Common Perceptions About Corporate-Owned Veterinary Practices:
An increasing number of general, and specialty & emergency hospitals in the U.S. are corporate-owned. Corporate hospitals are owned by a single entity and can operate 100s of locations in a particular region or throughout the country.
The following opinions often held by many people about the differences between privately-owned and corporate-owned veterinary practices are based on statements communicated on leading websites including veterinary practices, corporate consolidators, employee reviews, consumer reviews, press releases, and veterinary news websites.
ACQUISITIONS ARE NOT PUBLICIZED:
- It is hard to tell the difference between an independent, locally owned and operated hospital from a corporate veterinary practice. These acquisitions tend not to be publicized, and there are no obvious changes that would alert clients to new ownership. Atleast not right away. Over the last few years, the acquisitions of private-owned practices by large corporations has accelerated. It is estimated that 25% of all veterinary practices are now corporate-owned in the United States. Large hospital groups view the corporatization of a practice as a marketing liability and may purposely avoid corporate ownership identification which is most likely to create a FALSE IMPRESSION to pet owners that the practice is independently owned and locally operated.
- According to the CEO of Innovetive Petcare, a veterinary consolidator that owns and operates more than 75 animal hospitals, “a client of one of our practices might not even know that their veterinarian has joined a more extensive group…when they take their pet to the vet, the practice has the same name, and they still get the same great care from the vets and staff that they always have,” Mark Ziller said.
A first-of-its-kind study conducted by CARE for Pets™ VALIDATED the common perception of the lack of ownership transparency in corporate-owned veterinary practices.
- Corporate-owned hospitals are associated with providing impersonal care that embrace technologies and innovations that value speed, efficiency, and cost reduction.
- Conversely, many private-owned practices focus on long-term relationships with patients and clients.
“ONE-SIZE-FITS-ALL” APPROACH TO PATIENT CARE (LACK OF PERSONALIZED CARE):
- Corporations set medical protocols that veterinarians are required to follow. Pets may be treated according to a corporate template and or prescribed treatments that your pet may not need.
DOCTORS SPENDING LESS TIME WITH PATIENTS:
- Doctors are under pressure to see high numbers of patients. Corporate practices may book more appointments per hour compared to private-owned practices. As a result, doctors may have less time for discussions with clients, diagnosing an illness, and recommending treatments to their clients.
- The average number of patients a full-time veterinarian sees per day ranges from approximately 12 to 21 patients according to the AVMA. It’s not unusual for general practice doctor’s appointments to be scheduled at 15-minute intervals for high-volume practices.
WHEN CORPORATE CONSOLIDATORS BUY PRACTICES, PRICES INCREASE:
- Pet owners pay higher prices after doctors sell their practices to corporate consolidators. The rise in consumer prices enables consolidators to pay large premiums (OUTBID INDEPENDENT DOCTORS) to acquire veterinary practices, offer higher salaries and incentives to veterinarians such as COMMISSION-BASED PAY, offer larger signing bonuses (retention bonus to keep employees). The higher prices drive revenue and enhance the value of the veterinary practice (roll-up and resell to another veterinary consolidator in many cases for hundreds of millions of dollars) and increases its corporate profits.
- In human medicine, raising prices has been a common strategy after a private equity acquisition. A recent STUDY found that hospitals have increased their prices after being acquired by private equity firms.
- According to the 2022 AVMA Senior Survey from the American Veterinary Medical Association, New veterinarian graduates at corporate-owned practices or group consolidators had a mean starting salary of $124,686, compared with $105,637 at independent practices. Corporate practices provided a signing bonus in 81% of offers to new veterinarian graduates, at a mean of $27,181, while 42% of offers made by independent practices had a signing bonus, at a mean of $10,678.
- Should You Trust Private Equity to Take Care of Your Dog? | Freakonomics Radio | Episode 531 (1.18.23)
- According to a veterinarian who worked at an independent veterinary practice that was bought out by a private equity firm, “we saw three price increases in the span of a year and a half and when I talked to some of my other colleagues who work at other branches (locations) of the same company or other similar corporate companies — they’re experiencing the same thing.”
PRIORITIZE PROFITS OVER PATIENT CARE:
- A common criticism of corporate medicine is that BIG CORPORATIONS FOCUS TOO MUCH ON THE BOTTOM LINE. Many corporate-owned practices are owned by veterinary consolidators and are backed by private equity firms. These corporate entities aim for fast growth and increasing profit margins in order to maximize returns for their investors.
- According to a recent forbes.com interview with a former executive consultant to veterinary corporate groups (veterinarian), and is the CEO of a hospital group startup: Many corporate consolidators are limited by a 3-5 year investment horizon, they prioritize generating returns and often overlook the employee well-being or quality of patient care. Their approach is buying as many hospitals as quickly as possible and then reselling at a higher multiple.
THE QUALITY OF PATIENT CARE IS DIFFERENT:
- Independence leads to the best care.
- According to the owner of the first PetSmart Veterinary Services (PVS) Hospital: “Since I began practicing veterinary medicine, I have seen the difference in the care provided to pets and the happiness and fulfillment of the veterinarians themselves when they are in control of their own business. This independent ownership model empowers doctors to continue to do what they love while supporting their own career and personal development. It is a win-win for veterinarians across the country.”
- Hospital group offers shared ownership (minority stake) to veterinary business partners.
- “GoodVets believes local veterinarian ownership leads to IMPROVED experiences for pets, pet owners, and hospital teams.”
HIGH TURNOVER OF MANAGEMENT AND SUPPORT CENTER EMPLOYEES:
- Corporate consolidators can own 100s of veterinary hospitals across the country and their business model requires a Support Center which includes a LARGE INFRASTRUCTURE OF MANAGERS AND SUPPORT TEAMS. The Support Center is operated from a remote location and In many cases can be located in a different state. Its organizational structure includes MULTIPLE LAYERS OF MANAGEMENT which is very different from independent practices.
- In contrast, with independently owned veterinary practices, the veterinarian(s) that owns and operates the local practice, is in direct contact with all of its employees (Support Center doesn’t exist) and is actively involved in the decisions of the veterinary practice.
- High management turnover (including support team staff) can negatively impact veterinary workers throughout its network of animal hospitals and may exacerbate the industry SHORTAGE OF VETERINARIANS and technicians.
HIGH TURNOVER OF VETERINARIANS
- Many veterinary consolidators offer high RETENTION BONUSES (up to $250,000) to veterinarians which requires the employee to work at a practice for a specified period of time (commonly ranges from 18 months to 3 years).
- Do You Know Who Owns Your Vet? | Freakonomics Radio | Episode 532 (1.25.23)
“Veterinary practice that was bought by a private equity firm had a huge staff turnover so out of say 16 to 20 doctors they maybe have 5 of the original bunch that was over a period of about 12 to 18 months.”
- Do You Know Who Owns Your Vet? | Freakonomics Radio | Episode 532 (1.25.23)
DISCOUNTED RATES ON VETERINARY PRODUCTS:
- Corporations make bulk purchases (purchasing of goods in large quantities) on behalf of the many practices they own and may receive volume discounts. In some cases, these cost savings are passed down to their customers. Corporate-owned practices may offer cheaper prices on some veterinary products.
Why Choose a Locally Owned Veterinary Clinic?
- “For veterinarians, the benefit of working in a privately owned practice rather than a corporate owned practice is that the doctors have the freedom to choose the best medicine for each patient. Our doctors are not under pressure from the corporate suits to see high numbers of patients or give large numbers of vaccines that do not necessarily fit the pet’s lifestyle.”
Are Veterinary Consolidators and Hospital Groups Helping or Hurting Veterinary Medicine?
- Many corporate consolidators are owned and or controlled by private equity firms (majority led by non-veterinarians) which aim for fast growth, an increase in profit margins and often repackage and resell acquired animal hospitals at a profit to another firm in 5 to 7 years.
WHY LOCAL MATTERS: Interview with Dr. Bonnie Bragdon of the IVPA (1.20.22)
- CARE for Pets,™ conducts an exclusive interview with the President of the Independent Veterinary Practitioners Association (IVPA) about the value of independently owned & locally operated animal hospitals to pet owners.