Veterinary Corporations

Hi everyone and thanks for joining me on this episode of Val Talk’s Pets.  On this episode I want to explore something that has been happening in the veterinary world that to be honest, I’m not too sure about.  I don’t know about you, but when it comes to veterinary care for my pets, I want to be able to see the vet that I have established a relationship with and the one that I know isn’t recommending unnecessary tests or procedures or is basically upselling me.  Sounds reasonable?  Well of late, many vet clinics have sold to veterinary corporations.  

So what exactly is a veterinary corporation?  There is an amazing paper posted by mvma.ca, which is the Manitoba Veterinary Medical Association.    It is written by Robert Dawson, Barrister and Solicitor (Dawson Law Chambers, Winnipeg).  I love this article!  It couldn’t be clearer and answer the questions I certainly have with regards to veterinary corporations.  So I will paraphrase Mr. Dawson’s work but I highly recommend accessing the full paper.  What I found interesting is that before 2017, veterinarian corporations were illegal.  But, now as long as the clinic adheres to what is considered strict requirements, a vet may practice through a veterinary corporation.  In a nutshell, usually a vet will render services to a pet owner and the owner will pay the vet or vet clinic for those services.  This can result in some rather challenging tax responsibilities on the part of the vet or clinic.  If the vet or clinic is owned by a veterinary corporation, the tax responsibility takes a different path.  Instead of the vet being directly in the path with the owner, the corporation is the provider.  The corporation then has the agreement with the vet.  So, think of the corporation as the middle man.  The pet owner will pay at reception.  That payment is actually going to the corporation.  Now the corporation will pay the vet.  In so doing, the vet now has some wiggle room with regards to income tax liability.  

Now, not everyone can set up a veterinary corporation.  There are very strict rules about who can set up the corporation and the adherence to very clear and strict compliance rules.  Okay, that sounds good.  So, we can see the lure for some vets to be able to ease some of the tax burden by selling to a corporation and allowing their practice to be essentially run by the corporation.  A veterinarian may wonder what the benefit is however, over and above the tax issues.  I have had a look at the Independent Veterinary Practitioners Association website to see what it could tell me if I were a vet wondering about this whole thing.  They did a great job of setting out the pros and cons which was exactly what I was looking for. 

The pros as set out by iveterinarians.org are as follows:

“Corporate clinics are great for veterinarians who want to have predictable hours and manageable workloads.

The best veterinary corporate consolidators also offer benefits such as health insurance, paid vacation time, retirement packages and sick days.

At corporate veterinary hospitals, you’ll often have a mentor or two to help you navigate the daily challenges of maintaining relationships with clients, achieving goals in their practice and learning about different types of pet care.”

The cons as set out are as follows:

“If cost-cutting becomes necessary, you could be looking for employment much sooner than if you owned a clinic.

Consolidate veterinary clinics may not be as responsive to your thoughts and opinions about different veterinary care topics.

Veterinarians in corporate hospitals need to strive for company policy 100% of the time, as a tiny slip can cost you your job.  This can lead to unneeded stress.”

Private Clinic Ownership Pros

So let’s be fair here and go over the pros and cons of private clinic ownership.  Iveterinarians.org sets out the pros as follows:

“You’ll have complete control of your clinic, from deciding who you hire down to setting your hours.

As a private veterinarian, you set your fees and office hours.  Meaning you have complete control of how much money your clinic produces.

As a private veterinary clinic, you are in charge.  You make all the decisions for your business and can be proud that it was your idea.

You’ll get satisfaction knowing that your clinic is flourishing because of the hard work you put into building it.”

Private Clinic Ownership Cons

The cons as set out are as follows:

“Starting your veterinary practice can be expensive.  You’ll need to purchase or lease a building, pay for equipment and furnishings and market your services to attract clients.

You’ll be in charge of paying veterinary technicians, veterinary nurses and others who work with you.

When the practice is doing well there is regular income for the owner and when going through tough times, the practice owner typically reduces their earnings.”

Additional Commentary

Bash Halow, LVT CVPM

Hmmm.  Very interesting to say the least.  Let’s look at a few other opinions from dvm360.com.  Bash Halow, LVT CVPM states with regards to corporate ownership of a veterinary practice, “In general, corporate ownership forces private practices to step up their game, bring more structure to their businesses, learn to lead more effectively and reach for novel business models and decisions.  Consolidation in general means that larger groups can trim expenses, lean down their administration costs and provide team members access to high-quality continuing education and other benefits.  In general, consolidated practices can be more competitive in many, many ways.  But consolidation also has a down side.  Larger organizations may not be as agile in responding to market changes, allowing smaller, leaner organizations a chance to jump on opportunities more swiftly.  Corporations also have a more difficult time humanizing their presence on social media, an effective pipeline to clients that private practices can easily and affordably leverage to their benefit.”

Greg Nutt, DVM

Greg Nutt, DVM states, “I think it’s probably a good thing on an individual basis.  There will probably be better managed practices that will afford employees better schedules, pay and/or benefits than a more poorly run independent hospital.  It will be good for practice owners getting ready for retirement, as the corporations are paying a premium on practices.  In the long run, though, I worry that it may not be in the best interest of the veterinary profession to be mostly owned by corporations-corporations that are primarily about business.  Yes, the business of veterinary medicine will likely improve via efficiency and economy of scale, but at the loss of the small, local, community practice.”

Other Comments

Other comments include the ability for new vets to practice and earn a salary as opposed to drowning in education debt and then trying to float a new practice.  Also, having a corporation ownership may allow for the purchase of higher cost equipment that would not otherwise be a possibility.  One vet mentioned that although benefits were available their voice was not heard nor cared for and hence they left that practice.  

John Volk senior analyst

I also had a look at Today’sVeterinaryBusiness.com.  This site offers vets articles, resources etc. and also looks at the pros and cons of corporate ownership.  In an article on this topic, John Volk was consulted.  Mr. Volk is a senior analyst with Brakke Consulting in Chicago.  As Mr. Volk points out, there are some pretty good offers out there for vets to sell their practices as he says, “thanks to years of bidding up the market.”  He says there are definitely advantages to receiving employee benefits and human resource benefits.  And “certainly for younger veterinarians coming along, there’s opportunity for a career path beyond working at an individual practice location.”  Mr. Volk also talks about the drawbacks.  He states, “Practice owners who sell to corporations no longer make decisions about the business, such as hiring or how medicine is practiced. The name of the practice may also change.  Initially, this can be a tough transition, especially for those sellers who continue working in the practice.” 

He also states, “The corporate beast has to be fed, so profits may or may not go back into the hospital.  However, a recent trend has been creative ownership agreements where for example, a corporation might buy 55% and let the seller retain 45% ownership, or they might give associates an opportunity to own shares.  We used to not see what Volk says.  It was a 100% buyout or nothing.”  In addition Volk points out, “Practices that join corporations may find themselves giving up some of their role in the community.  The new corporate owner may not want to sponsor softball teams or Scout troops.  Those decisions are going to be made elsewhere.”  Plus, “In an independent practice, a receptionist who has an idea may have one or two steps to reach the owner’s ear.  In a corporate-owned practice, this chain of command is much longer, making it more of a challenge to consider suggestions, enact changes or get questions answered.”

VetStrategy

So, it is obvious that this topic has quite a lot on both sides of the coin.  But, I can’t help thinking that a corporation’s basic mandate is to make money.  As John Volk said, “The corporate beast has to be fed.”  One of the corporations that has acquired three clinics in my area is VetStrategy.  According to canadianlawyermag.com, “Boston-based Berkshire Partners, acquired a 70 percent majority interest in VetStrategy from Imperial Capital, in a deal valued at more than $1 billion.  “Kobi Bessin of Torkin Manes LLP, the lead lawyer for the team advising VetStrategy, says the rising interest in pet ownership because of the pandemic wasn’t a big factor in the price Berkshire ultimately paid.  However, in recent years, pet ownership growth feeds into the notion that veterinary clinics are an essential healthcare service with a bright future.”  In Toronto, many clinics are now owned by VCA Animal Hospitals.  VCA reaches the U.S. Canada and Japan and has at last count 925 hospitals and 4500 veterinarians.  Interesting though is VCA Animals Hospitals is actually owned by Mars Inc.  Yes, that Mars.  The Mars family based out of Virginia has a huge capture in the pet industry.  Their acquisition recently of Royal Canin originally a Canadian company and Champion pet food known to most as Acana and Orijen also originally a Canadian company, shows the proliferation of this company.  The ownership of VCA Animal Hospitals again shows this extensive reach into the pet industry.  

Pet Parent Experience

Now that we’ve looked at the pros and cons and what is behind veterinary corporations, what is actually happening at the grassroots level?  What I mean here is, what does this mean for you and mean when we go to the vet?  The last clinic that was acquired in my area was one that had a long tenured vet that obviously wanted to retire and clients found the clinic’s prices to be fairly reasonable and some pet parents had been clients at this particular clinic for years.  But, I started hearing people telling me that they had an upsetting experience at the vet clinic where they had always gone and of course I wondered what had happened.  One pet parent said they have a cat with an irritable bowel and they have been on medication for quite some time.  The owner said they have always just called the clinic when they needed a refill and went over to pick it up.  What happened was, she called the clinic like usual to say she needed a refill and would be over to pick it up and was informed that she would no longer receive refills unless the cat came in for blood work and an exam, every time.  Of course you can imagine her response after hearing that.  “What!?? Since when??”  Well that’s our new policy, she was informed.  I told her I think I may know why that is.  The clinic had been sold to VetStrategy about a month before her call.  The question begs here, does this cat really need to go in each and every time it needs a refill on its prescription or is this just a way to “feed the beast”?  The pet parent was gobsmacked to hear this from the clinic reception and just as perturbed to learn about the sale because the whole thing felt like being fleeced.  Basically I have been hearing about several odd encounters with pet parents and the clinic they had always gone to and this is what provoked me to have a look into what was going on.  Originally I thought maybe there had been a staff turnover or something, but then I found this acquisition issue with these particular clinics.  And here is how I got really twigged to this whole thing going on. 

There was an organization that was running a charity event and one of the recipients of the fundraising was pet related.  The volunteers were contacting pet stores and vets to see about sponsorship or at the very least if they could put up a flyer about their event.  They contacted a particular clinic and were told they would have to speak to the manager.  All they wanted was to put up a flyer.  Well, apparently they got lambasted by the manager for having the nerve to ask such a thing and the two volunteers were embarrassed by this encounter and more than upset by how they were treated just for asking to put up a flyer for a charity event that had proceeds going to animals in need.  It turns out, this is the manager for all the clinics who was put into this position by VetStrategy.  This was one of the major cons that was pointed out in the papers and articles I read.  If you are owned by a corporation, you do not have hiring capabilities. Plus as pointed out a corporate clinic can be removed from the community.  And the worst part is, this encounter is not the only one I have been made privy to. 

Without knowing anything about the change in ownership of their clinic, some pet parents have told me that the prices have shot up, they cannot see their regular vet, or their regular vet is no longer at the clinic and the whole experience and atmosphere is not what they originally enjoyed with their clinic.  For that reason, I’m often asked who I would recommend for a vet because the pet parent wants to change clinics.  I can definitely say I have heard some crazy prices for some vet care.  A woman I spoke with who in my book is a puppy hero, especially her husband, who upon hearing about an 8 month old lab being kept in a garage all day and during the night because the guy who bought him said, that with the kids, and work and going to the gym, he didn’t have time for the dog, said, where is this dog, I’ll take him.  So, they were looking into getting him neutered and the cheapest cost they got from vet clinics near to them was $1200.00.  Can you imagine?  That’s ridiculous for a neuter.  I asked who she called and guess what?  It was the three clinics owned by guess who?  Now here is a responsible person who has taken this beautiful lab and is going to give him his best life and now they have found that a simple neuter is going to cost them tons of money.  I would say, hey privately owned clinics, this is your opportunity.  There are a lot of disgruntled pet parents out there that would love to come to your clinic if your prices are reasonable and the care and experience is genuine.  If I were a vet, I’d be all over that.  To get into the spay/neuter clinics run by the OSPCA there is up to a 4 month wait list.  I say, match the OSPCA clinic rate, dedicate a couple of weekends to doing nothing but spay/neuters and before you know it, you’ve got new clients, money in your pocket and the peace of mind knowing that providing the service for the benefit of animals was probably the reason you got into veterinary medicine in the first place.  

So where do we land with this issue?  Well, so far, my grassroots experience is not looking good.  I have been privy to some rather unfortunate experiences that some pet parents have encountered making it not looking good for the corporate owned clinics.  It would be awesome to hear about some new state of the art equipment coming in or extended hours or the addition of emergency care, or a reduction in rates, but so far that is far from the reality.  And in some cases, there are pet parents that haven’t noticed a thing.  I did speak to someone in the vet field and the opinion was that this whole corporate acquisition thing does really raise some serious questions.  I agree.  For me, I just can’t see a corporation in charge of a clinic not expecting a quota from the vets or mandatory upselling or having a vet having to answer to their practice choices.  Can’t you just see the management team going over the week’s appointments and pulling the vet in to answer for why they didn’t say this pet needs this blood work or this procedure as opposed to what the vet did, which was saying they didn’t really see how this could be that beneficial?  It comes down to relying on the veterinarian’s integrity and how strong they are against being coerced or dare I say, bullied into doing something that is against their own ethical convictions.  I would be so upset if I couldn’t see the vet that I always see.  He is the one that knows my animal’s history and how I go about things.  He knows I always choose the least invasive choice first and go from there.  Yes, he gives me all the options but he knows there is no point trying to recommend something that sounds a bit over the top.  Not only would his own integrity stop him from doing that but he knows I’ll just go out and research everything!  I would just hate to have to go over my pet’s history with a new vet every time I walked in the door.  Forget that! 

It is so disconcerting to think that, that vet clinic around the corner, or the one out in the country or the one in your smaller town, could easily in a few years be nowhere near the quaint clinic you have always gone to because it has been gobbled up by a large corporation.  This isn’t to say that the vet who sold the clinic was coerced or threatened into selling.  Obviously the vet who sold did so for their own reasons.  But, I have looked at some of these corporations websites meant for veterinarians and boy do they make it seem like a dream to sell to them.  They sound like a car rental company touting how they let you just concentrate on doing what you love, treating animals, leaving the business side to them, easy peasy.  Is it?  What if you get some witch of a manager alienating your long time clients?  It’s not like you can do anything about it.  Perhaps, these agreements should have some kind of clause that allows the seller if they are still working in the clinic to have some say in staffing for example, especially if they have to work with them.  All I can say is if you are a vet thinking about selling your clinic, get a good lawyer.  As for pet parents, if something seems different about your clinic, there may be a reason.  I would suggest asking some questions about corporate ownership.  If that doesn’t sit well with you, then have a look around for a different vet that isn’t corporately owned.  For me I prefer to support the vet that works in his or her own clinic, who is invested in giving the best care because it’s their business.  The last thing I personally want to do is put money into the pockets of a large corporation that frankly probably doesn’t need any more of our hard earned cash.  Just saying.  That’s me.  So, in this case it may be super important to you as a pet parent to do some sleuthing and research because as I say, knowing is caring.  

All pictures obtained from Canva

Tagged as: Veterinary Corporations,  Private Clinic Ownership,  Mars Inc,  VetStrategy.