Private Equity is buying up veterinary clinics and pet hospitals: a "Future-Proof Enterprise"

[Auggie]

Entrepreneur.com / January 27, 2021

A satisfactory return for private equity firms is 3x over three-to-five years. Veterinary consolidators easily exceed this figure, often generating a 4-5x return. It’s a profitable business — people care about their pets more than they care about their own health. According to a New York Times article, while utilization of human healthcare services dropped by an estimated $15 billion during the pandemic, animal hospitals reported increases in their volume and revenue.

As private capital continues fueling veterinary consolidation and enterprises are urged to start generating as much profit as quickly as possible, it’s time to discover ways of creating value post-acquisition. For starters, here are four questions to consider.

How do we integrate and operate practices to get the highest ROI? The veterinary healthcare market in the US is fragmented, remaining an attractive playground for corporate chains and their investors. In America, more than $31 billion of the $38 billion vet market is privately owned.

As corporatization continues, 25 percent of veterinary practices are expected to be consolidated by 2023 and will represent 50 percent of veterinary visits. Even the COVID-19 pandemic hasn’t discouraged acquisitions and we have seen some major deals in 2020, such as Berkshire Partners acquisition of VetStrategy for over $1.4 billion.

https://www.entrepreneur.com/article/362267

Sister thread to earlier post: https://www.democraticunderground.com/100215905879

Why is there a shortage of care? Why are animals dying? Why are veterinarians and veterinarian nurses turning suicidal?

Five will get you ten private equity is behind it all. It's about return on investment.

[hlthe2b]

1. I know they have rapidly driven private clinic owners out of business in areas across the US.

Their predatory practices in smaller communities have led to suicides. Some of them get reported in the news, but most don't.

The average pet owner is not served by this "profit at all cost" consolidation. These corporations are not unlike those buying up medical clinics and trying to drive physicians/veterinarians to practice "PROFIT" medicine rather than focused "standard of care" medicine.

[Auggie]

4. One possible benefit but it's unlikely to happen IMO ...

consolidated practices could lead to shared lab equipment and advanced devices that smaller clinics can't afford. But that's provided you find a private equity firm with scruples to actually provide something like, say, adequate and moral health care. Maybe they do/will, but at a much steeper price. Shit, next they'll start buying up pet food and medicinal suppliers and push their brands over others.

[Klaralven]

10. Mars is big in both Vet services and pet foods.

Banfield Pet Hospital (owned by Mars Inc.; 1,050 hospitals)
VCA Animal Hospitals (owned by Mars Inc.; more than 925 hospitals)
BluePearl Specialty and Emergency Pet Hospitals (owned by Mars Inc.; 75 hospitals)

https://www.dvm360.com/view/state-veterinary-corporatization

Mars owns Eukanuba, IAMS, Pedigree, Royal Canin, Whiskas and a variety of other brands

https://en.wikipedia.org/wiki/Mars,_Incorporated#Products_for_pet_consumption

Mars, although a corporation, is privately held and still controlled by the Mars family. 6th largest privately held corporation in the US.

JAB Holdings, which bought National Veterinary Associates is controlled by the German Reiman family.

[SharonClark]

11. We have a Blue Pearl and a locally

owned and run emergency clinic. I won’t take my dogs to a vet clinic that has the name of an Asian nail salon.

[Auggie]

15. Thanks for sharing. Very interesting.

[Johnny2X2X]

2. Financing

We went to a place with an oncologist for our dog, she needed chemo, they offered financing, but we had the cash, but I looked into the financing briefly and it was an outrageous interest rate for me and I have very good credit. They were talking about a 29.99% interest rate.

This is a national chain, but offer really good care for cancer. The financing was outrageous and I know they prey on people who want the best for the furry family members.

[Auggie]

6. From the OP: a 4-5x return over three years. Guess financing is one way.

Thanks for sharing

[alphafemale]

3. Everyone decries the practices of Banfield in this area.

They are greed driven.

I love my local vet hospital.

Great vets and techs.

[MissB]

5. It has become more difficult to find an independent vet

I’ve remained with one for about 5 years. The previous one was also independent but they built a huge new facility and increased their prices substantially. Our current vet moved into their old smaller space.

Before that, the vet clinic we used was bought out by a large chain. The pressure for additional testing was getting ridiculous, and I’m not opposed to additional testing.

If the current vet sells out, our animals will suffer. I’ll switch to a farm model of giving our own animals their shots from the feed store and utilizing a chain’s low cost service for the required rabies vaccine (can only be administered by a vet.) But they’d lose their annual checkup and I’m not ok with that at this point.

[SharonClark]

12. How many animals do you have?

[MissB]

13. More than

need to go to a vet. I raise chickens for eggs; they never see a vet.

So it’s just the two dogs and a cat.

[Klaralven]

7. A vet who worked for a private practice moved to a practice that was bought by a corporate

She makes more money, schedules are better and more flexible at the bigger corporate practice, vets have more techs and aides supporting them, and the practice has better and more equipment.

[Auggie]

9. I mentioned up thread the possibility of some positives

Glad to hear it worked out for this vet.

[spooky3]

8. I'm sure you're right that it's a big factor, but

The statistics on suicide, etc., predate these takeovers. One of our favorite vets sold his practice and retired in his 50s because he said it was just too stressful to continue.

Pay is low, compared to the skills and responsibilities vets and vet techs have. You can usually guess pay is low when women are the majority of occupations, sadly, because research shows that as the proportion of women increases, pay declines.

During the pandemic lots of people adopted pets, and they of course pushed up demand for services. Vet clinics had to limit the number of appointments to ensure social distancing, etc.

[Patton French]

14. This happened to our vet

The prices skyrocketed as a result. We switched to a vet outside of town and get much better prices and much better care.