HUNTSVILLE, Alabama — About a year ago, veterinarian Melissa Ezell started noticing subtle changes at the medium-sized animal clinic where she works in Huntsville, Alabama.
She said she and other veterans feel pressured by management to make a certain amount of money for each appointment. If pet owners don't spend enough, the message from management was to offer more services. She was prompted to squeeze in more patients outside of normal business hours.
“Before, I never felt pressured to make a certain amount of money a day,” Ezell, who started working at the clinic in 2021, told Stateline. “It was just, 'Fill your schedule, practice good medicine, and everything else will fall into place.'”
The clinic is owned by National Veterinary Associates, one of the nation's largest veterinary chains. In 2020, the company was acquired by JAB Consumer Partners, a global private equity firm based in Luxembourg. Ezell said he felt that by early 2023, the tone of the clinic had changed, with a focus on increasing profits.
Private equity's recent foray into the human medicine industry has sparked public outrage and accusations that companies are raising prices, cutting services and closing hospitals to maximize profits for shareholders. This has led to increased legislative scrutiny.
Now, some veterinarians and veterinarians are warning that private equity's entry into the pet health industry could have similar consequences.
Some states already have laws banning non-veterinarians from operating veterinary practices, and some consumer advocacy groups are calling on states to reconsider large-scale acquisitions in the industry.
“Many of these funds see veterinary medicine as a good source of revenue,” said Dr. Grant Jacobson, an Iowa veterinarian and director of the Association of Independent Veterinarians. He claims that corporate-owned chains in his area are jacking up prices for consumers, stifling market competition, and circumventing state laws that ostensibly prohibit non-veterinarians from operating veterinary practices. He said he had seen it.
Private equity firms such as Shore Capital Partners, KKR, TSG Consumer, and JAB Consumer Partners have spent billions of dollars over the past several years on veterinary practices, specialty animal hospitals, pet insurance services, and pet food companies. Ta. Private equity-owned companies include PetSmart, PetVet Care Centers, FIGO, Thrive Pet Healthcare, and ASPCA Pet Health Insurance.
Private equity firms say these investments are giving clinics and other health care providers the capital they need to buy better technology and improve efficiency. And corporate chains are often able to offer employees better workplace benefits, such as health insurance.
National Veterinary Associates said in a statement to Stateline that its corporate philosophy is “based on veterinarians making medical decisions, not corporate offices,” and that the veterinarian ownership share program is “It's the largest in the industry and unique among its peers.” ”
“Our vision is to build a community of hospitals that pet owners can trust, be easily accessible, and provide the best care possible,” National Veterinary Associates said in a statement.
JAB Consumer Partners did not respond to Stateline's request for comment.
More pets means more money
Private equity uses pooled investment funds from pension funds, endowments, and wealthy individuals to purchase controlling stakes in companies. Companies typically seek a quick return on investment before selling within a few years. They have preyed on small businesses in countless industries in recent years, from nursing homes to car washes.
As pet ownership surges during the COVID-19 pandemic, private equity has followed closely. The pandemic years of 2020-2022 “were peak years for private equity acquisitions of veterinary services and practices,” said Michael, senior health care coordinator at the Private Equity Stakeholder Project. Fenne said. Stock Ownership.
Americans spent a record $147 billion on pet products and services last year. From 2017 to 2022, private equity spent $45 billion on deals in the veterinary space, according to PitchBook, which tracks investment data.
The veterinary industry is attractive because it is mostly made up of small, mom-and-pop businesses that companies can acquire and integrate into larger chains. And it's primarily a cash-based business. Unlike human medicine, veterinary customers typically pay out of pocket rather than relying on third-party payers such as insurance companies.
In some cases, private equity firms and other companies purchase local clinics from the veterinarians who own them for 2, 5, or even 10 times their value. Companies then combine them to form larger clinic chains that can corner regional markets.
Jacobson, the Iowa veterinarian, said it's a strategy that could drive other independent owners out of business. He had worked at a privately owned clinic in Iowa for about 20 years and wanted to buy the clinic when his original founder retired.
But the founder sold the practice to a major veterinary chain owned by Mars Inc. (a privately held company best known for owning candy brands including M&Ms) for more than $1 million, more than his asking price. sold, Jacobson said. Although Mars is not a private equity firm, it is the largest consolidator of pet care companies in the United States, owning pet food companies, pet pharmacies, and chains of veterinary clinics such as Banfield Pet Hospital and Blue Pearl.
About a quarter of general veterinary practices and three-quarters of specialty practices, such as emergency medicine and surgery, are now owned by large corporations, said John Volk of the veterinary management consulting firm Bracke Consulting. ing.
Some private equity-backed chains, such as National Veterinary Associates, are acquiring local veterinary practices like Ezell's without rebranding them under the chain's name. As a result, the client may not be aware of the change in ownership.
“It may appear that you are receiving community-based care, when in fact there is a large set of incentives underlying it. [the clinic] It comes from private equity owners,” Fenne said.
Where veterinarians want to work
Lori Kogan, a professor of clinical science at Colorado State University's College of Veterinary Medicine and Biomedical Sciences, surveyed approximately 900 veterinarians in 2022 about their experiences and perceptions of corporate and private animal hospitals.
Although most veterinarians surveyed reported working in corporate-owned practices, Kogan said more than half said they would prefer to work in a privately-owned practice. There was found. Kogan told Stateline that benefits offered by corporate chains, such as health insurance, don't seem to be strong enough to override other preferences.
“It's really important for people to feel like they have a say in decision-making, to feel like they're recognized as individuals,” she says. “I think corporate ownership can accomplish these things, but you have to be careful about it.”
Ezell, a retired veterinarian from National Veterinary Associates, said this pressure is also affecting patients and their humans.
“They feel like they're being pushed or pushed for additional services that they're not sure they actually need,” Ezell says. “They feel like they don't have time to see a doctor and go home without fully understanding what was done to their pet or what the problem might be if their pet gets sick.”
National Veterinary Associates said in a statement to Stateline that the company has “continued to invest in technology and infrastructure, pioneering clinical research, industry-leading continuing education programs, and human services initiatives.”
Can countries intervene?
Last August, Thrive Pet Healthcare announced it would close its only 24-hour emergency veterinary clinic in the Rochester, New York metropolitan area. Thrive is a chain of more than 500 veterinary clinics and clinics based in Austin, Texas, and owned by private equity firm TSG Consumer.
“It's devastating to think that the only 24-hour pet emergency care center in the entire metropolitan area would close,” said Rachel Barnhart, a Democrat from Monroe County, New York, who has taken her dog to the clinic. It was scary,” he said. “We are a community of over 1 million people. The idea that we cannot support a 24-hour pet facility is outrageous.”
Barnhart wrote a letter to the Federal Trade Commission asking it to investigate Thrive, which operates more than a dozen clinics in Rochester. She said she had seen the FTC act against anti-competitive practices in the veterinary industry elsewhere, and she felt Thrive deserved similar scrutiny.
Thrive leadership said in a letter to Barnhart and in media reports that the shortage of ER veterinarians has made it impossible to hire enough workers to maintain the clinic 24 hours a day. But Barnhart suspected the company wanted to close the clinic because employees had recently voted to unionize. CEO Tad Stahel said in a letter to Barnhart that the closure was unrelated to employees unionizing.
In 2022, the FTC filed a lawsuit against JAB Consumer Partners, which recently acquired a series of veterinary and pet service companies. The FTC requires the company to sell portions of its veterinary clinics in California, Colorado, Texas, Virginia, and Washington, D.C., as a condition of approving its multibillion-dollar acquisition of two multistate animal health chains. I asked for it.
The group's Fenne said “it would be a good first step” toward consumer protection if state governments empowered regulators and agencies to review similar large-scale mergers and acquisitions in the veterinary industry. Stated.
Many states, including Iowa, Minnesota, New Jersey, New York and North Carolina, have already enacted laws prohibiting non-veterinarians from practicing veterinary medicine. The aim is to prevent veterinarians' medical decisions from being influenced by corporate profits.
Experts and advocates predict further corporatization of veterinary medicine as more companies acquire not just veterinary hospitals but other businesses across the pet care field.
In February, asset management giant Blackstone acquired Rover, the country's largest online platform offering services such as pet sitting and dog walking. Over the past two years, JAB has acquired several of the largest pet insurance companies in the United States and Europe.
Ezell, a veterinarian in Alabama, eventually decided to take a job at another private practice in town. She plans to leave there in a few weeks.
“Not all corporate medicine is terrible. There are great veterinarians and caring support staff everywhere,” she told Stateline.
“But it's easy to lose sight of your values. The reason we do this is because we want to make a difference in the lives of animals and people. Shouldn’t we?”
Stateline is part of States Newsroom, a national nonprofit news organization focused on state policy.
