Veterinary Medicine, Incorporated

Photo Credit: Flicker CC, sagesolar, upwardTwo giant corporate players have been making veterinary headlines as of late.  Mars, Incorporated, the candy maker (M&M’s, Snickers, Twix, etc.), pet food manufacturer (Royal Canin, Pedigree, Iams, Whiskas, etc.), and owner of Banfield Pet Hospital with its more than 900 locations has plans to acquire VCA Antech and its almost 800 veterinary hospitals. The purchase price is said to be $9.1 billion. Pending approval of federal regulators, this mega-deal is set to close before the end of 2017.

Corporatization of veterinary medicine is nothing new. It’s been going on for decades. The more recent trend is the consolidation of veterinary corporations. To date, the Mars-VCA deal is the largest such transaction on record.

Another relatively new trend is the consolidation of independent veterinary practices. The first large-scale merger happened in 2010 when 17 facilities joined together to create Companion Animal Practices, North America. This company grew to 56 locations before being acquired by VCA Antech. Mixed Animal Veterinary Associates North America (MAVANA) has been another successful merger in which 21 mixed animal and equine veterinary practices spread across 10 states joined forces. Dr. Scott Spaulding, founder of MAVANA stated,

It seemed to me there was an opportunity to put together some practices to develop a corporate structure to pull a lot of the business administration part out of the practice at the local level and put it at the corporate level. By pooling our resources, we can hire experts in those fields, and that’s what we’re in the process of doing right now with MAVANA.

The good

While it’s tempting to view large veterinary conglomerations and corporations as a Darth Vader character in a James Herriot story, they do have a bright side. Reinvestment of profits gleaned from improved business practices and economies of scale (a proportionate savings in costs created by an increased level of production) can provide bigger and better state of the art veterinary facilities and technology. This translates into improved diagnostic and treatment options.

Additionally, large veterinary corporations have the ability to gather data from their literally millions of patients and turn this information into meaningful research that can benefit animals wherever they receive veterinary care.

Lastly, without corporate buyout options, most veterinarians who own really large veterinary hospitals would not be able to come up with a financially feasible exit strategy for themselves. Few veterinarians have the capital required to make a multi-million dollar purchase.

The bad

Although an estimated 85-90 percent of veterinary clinics and hospitals within the United States remain independently owned, in some regions of the country, corporations own a disproportionately high percentage of veterinary facilities. For example, the San Francisco bay area supports a large number of veterinary specialty practices. VCA Antech (soon to be Mars) owns all but a couple of them. Such monopolies take choice out of the hands of the consumer.

VCA is a publicly traded company, meaning its business metrics and acquisition activities have been public knowledge. Such information can be useful in terms of the business of running a veterinary hospital. For example, private veterinary practice owners might derive reassurance that their financial “slow season” seems to match up with VCA’s “slow season.” All such public information will go underground once VCA’s approximately 800 hospitals are acquired by Mars.

The ugly

Having nonveterinarians call the shots can be worrisome in terms of the best interest of the patients. Banfield Pet Hospital and VCA have both been criticized for tying the hands of their veterinarians, requiring that they follow strict medical protocols rather than making decisions based on the needs of individual patients and clients. In fact, a recent Bloomberg Businessweek article featured a veterinarian accusing Banfield of pushing its employees to prioritize profit over the health and safety of the animals they are treating.

Reactions within the profession

Reactions to the Mars-VCA merger from those involved in the veterinary profession have been mixed. Dr. Eileen Jefferson is the owner of Ethical Veterinary, a mobile practice in Stone Ridge, New York. She is concerned that,

Veterinary medicine stands to be reduced to the financial interest of shareholders in a candy company, and at the expense of veterinarian-owned hospitals. Using a fast-paced, cookie-cutter retail model has the potential to undermine the science and ethics central to traditional veterinary practice. More than ever, animals are regarded as family members. As a veterinary practice owner, I see that clients are increasingly interested in time spent with the veterinarian, thoughtful education, continuity of care, and patient-tailored medical decisions. The trend toward corporate veterinary practice doesn’t seem to to match what clients are actively seeking for their animals.

MAVANA founder, Dr. Scott Spaulding, views the VCA-Mars merger as potentially positive for the veterinary profession. Based on his experience as a practice management consultant and member of the AVMA Veterinary Economics Strategy Committee, he recognizes that one of the largest financial hurdles most practices deal with is the lack of capital. Pertaining to the the acquisition of VCA, Dr. Spaulding stated,

It’s a capital-intensive business. We have to have facilities and a large enough staff. We also invest heavily in surgical facilities and the latest diagnostic technologies. With $9.1 billion coming into the veterinary industry, I think that is definitely needed by veterinary medicine and that it will have a tremendous long-term impact.

In response to the VCA-Mars transaction, the American Veterinary Medical Association (AVMA) issued forth the following uber-politically correct statement:

We support every veterinarian engaged in veterinary medicine, no matter where they practice. In addition, regardless of practice ownership, the interests of the patient, client, and public require that all decisions that affect diagnosis and treatment of patients are made by veterinarians in the context of a veterinarian-client-patient-relationship, and veterinarians must have the authority to exercise professional judgment in making clinical decisions.

How do you weigh in on this topic?

Best wishes,

Nancy Kay, DVM

Diplomate, American College of Veterinary Internal Medicine
Author of Speaking for Spot: Be the Advocate Your Dog Needs to Live a Happy, Healthy, Longer Life
Author of Your Dog’s Best Health: A Dozen Reasonable Things to Expect From Your Vet
Recipient, Leo K. Bustad Companion Animal Veterinarian of the Year Award
Recipient, American Animal Hospital Association Animal Welfare and Humane Ethics Award
Recipient, Dog Writers Association of America Award for Best Blog
Recipient, Eukanuba Canine Health Award
Recipient, AKC Club Publication Excellence Award
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Please visit http://www.speakingforspot.com to read excerpts from Speaking for Spot and Your Dog’s Best Health.   There you will also find “Advocacy Aids”- helpful health forms you can download and use for your own dog, and a collection of published articles on advocating for your pet’s health. Speaking for Spot and Your Dog’s Best Health are available at http://www.speakingforspot.com, Amazon.com, local bookstores, and your favorite online book seller.

 

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