When I was in high school l had the great opportunity to work for my town’s local veterinarian. I cleaned cages, cared for the hospitalized animals, and assisted the veterinarian when he needed an extra pair of hands. It was a great learning experience and introduction to the field of veterinary medicine.
I learned a lot about what it meant to be a veterinarian and chose not to pursue a career in veterinary medicine because I knew I would have great difficulty seeing patients whose owners were unable or unwilling to provide the treatment their pets needed. I saw myself either giving away my services and medications for free so the animal would receive the treatment it needed (which would result in my bankruptcy as a private business owner, or termination if I worked for another veterinarian) or becoming angry and dissatisfied with my career choice. Thankfully the field of animal welfare was there to provide me with a rewarding and fulfilling career helping animals in other ways, and I have maintained my deep respect and admiration for veterinarians and the important roles they play in the lives of our pets and our families.
Interestingly, in recent years a significant shift has been occurring in the veterinary industry. Private equity (PE) firms have increasingly been buying veterinary hospitals across the country, transforming the landscape of pet care. This trend has sparked a debate among veterinarians, pet owners, and industry experts alike. What does this mean for the quality of care, the veterinarians, and the future of the industry?
Understanding Private Equity and Its Interest in Veterinary Hospitals
Private equity firms are investment management companies that pool capital from high-net-worth individuals, pension funds, and other sources to acquire ownership stakes in businesses. Their primary goal is to increase the value of these businesses over a few years and eventually sell them for a profit.
Veterinary hospitals have become attractive targets for PE firms for several reasons:
Stable Revenue: Pet ownership has been steadily rising, with more people considering pets as family members. This trend has led to a consistent demand for veterinary services, ensuring stable and predictable revenue streams.
Fragmented Market: The veterinary industry is highly fragmented, with many independent practices. This presents an opportunity for PE firms to consolidate these practices under one umbrella, achieving economies of scale and operational efficiencies.
Growth Potential: The industry is ripe for modernization and technological upgrades, which can enhance profitability. PE firms see an opportunity to invest in new technologies, streamline operations, and introduce best practices across the board.
The Impact on Veterinary Practices
The influx of private equity into veterinary hospitals has both positive and negative implications.
Advantages:
Access to Capital: Independent veterinary practices often struggle to invest in new equipment, technology, or expansion due to limited financial resources. With the backing of a PE firm, these practices gain access to capital that can be used to improve facilities, expand services, and enhance patient care.
Operational Efficiency: PE firms bring business expertise and can implement operational efficiencies that independent practices may lack. This can lead to better resource management, improved scheduling, and optimized supply chains, ultimately improving the bottom line.
Standardized Care: As PE firms acquire multiple practices, they often work to standardize care protocols across their network. This can lead to more consistent and high-quality care for patients, regardless of which practice they visit.
Disadvantages:
Profit-Driven Focus: The primary goal of private equity is to generate returns for investors, which can sometimes lead to a focus on profitability over patient care. Veterinarians may face pressure to increase the number of patients seen per day, cut costs, or push for more expensive treatments, which can impact the quality of care.
Loss of Autonomy: Veterinarians who sell their practices to PE firms may lose some control over how their practice is run. Decisions may now be made by executives who are not veterinarians and may not fully understand the nuances of animal care.
Cultural Changes: The corporate nature of PE-backed practices can lead to changes in workplace culture, potentially causing dissatisfaction among staff who are used to a more personalized, independent environment.
What Does This Mean for Pet Parents?
For pet parents, the rise of PE-owned veterinary hospitals can have both benefits and drawbacks.
Pros:
Improved Access to Services: With increased investment, practices may offer a wider range of services, better technology, and more convenient locations.
Consistency of Care: Standardized care protocols can ensure that pets receive the same high-quality care regardless of where they are treated within a network.
Cons:
Cost Increases: The push for profitability may lead to higher costs for services, as PE firms seek to maximize returns.
Potential for Over-Treatment: Some pet owners worry that the focus on profits might result in recommendations for unnecessary procedures or treatments.
How do Find Out if Your Veterinary hospital is Owned by a Private Equity Firm:
Ask the Hospital Directly: The simplest approach is to ask the hospital’s staff or management if they are privately owned or if they are part of a larger corporate group, including any affiliations with private equity firms.
Check the Hospital’s Website: Some veterinary hospitals disclose their ownership on their websites. Look for information in the “About Us” section or any pages that mention the hospital’s history or affiliations.
Search Online: Use search engines to look up the name of the hospital along with terms like “private equity,” “acquisition,” or “ownership.” This can help you find news articles or press releases about the hospital’s ownership.
Look for Common Veterinary Corporate Owners: Many veterinary hospitals are owned by large corporate groups that are funded by private equity firms. Common corporate owners in the veterinary field include Mars Veterinary Health (Banfield, VCA), National Veterinary Associates (NVA), VetCor, and others. Check if your hospital is listed under any of these groups.
Use Business Databases: If you have access to business databases like Bloomberg, PitchBook, or Crunchbase, you can search for the veterinary hospital or the company that owns it to see if there’s any information about private equity ownership.
Check Regulatory Filings: In some cases, ownership details might be available through state or local business registries, where the veterinary hospital is required to file ownership information. These filings might be accessible online depending on your location.
Consult News and Industry Reports: Veterinary industry publications, news outlets, and reports often cover mergers and acquisitions, including those involving private equity firms. Searching these sources may provide insights into who owns the hospital.
The Future of Veterinary Medicine
As private equity continues to pour into the veterinary industry, the sector is likely to undergo further consolidation and transformation. While there are clear benefits to increased investment and operational efficiencies, there are also valid concerns about the potential impact on care quality and the profession’s integrity.
Veterinarians, pet owners, and industry stakeholders must navigate this new landscape thoughtfully, ensuring that the drive for profit does not overshadow the fundamental mission of veterinary medicine: providing compassionate, high-quality care to animals.
The continued dialogue between these parties will be crucial in shaping a future where the benefits of private equity investment are harnessed without compromising the values that have long defined the veterinary profession.
Marcia Mayeda
You can subscribe to Marcia’s blog here: https://animalcare.lacounty.gov/directors_blog/The Los Angeles County Animal Care Foundation is a nonprofit 501(c)3 charity that raises money to support DACC in its mission of saving animals and keeping pets and families together. Learn more at www.lacountyanimals.org.
