailors around the world going back to ancient Egyptian times tolerated cats because they killed pests, and those little felines sort of domesticated themselves (the jury is still out on how wild house cats are!) And when people get up in arms about homeless people who own pets I remind them that they are often a useful form of protection, to say nothing of companionship and something that gives them purpose
Very cool that your wife graduated from Ross and now you're getting to teach there. If you don't mind, I'll message you about some Caribbean things as I live practically across the street. (I can often see St. Kitts from my porch.)
I'm glad you rescued Kali and she's a healthy, happy pup now. I live with some island rescue animals, too: a dog and two cats. And don't even get me started on (some) Europeans' incoherent opinions about naturalness and animal husbandry.
Because indeed, pets are a human universal, and probably my favorite trait that's uniquely human, and universal to humans. It defies every evolutionary just-so story about genetic selfishness that generation after generation, in culture after culture, humans say to a creature that will use their resources and never pass on their genes, "I love you, and I will care for you the best I can." All animals are future-oriented in some way, investing in their own offspring, and many animals will even adopt the orphans of their own species. But only humans habitually love completely unrelated animals with lifespans much shorter than our own, knowing in advance that our love will end in grief. I think pet ownership is one of the most beautiful things humans do.
I wrote more about dog evolution and love here:
https://doctrixperiwinkle.substack.com/p/the-paragon-of-animals
Oh wow. I have so much I could say. This took me back to a piece I wrote in May 2020. All the red flags about affordability were obvious then; and in fact, there was published data going as far back as 2007 (Jason B Coe, Ontario Veterinary Medical College) and the Bayer Veterinary Care Usage Study (2011) showing that pet owners were expressing concerns about the cost of veterinary care all those years ago.
Seemingly, no one in the profession really wanted to listen? To this day I’m not sure why.
Your piece today prompted me to go back and reread what I wrote in 2020 when we were still in the early throes of the pandemic.
The focus of what I wrote was less about prices than it was about urging vets to consider adopting accessible financing options other than the “old standby,” CareCredit, and to consider creative ways to help clients better manage costs (pay-in-advance plans, pay-as-you-go, things that dentists and cosmetic surgeons had already been doing for years.)
Anyway, I hear you. But as a pet owner who founded a company based on offering alternative payment options, for many years I had zero credibility with vets. I’m not sure why that was, seeing as I represent the people vets serve every single day — clients.
Nevertheless, maybe it was just a case of being too early with the message. The market, the profession, just hadn’t gotten there yet.
If you want to read my piece from 2020, I’ll include the link at the end of my comment. And if you visit my LinkedIn profile and look through my articles, I’ve been addressing this topic for a long time.
At least my mom read what I wrote, lol 😂
https://www.linkedin.com/pulse/why-arent-more-veterinary-practices-talking-helping-cannon-ms-ma?utm_source=share&utm_medium=member_ios&utm_campaign=share_via
And here is the link to the paper by Coe et al, published in 2007 in JAVMA, “A focus group study of veterinarians' and pet owners' perceptions of the monetary aspects of veterinary care.”
https://pubmed.ncbi.nlm.nih.gov/18020992/
Thanks for sharing your comments and that great article, Suzanne! Though I have to say I chortled when I read the title "Will COVID Encourage Veterinarians to Address Affordability?" [Spoiler alert: It did not 🙃]
I'm all for the various options to help make payments easier. I've used Care Credit multiple times in the past, and pet insurance can be a godsend. Our little orange devil Ernie recently ate an earplug and went to the vet for an obstruction and insurance covered the majority of it (luckily he passed it without needing surgery).
Still, all of those options are just workarounds for the main problem: high costs. And if the profession doesn't start taking it seriously, all of the payment plans and pet insurance in the world won't save us
Such an important article, Eric. Thanks for sharing this information. As I retired veterinarian who practiced in what I call "the glory days" of the profession, I feel for both the veterinarians who don't have anything to do with setting prices and their clients.
Thank you for the kind words! I know technology has advanced a lot, our pets are living longer, and stuff like CTs, MRIs, chemo, radiation therapy, and advanced surgeries cost a lot of money. I also don't want to throw other vets under the bus and imply this stuff is a grift, because it's not, the issue is just prices have gone bananas.
One reader on Substack commented that they were given an estimate of *$4,500* for a dental! Look, I don't know the medical details of the case, and extractions can add up quickly, but I really struggle to understand how anyone could quote that with a straight face unless the cat's mouth was literally dissolving from top to bottom (and in a follow-up post they said they found another vet to do it for a fraction, so I'm sure that wasn't the case...)
Agreed. I've heard of more and more people taking their pets across the border for veterinary care, much like people leave the country to get less expensive dental care. I also wrote an article on this topic
https://kayn.substack.com/p/the-high-cost-of-veterinary-care?utm_source=publication-search
Keep up the good work!
That's a great piece, thanks for sharing. I restacked it to spread awareness
Thanks.
Not a word about the sharply accelerating acquisition of US veterinary practices by private equity over the last decade? From less than 20% PE-owned (over 80% independent) in the early 2010s to around 50% PE-owned presently. Over 75% PE-owned in many metropolitan areas, like SoCal, NYC Metro, Florida, Chicago/Great Lakes, Austin/DFW/Houston, Phoenix/Tucson, Washington State. Denver/Boulder, Boston, etc. While the independent holdouts tend to be the highest-priced boutique practices.
Mars Inc. (family-owned): Banfield, VCA, BluePearl- over 2,000 hospitals, even more clinics.
Veterinary Practice Partners - PE-backed by Audax Group.
Pathway Vet Alliance (now Thrive Pet Healthcare) - backed by TSG Consumer Partners.
NVA (National Veterinary Associates) - acquired by JAB Holding Co. in 2019 for $5+ billion.
Mission Veterinary Partners, Heartland Veterinary Partners, and VetCor are all PE-backed, collectively managing at least five thousand clinics.
Well, for starters, the numbers you quote are way off. Typical estimates for corporate ownership of US vet practices is about 35%, with 65% privately owned. It is difficult to disentangle private equity from non-PE corporate clinics, but it is absolutely nowhere near half. References:
1. https://www.avma.org/news/less-foot-traffic-veterinary-practices-spells-declining-revenue
2. https://www.aaha.org/trends-magazine/publications/corporate-consolidation-and-the-rise-of-private-equity/#:~:text=In%20fact%2C%20according%20to%20animal,corporately%20owned%2C%20according%20to%20Brakke.
It is true that referral specialty/ER hospitals (which are a relatively small fraction of the market) are owned by corporate or other consolidators at a much higher rate than general practice clinics and other practice models. However, a big driver of that (besides the higher revenues) is the fact that those large clinics are enormously expensive and cannot easily be transferred to one or several owners with any reasonable financing. A small, 1-3 doctor clinic can easily sell to a young associate vet who takes out a small business loan for a couple million dollars. How do you do that for a 30 doctor hospital valued at $50 million? Really the only organizations who can acquire clinics that large are corporate entities (whether or not they are publicly-traded, PE, etc).
Do I think corporate clinics are part of the problem? Absolutely. there is no question the need to pay back shareholders who aren't directly employed by the clinic inflates prices. Do I think that is all or even most of the story? No. I see similar pricing behavior by independent clinics all. the. time. One of the most egregious examples I ever saw marking up my own professional services as a third-party was by a local clinic that had been owned by the same people for decades and pointedly refused to "sell out to corporate."
Most stories don't have easy bogeymen, and things are more complex under the surface, but if I had to pick a "villain," it would probably be the proliferation of MBAs and business consultants who collect fees telling independent and corporate clinics alike the answer to all of their balance sheet problems is raising prices.
You would know better, but those numbers came from my memories of reading from FTC and Elizabeth Warren's websites last year. And I believe I used "PE" to describe all acquisitions by large corporations.
FTC took three enforcement actions in JAB’s acquisition of National Veterinary Associates from 2020 through 2022, due to concentration concerns.
Also, American Economic Liberties Project put out a white paper a year or two back. They're all biased.
I'm in an affluent-ish part of DMV, every practice I've used over the last 20+ years (6 or so) has been acquired by massive entities, and, seemingly - enshitified.
I like Senator Warren, but I am skeptical of some of her claims. For example, take this statement from a news article:
"Private equity has bought about 30 percent of all veterinary practices in the United States, Warren said during an appearance at the Heal Veterinary Clinic on Monday. These firms have also vertically integrated in the industry, many also buying up the labs where medical testing is done, and the insurance firms that pay for — and more and more frequently deny coverage for — a pet owner, the senator said."
REFERNECE: https://www.yahoo.com/news/private-equity-carves-path-pet-132148709.html?guccounter=1
I'm not sure where her 30% number comes from, but the follow-on claim about vertical integration of labs by PE is 100% untrue. >95% (probably like 99%) of the vet lab testing market in North America (and broadly similar globally) is by 3 companies: IDEXX, Antech, and Zoetis. IDEXX is a publicly traded company that has been around since the 80s, Antech is owned by the Mars family, and Zoetis was primarily a publicly-traded pharmaceutical company that spun up a lab side hustle a few years ago. Is the fact that three corporations dominate the market great? No! But the fact that she is so wrong on a basic point makes me question some of the other claims.
The reason I'm a stickler on differentiating true private equity (PE) from other forms of corporate consolidation is there are real, meaningful differences in their purpose and business model. PE are entities where large investors (pensions, hedge funds, high net worth individuals, etc) buy up promising or troubled businesses, usually the latter, and essentially flip them or otherwise extract revenue from them. This is often done by laying off a large portion of staff, raising prices, and other tactics designed to squeeze out every dollar.
In contrast, the other business types have different incentives. Angel investors and venture capital invest in early-stage growth companies hoping for a large pay-day, knowing that many "bets" fail, so they spread their capital around to many companies. In Big Tech, the hope is a windfall from an IPO, but in vetmed, which is much smaller than tech or human healthcare, this usually means acquisition by a large company. Lacuna Diagnostics, the digital cytology company I cofounded 7 years ago, was partially supported by several VCs and then acquired by HESKA, which in turn was bought by Antech.
Publicly-traded companies like IDEXX and Zoetis have their main incentives to increase their stock price and satisfy investors during quarterly earnings calls. IMO this incentivizes a lot of short-term thinking at the expense of long-term sustainability, though companies like IDEXX would probably argue it is the cost of ensuring a viable business of almost 40 years that has created a lot of genuine groundbreaking innovations that transformed vetmed.
In contrast, the Mars family owns a big portfolio, including VCA, Antech, Banfield, and BluePearl (my wife works for BP, which is also on my disclosure page (https://allscience.substack.com/p/conflict-of-interest-disclosure-and). I have very mixed feelings about some of their business practices, but I will say that they are in it for the long-haul. They don't have to worry about the stock market, and can follow long-term plans without dealing with a shareholder revolt. Unlike PE companies, they are not looking to flip these businesses for a quick buck. They do invest a lot of their money from their food ventures back into the vet side, and BP has recently been experimenting with strategic pricing initiatives that have cut prices in some markets where they found the costs were hurting caseload and compliance with estimates.
In some markets where VCA, BP, and Banfield owned too many clinics, the FTC has stepped in too force divestments and prevent monopolization. I think this is great and whole-heartedly support vigorous anti-trust. I was a big fan of Lina Khan and hate to see the current administration reversing course on a lot of these things.
One last thing I will say, not to throw older vets under the bus, but in some cases we are our own worst enemy: Vets approaching retirement often hold most of their net worth in their practice, the associated real estate, and equipment. Many express a desire to pass it on to a younger independent vet of the next generation. But when push comes to shove, corporate consolidators offer them way more money and they take the payday over preserving independence. You could argue that this is the fault of companies dangling an unreasonable amount of money, but they wouldn't have takers if private owners chose principle over $.
In a vacuum, every individual and business is making decisions that is in their own best interest. However, this can result in negative externalities and worse outcomes for multiple parties. This is why it's important to have vigorous regulations and government enforcement of them, which I whole-heartedly support.
I hope that explains more of my position
Fascinating. I'll read (and respond) more carefully this evening. My original point, I think, was that your essay didn't mention, or barely mentioned this consolidation and concentration of pricing power - I think. Or the vertical integration. Despite efficiencies and so on, none of it seems to help with costs for consumers. And any convenience seems to come at steep costs - my vet's "in house" mail order pharmacy has ridiculous pricing.
Veterinary medicine is just a decade or two behind human medicine with much if this, but the costs are borne much differently. Like small group medical practices, you wrote.
"Many express a desire to pass it on to a younger independent vet of the next generation. But when push comes to shove, corporate consolidators offer them way more money and they take the payday over preserving independence.. "
You left out that veterinary hospitals, like nursing homes, dental offices are being used as a money making venture by private equity funding. Perhaps if more private equity funded corporate hospitals became B-Corps, there would be a higher level of concern for the general veterinary patient/client. And don’t go blaming rising salaries. That is a mis-redirection
You raise fair points that venture capital, private equity, and corporate hospitals have different expectations for revenue and profit that can impact pricing. Human medical facilities owned by private equity have much higher costs and also a higher rate of medical issues (often due to cutting staff).
Further reading:
https://www.nytimes.com/2024/04/07/us/health-insurance-medical-bills-private-equity.html
https://www.nytimes.com/2023/12/26/upshot/hospitals-medical-errors.html
That said, there are relatively few true PE-backed veterinary practices compared to traditional corporate acquisition (which may be public or private) or independently owned, and independent clinics can exhibit the same pricing strategies.
I disagree that salaries don't have an impact. Labor is one of the largest cost centers in most businesses, and that's no exception in vetmed. DVMs are a high-skill profession that spend a decade in school for the same cost as physicians and dentists, and the pandemic saw huge attrition in some sectors and markets that necessitated rapidly rising pay to recruit and retain people. And veterinary technicians are chronically and severely underpaid, even as we try to rectify that pay gap.
I commented on your essay before reading through the existing comments.