Vet clinics became very popular private equity targets recently.
One of the people I know in PE described their profit margins as being surprisingly high even before PE roll-ups. They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic. There was a secondary rush where people were trying to acquire vet clinics in anticipation of flipping them to PE roll-ups later.
My local vet seems to have gone down this slide. A long time ago it felt like a staff that really just cared about animals and had good prices. On my last visit it felt like I was bombarded with practiced pitches for different products and services at every step of the process. They even added some expensive vitamin product to my bill despite me declining it during the service. They removed it when I caught it on the bill before walking out the door, but only after a last attempt at pitching me on it. I could tell they were heavily incentivized to sell as much as possible. I didn't go back, but at this point I don't know where else to go.
I worked with people who did (human) clinic roll ups.
Part of the issue at hand is that doctors and physicians are notoriously bad businesspeople. So once they build up a big enough practice, a lot of them will jump on the chance to sell the side of the business that they hate to a management firm.
I’ve hands on done these roll ups in mass (a ton of tiny M&A deals) and I would not characterize the physicians that way at all. They are generally fairly savvy small business owners and they always saw their practice as a retirement/nest egg. They also tend to burn out on all the insane regulations/insurance/employer/etc hoops they have to jump through and as a small business they tend not to have negotiating power or the scale to leverage shared services. These are the primary benefits of the roll up along with jacking up prices as much as possible obviously.
Like many physicians these days, they see benefits of just being a W2 employee. It’s also a demographic wave, there’s a lot of near retirement folks that are winding down and these PE firms are providing liquidity for their practice. For the consumer though, it’s probably not a good thing at all
As result of the acquisition you may notice appearance of a business practice manager - a non-vet guy lurking behind the nurses and doctors at whom they all look trying to understand whether he approves or disapproves each and every action they do/say.
Similar experience in PE a while back, know a lot of people who still do it, and yeah a lot of small business owners are cashing out right now as boomers retire. Between that and all the dry powder PE has on hand after recent massive raises there will be a lot of buying businesses going on, lots more than even a decade back. Especially now that inflation is stressing retirement savings and costs of everything are rising so fast while people will be looking more to private markets to up returns in bad economic conditions.
The inevitable march of capitalism: experts in every field are gradually relieved of their decision-making power by experts in finance, until finance guys control everything.
"financialization" is more a boogieman than a solid concept. More competition (the best interpretation of "de-financialization" I can imagine) is not very solid solution for something like healthcare (or yes pet care) where the demand being inelastic makes "ransoming" easy.
> best interpretation of "de-financialization" I can imagine
"Financialization" means the insistence on seeing "business" as a machine which is to be optimized to maximize return on money. It's in contrast to people doing good work for a fair price.
Compare these two veterinary practices.
One has an owner who is a vet, who got into the practice because they love animals. They hire staff who love animals. They charge enough money to live reasonably comfortable lives and pay off their vet school bills. They could charge more but they don't. They don't try to push unnecessary services to raise more money.
The second is owned by private equity, who got into the field because it has inelastic demand. Prices are carefully calibrated to extract the maximum amount of cash possible. They hire staff who focus on getting the most bang for the buck: they focus and push for expensive operations and do them in the shortest amount of time; operations which aren't cost-effective are passed over or simply not done. At every step of the road, "upselling" is a thing, to maximize money taken from pockets.
The first is what I consider the best kind of "business": Doing good fork for a fair price. Those kinds of businesses make the world a better place to live in.
The second is what I would call "financialization", and I consider the worst kind of business: Extracting as much money as possible for the least effort. Those kinds of businesses make the world a terrible place to live in.
The first kind of business is the kind of capitalism I want, not the second.
Doubtful. The point of capitalism is to optimize for maximum capital production. Ergo, the optimum solution always seems to end up being financialization, since it is so effective at producing capital.
Interestingly enough, a couple of states allow interested people to become lawyers by apprenticeship instead of the university route. Wonder if that would ever be feasible for veterinarians.
what do you mean? That's exactly capitalism, it favors inequality heavily. The Vet made it to the top of the heap, and is now utilizing the PA as an exploitable workforce.
Tech example, BigCo A gets first mover advantage, equally good BiggishCo B is a bit behind (for whatever reason), BigCo A leverages their position to prevent B from being able to compete long term - usually by acquisition, they work for us now.
It's not capitalism because a licensing cartel artificially keeps the supply of vets low by keeping out qualified PAs and nurses who could handle easy cases.
> They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic.
I searched recently for a nearby vet in Chicago and probably out of 15, only 1 was not owned by a larger chain or company. Big bummer. It's hard to trust that a vet that's part of a chain isn't going to have perverse incentives when it comes to caring for my pets.
Also, another thing that I imagine is driving up vet prices is the unregulated pet insurance industry.
My brother owns Merrick Animal clinic in Brookfield. The other thing to investigate would be independent vets doing house call practices which, assuming you can find one, would be cheaper than a clinic and much less stressful for the animals (my brother did that before buying Merrick 14 years ago).
We have used house call vets for many years, and they are wonderful in terms of experience for the animals. However, in my experience they are universally far more expensive than clinics (which we still go to sometimes if it's semi-urgent and our mobile vet is not available).
Oh yea I'm sure. Many of the chains I'm not sure what type of company they were. But just the fact that vets aren't a small, locally owned businesses concerns me. I'm sure some of the larger chains are either PE firms or owned by PE firms.
don't ever go to any ACCESS animal hospitals then. they're prominent in southern california, and probably beyond, and sold out to PE many years ago. they take advantage of pet owners in the most acute veterinary situations to bilk them (or their insurance) out of many thousands of dollars. it's despicable.
i was so furious i nearly punched a vet there who was hard-selling me on very expensive cancer treatments for my (then dying) cat a few years ago when he hadn't even confirmed it was cancer (there was much more to the story, but i'll leave it at that). that was my one and only visit. never again.
i've since found a great vet working at a non-profit rescue organization. she's no-nonsense, genuine, caring, but importantly, unconstrained by financial metrics. when the sibling cat was dying, she recommended palliative care (and generic medicine from a formulary) over low-odds treatment, because the best case was a few more months at the cost of significant agony for my cat.
My mom and step-dad have run a small veterinary clinic for the last 20+ years, they recently sold to one of these companies for a lot of money because mom was completely burnt out and wanted to retire. Step dad agreed to continue working for 3 more years though to ensure a smooth transition, mom worked for an additional 6 months and very recently retired.
They both despise the company. Before selling they were not beholden to any boss or investors, and worked hard to do the best for their clients and their pets. Now they're forced to use systems they have no control over. People can schedule appointments online through a system they don't manage, which means they could end up needing to euthanize an animal that they've known for 15 years at 9 in the morning, and then 5 minutes later have to pretend they're completely ok and happy to accommodate a new client with their new puppy. Step dad says it makes him feel like a psychopath.
They also take issue with the fact that there's no screening of the appointments that are scheduled. To test it, he scheduled an appointment to a nearby hospital on the same network with the description (and I apologize for the morbidity, keep in mind this didn't really happen and he just was making a point), "Garage door was accidentally shut on my dog's head and severed it. Can you please reattach it." It was approved and apparently nobody noticed it until an hour before the appointment was supposed to happen.
On top of that, now he's started dealing with corporate politics that he's never encountered before, and he says he's worried there will come a day that he just loses all motivation to go to work.
Vet clinics become very popular private equity targets recently.
Probably because more and more people are buying pet insurance -- our insurance paid nearly $20,000 to Sage for my dog's cancer treatments. I doubt I could afford emergency vet treatments without insurance.
Dentists are the worst up sellers of all. Before moving, I had all of my family checked out at the dentist we had for years. When we moved our new dentist found a lot of 'work' that needed to be done. When we asked him to consult with our old dentist to compare notes it got real awkward.
My guess is that nobody becomes a dentist because they love teeth. They do it to have a stable business. Conversely, people become vets because they love animals, and people often become doctors for the prestige or the ability to help people.
Also in my experience it’s very standard for dentists to quickly go out on their own —- many towns will have multiple dentists and none to one doctor or vet clinic.
Then again I’m seeing places like Aspen Dental popping up all over the place so who knows
A free market can also create an environment where pets are hurt and owners are defrauded. Regulations reduce waste, improve quality, and create more efficient markets.
If a veterinarian or anyone else has harmed or committed malpractice against your animal, you have the right to present evidence to the police and pursue criminal charges against them.
Very curious that despite all of the licensing and regulatory schemes out there, these things still happen? What's the backlog like currently for such cases?
> If a veterinarian or anyone else has harmed or committed malpractice against your animal, you have the right to present evidence to the police and pursue criminal charges against them.
The courts are not an efficient solution, and it's too late for your pet. I don't want to sue people, I want my pet taken care of.
> Very curious that despite all of the licensing and regulatory schemes out there, these things still happen?
I don't understand: You're saying that regulations don't perfectly prevent all bad behavior?
Strict regulations don't guarantee this. Additionally, they can be counterproductive by blocking competition, resulting in only a few compliant vets in your area who might still harm your pet.
>I don't want to sue... courts are not efficient
If a monopolistic vet knows they won't lose their license or face charges/fines because a court can't take do so, why would they be incentivized to be extra careful with your pet?
> They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic.
This is why medical care (human or pet) and capitalism don't mix well. If you are having a heart attack, you aren't comparing prices, and if your animal "child" is throwing up, you aren't calling around various vets.
> This is why medical care (human or pet) and capitalism don't mix well. If you are having a heart attack, you aren't comparing prices, and if your animal "child" is throwing up, you aren't calling around various vets.
Comparing human and (non-human, but I'll omit that) animal healthcare is flawed. Humans are paying for healthcare themselves and place an infinite financial value on their own lives. Animals don't pay for their own healthcare, so it doesn't matter how much they value their own lives, what matters is how much the owner values its life, which is in many cases not at all infinite.
Nope. Barriers to entry in the market (securing capital for initial expenditures, rising rents, rising malpractice liabilities) will make providers take positions at the PE-owned practices. Monopolization works in both directions.
The disproportionate-to-profit (or income) rise in secondary education costs, however, will. And that rise has the same underlying cause - the search for more money.
But this isn't the kind of thing that happens overnight. It takes a very long time for people to notice the profits, more people to choose to enter the veterinary field, and for them to finish education and move on to launch their own clinics.
There's also a secondary problem whereby the existing chains can incentivize new vet grads to simply join up. Why go through all of the risk and trouble of starting your own clinic when the local chain is offering a huge sign-on bonus and reasonable annual salary?
Come on! Navie understanding of the market/society is a virtue. Profit is always bad for public good. The market is just failing everywhere. Captial investment is ruining everything. Downvotes prove you are wrong.
Where is anyone saying that? They are saying Cartels are bad. Artificially capturing the market so you can dictate pricing or can push hard upsells and no longer worry about customer good will because there is no longer an alternative decent vet to deal with is not creating 'public good'.
Totally agree, capturing the market should get government approval first. All the chain businesses should be banned, of course the ones you agree with can remain open.
Interesting. I'd like to see more action against the financialization of many other industries / domains, like healthcare and even housing, that I feel are not well served by a purely-market driven perspective. One wonders what the Private Equity firm's intention was here.
I guess it might be fairer to then say "I wonder why nobody says out loud that such an acquisition will definitely lead to a decline in service for consumers".
To a lesser extent you can throw funeral homes into that mix. A few companies control many of them and buy more of them every year. They keep their local names. You still work with "Jacobs And Sons Funeral Services, established 1912" but really you're just paying Service Corporation International.
Yeah, and a big part of this is they used to be generational family businesses, but now the "and Sons" often don't want to carry on, so after they've serviced Jacobs they sell.
I go to a small optometry practice, and I was told by my optometrist, several years ago, that it was a common thing for practices to be bought up by large corporations. They then sweat-shop the employees in an attempt to extract maximum returns. My optometrist didn't want to work like that so he (and his partners) didn't sell. But, in Southern California, it's a common thing for optometrist to build up a practice and flip it to larger companies.
You can make a moderately comfortable bonus living this way IF the companies are remote and your clients are local - build business, flip to company, wait a bit, start a new one, wait for the old to implode, get your customers back, and repeat.
Similar to a guy I knew who sold his restaurant four times, each time buying it back for a song from the new owner who couldn't make it work out.
I honestly think at some point this gets to the place of "operating under false pretences" to have so many brands that are actually the same company behind it.
Perhaps "brought to you by HOLDING_COMPANY_X" should be required.
Index funds almost never vote with their shares. To say that vanguard having equity ownership without utilizing their voting rights leads to market failures seems incredibly naive.
Sure, until you actually look at the matrices of controlling board / ceo / congress seats these guys hold, and what has been recorded throughout history in what they do when investing...
Its incredibly naive to think that they arent actively affecting prices.
"What are you talking about, these guys are JOB CREATORS! they only invest in index holds!"
Yeah... good luck deciphering whats really happening when you think such.
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I don't give a shit what you think about John Oliver, but his "Corp Consolidation" piece shows you just how these units operate:
By funding of the smaller guys to be bought out by their bigger players... they then control the play of that industry...
Then they ensure that they all buy in-network shit... so all profits stay in the family. Incestuventure Capitalism. (And no its not about "economies at scale on pricing"
Is the Fed not a monopoly on your FIAT American Note? Just because they have "12 independent 'Member Banks'?
You're understanding of a monopoly is outdated. Plus, you're likely to knee-jerk with a "Thats not the defenition of a monopoly!"
Cool get all semantic on the third grade defenition of an insanely nuanced issue.
Monopoly in the dictionary sense is the same as a fucking sound-bite from the news on a highly complex nuanced global issue that takes one to have decades, and in some cases centuries, of input factors to understand the nuance.
> even housing, that I feel are not well served by a purely-market driven perspective
I hate to be the YIMBY broken record, but we don't have anything like a purely market-driven approach to housing. An important aspect of a functioning market is that supply is allowed to increase in order to meet demand. This isn't the case in the United States because of zoning laws. The housing market is more like the market for rare coins or something than it is any kind of actual market.
Hedge funds should be 10000000% excluded/precluded and effectively illegal from owning anything but stock in a company/industry at a level whereby they cannot set profit and pricing for ANYTHING. (either invest in the company or industry, but what they do is effectively price-fixing after they get control)
Full Stop.
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If you want to buy stock in a thing, a hedge fund should NEVER be able to have a complete controlling share.
Why? Because history shows us exactly what happens.
Funds, foundations, "private equity" are all money laundering corruption schemes at the cost of others.
THe problem is that this modality has replaced the definition of capitalism.
There are hedge funds that own over 100,000 houses, hedge funds that buy up every trailer home park they can, hedge funds that, in concert with the realty market, are the reason for high real estate prices.
Its a cancer.
Insulin Martin. is a great example of the mindset of these folks.
They're definitely not money laundering by any real definition of the word. If your goal is to launder money you're probably not doing it by buying stocks and vet clinics.
There's nothing "market-driven" about the way the Federal Reserve currently works. The Government takes your money and then makes a market you can't participate in, serving entities that seem to primarily thrive off of rent seeking behavior.
The entire "Too Big To Fail" period should have made this clear. We are clearly in a government regime that would prefer to control the markets through the discount window than let them be truly driven by their own forces.
A bit of apples and oranges here. The goal of the FTC is not to make big companies smaller, it's to protect the market. They are not supposed to be the ones to determine if whales are natural or not to an ecosystem - so they don't generally go hunting them.
That's so 1980s. Your appeal to nature has nothing to do with the reality of the last several decades. Mergers among firms in the same market are never good for humans who must use those markets in order to live.
Yep, we’ve had about 50 years now of a Supreme Court shifting further and further to the right, slowly eroding every government check on corporate malfeasance and rent extraction, including antitrust law. The result has been a slow-motion train wreck, and it’s not clear that anything can be done about it for at least a generation.
> Mergers among firms in the same market are never good for humans who must use those markets in order to live.
I don't think this is a universal truth. Clearly there are situations where consumers prefer national brands or dealing with larger companies. If we don't like it, we can pass laws to impose our morality on the public, but the FTC has their mandate and they are sticking with it until told otherwise.
Dealing with large companies is often better than small businesses or family businesses, which in many industries are incompetent or run by tyrants. Landlords being the classic example.
I'm an ophthalmologist. This phenomenon is endemic to all outpatient and procedure-based medical specialties. Especially eyes and teeth but also including emergency medicine, radiology, gi etc. It absolutely does lead to poorer quality patient care as practices are purchased with a second-liquidity event in mind and thus must show an increase in margins via increased "efficiency." In reality this means less technicians and less doctors seeing more and more patients. Remember that the doctors absorb the liability for poor patient care.
Another commenter mentioned that "most physicians are just bad at business" as a factor driving these acquisitions, there may be some truth to this, but the stereotype of the gullible, bumbling physician businessperson is bullshit. All of the practices being acquired were created and run successfully by physicians and many physicians are quite good at it. What is a huge problem is the predatory behaviors of senior partners looking for an exit strategy via equity buyout. I was searching for a job recently and it is almost impossible to find a position that is "partnership track" - something that used to be the norm. Even worse, practices will bring on junior partners with the promise of equity in the practice, force them to sign a non-compete as a term of their employment and then churn them after 2-3 years or worse - sell the practice to an equity firm.
There are a lot of things that need to change to create a healthy, diverse healthcare ecosystem, but an easy change that would be to ban physician non-competes. They do nothing but entrench equity firms and regional conglomerates making it impossible for competition to arise. Getting rid of the "certificate of need" regulations and generally decreasing the regulatory burden and thus cost to enter the market for a new competitor would also be a big step. The whole thing is gross. Most physicians want autonomy but don't know where to start. I wish there was a startup that could streamline the process - automate or outsource the front and back end work and sell or lease "starter practices" or something.
I think this cuts both ways. I have a friend who's a recently-retired partner in an ophthalmology practice, and it was very difficult for him to find someone who wanted to buy into the partnership to take his spot. He said that many docs these days just want to go to work, do their job, and go home, without dealing with all of the additional burdens that come with owning a business. He thinks that's a big contributing factor to the corporatization of medical practice.
What'd he end up doing? I don't know the specifics of your friend's situation, but I hear this a lot from older guys who want absurd buy-ins based largely on good-will.
He eventually found someone, but ended up working a couple of extra years before he could find a buyer. I don't know enough to judge whether the valuation he was looking (or eventually got) for was reasonable or not.
My dad was a vet. I'm older (52), but in the era and honestly well into my adulthood, vet clinics were generally sole proprietorships or sometimes professional partnerships. The name on the door was the ownership, not beancounters in an office tower somewhere.
So, took, are the vets I trust our pets with. But I have absolutely noticed this trend of corporate ownership and consolidation, and that has never resulted in better anything for customers or patients.
My partner works in this industry and in fact has friends that are affected by this merger. While the FTC can and does have the ability to do many things simultaneously, the current situation in the vet industry is dire. Corporate vets are more profitable (through price-gouging), have a virtual stranglehold on increasingly limited labor pools, and are pretty much the only ones that can afford to invest in specialty medicine like emergency clinics these days. The FTC has been taking a firmer watch over the consolidation in recent years, but the trend is very clearly towards the extinction of locally run, family-owned practices that serve the community.
Emergency vets in many places will demand you pay $5,000 upfront (within minutes before surgery is performed) or your pet dies. Then, your pet will die anyway. It is a sad and exploitative industry.
I've found that the people actually providing veterinary healthcare are some of the biggest animal lovers you're ever going to meet. They adore animals to frankly unhealthy degrees. If even the local family-owned vet clinic is also doing something, it's usually not because they want to exploit hurt animals and exploit you, it's motivated by the necessities of the industry.
In this case, non-payment is a huge issue for vets and they need to keep their doors open for everyone else that needs care. Running a specialty like emergency medicine is even more expensive and carries higher prices as a result. They don't want to deal with trying to collect after the fact. Hence, they'll usually give two options: Pay at the time of service or sign up for something like CareCredit that will pay the vet upfront and deal with the collections on the backend. Some places offer third options, but these are usually problematic or involve charities.
Yeah, the people I know who work in veterinary healthcare love animals. Many of them end up burning out because they have to deal with so much animal death.
A handful of years ago, we had to euthanize our (very old) cat. The plan was to have an at-home come in, but his conditioned worsened, and the service couldn't accommodate us, so I ended up going to an emergency clinic. Initially, it was a bit impersonal, but I was touched by the vet who, when administering the drugs, started crying right along with me.
Yep. This happened to us. After the dog was prescribed something (bravecto) she didn't really need, which had big risks we didn't know about, so much so that the FDA issued guidance about seizure risks. She had a seizure 48 hours after we gave it to her, and was dead within 72 hours. We paid like $3k in emergency vet care before they did any work, and she died within 30 minutes of them starting on her. 2 year old collie. Edit: just looked it up and the vet in question is owned by JAB.
Sorry to vent. Still makes me so angry and depressed. None of the vets wanted to entertain the fact that it was the drug, despite mountains of evidence. It doesn't feel like there's a culture of learning, just one of deflecting fault. I hate to be one of those "I've done my own research" types, but with animal care you really are on your own. This happened a few months ago, really miss that dog.
As someone who knows emergency vets, you have no idea what you're talking about and this is incredibly offensive. Vets don't go into veterinary care to get rich. They get into it because they care deeply about animals.
If your dog is bleeding out or not breathing, nobody is going to sit there waiting for you to swipe your card; they're going to try to at least stabilize your dog, and then talk to you about diagnostic options and so on. Emergency vets charge an up-front diagnostic fee and anything that is not "your pet will die if we don't act right now" has to be pre-paid.
There are no government funded veterinary clinics.
There is no legal right to emergency medical care for pets.
There is no government agency guaranteeing the vet ER gets paid if the owner isn't able to, or simply refuses. Debt collectors typically pay out a fraction of any debt they agree to collect...assuming the ER can even identify them. ER vets can't put liens on your property like hospitals can.
Most pets are not insured, and frankly pet insurance is a ripoff. Lots of exclusions and a lightning-fast "prior condition" reaction is how they avoid payouts. It's not regulated because in America, we don't Do That Sort Of Thing (no step on business snek, as business snek regulated by free market!)
Emergency medical care for humans is the most expensive kind of medical care there is. For one species, one usually able to communicate at least on some level.
Now imagine all that, multiplied by multiple species. Equipment, a pharmacy, and staff able to care for patients of almost any size, multiple species, of wildly variable temperament, who have nearly no ability to communicate or participate in their care. And who have an evolutionary drive to hide injury and pain, usually.
Part of the reason ER vet care is so expensive is because they do not "demand you pay" while your pet bleeds out or sits there on the table not breathing...and when people inevitably don't pay (in part because they're people like you who shout "well my dog died anyway, why should I pay you!?"). That has to get amortized over all the people who do pay.
The vast majority of pets that end up in the ER are dogs, and the vast majority of those are in the ER from getting hit by cars, into fights with other dogs, or poisoned/obstructed by things they ate - most of the time because they were not on a leash.
What do you expect ER vets to do? Who pays to keep the lights on? The massive pharmacy stocked? The staff trained? The imaging equipment working?
What an insulting, belittling comment. I don't know why you think veterinarians are charities, and don't know why feel entitled to pay people less than they're worth.
Veterinarians hold doctorates. Four years of undergrad, four years of vet school. Many emergency vets are board certified, meaning they've done an additional 3+ years in internships and residencies.
In running a practice, ideally you also want a 3-1 ratio of techs to doctors to monitor patients. Many states require at least an AA degree to become licensed. These days, it's common to find people who have undergrad degrees who go into vet nursing as a career. Therefore, clinics are paying for 3 others with degrees.
Add in costs like support staff, and the fact that 80% of medicine and equipment are repurposed from human use. Distributors don't give a shit that it's for animals and will charge a vet clinic the same as a human hospital.
Don't blame the vet for charging $5000 for a surgery. Blame owners who can't afford to raise a pet but have one anyway.
>Don't blame the vet for charging $5000 for a surgery. Blame owners who can't afford to raise a pet but have one anyway.
What an utterly callous statement. We're mostly well paid professionals here on HN, but to suggest that the average american should be able to come up with $500, much less 5k, on a moments notice is laughably out of touch with most people's financial situation.
There is an even more callous meaning that you didn't pick up on for some reason - they're not suggesting the owners should come up with $5000, they're saying the owners should kill or otherwise get rid of their pets once they can't afford them.
I think people are missing that the point here is that the prices aren't being set in a competitive market, so $5000 may just be a monopoly price. Maybe pet owners should be forced to pay the cost of treatment, but whether that's $5000 or not is what the FTC is concerned with.
Being able to come up with $500 or $5k at a moment's notice is part of pet ownership. If your financial situation prevents coming up with it, don't get a pet. You're just shifting irresponsibility in the guise of anti-corporate crusading.
I lost my shit at a redditor for complaining about a $500 overnight bill. $500 for a doctor and three nurses to watch over your animal like a hawk for eight hours, plus IV and medicine, is a damn bargain. I thought HN crowd would be smarter than that.
My wife is a vet and is affected by this. We are not in the states affected, but she works for one of the corporations involved.
This has been a long time coming. As another comment said, with a few anecdotal exceptions I can think of, many vets simply aren't good business people. Margins have been incredibly small since veterinary care became a thing. Vet schools have required business literacy classes for a few decades, but this is an industry where people get into it to help animals first, not get rich.
Corporatization came in to fill a void, but whether it's good or bad, the economics for veterinary care, and especially consumer perceptions, are due for a reset.
There’s no element of choice. Calling around my local vets every one is 3+ month wait for new patients. Even existing patients have week or longer lead times.
But of course if you choose Banfield (PE shitshow), they’ll see them same day (drop off in the morning, pet waits in kennel surrounded by other sick dogs all day until a vet is free, pet goes back to kennel to wait until end of day). The charge is significant, but the pets waiting around locked up all day is what bothers me more. At checkout they’ll of course hit you with the “wasn’t this so expensive? You should buy our health insurance plan!”
Compare this to the vet in my parents town that will also see same day, but I walk into the exam room with the pet, meet face to face with the vet, and stay with the pet for the majority of the operation. And pay less in the end.
Where is the market for the vets who are a bit more expensive but only have a wait time of a few days, with emergency services available at a premium comparable to the PE's but with better treatment?
Are we saying that vets would rather be unemployed than to work such a market or is something preventing them from serving that market or does the actual demand for such services not exist?
Boutique practices exist, they're just a relatively new business model and targeted to wealthy urbanites. Take a look at Modern Animal [1] or Small Door vet [2]. Traditionally, the answer has been to just go to an emergency vet if you need rapid treatment.
That’s probably the emergency animal hospital. Sees the pet same day 24/7, pet waits with you in parking lot until they’re ready, and is taken immediately back to you when they’re done. Prices are high, and non-emergency services aren’t available. For instance vaccines/microchipping.
I do not know why such places don’t offer standard services. The one by my house was nearly always empty, but still would not give my dog vaccines.
It's interesting that most people who like to defend the free market act as if consumers actually have choices most of the time.
That's just simply not the case nearly all the time.. or it's a complete illusion of choice.
Especially in any rural/smaller suburban area (of which the US predominantly is). It's not as if you have 1000 choices for everything around. That's only in large urban areas. The US is so spread out that it can't cram tons of competition in most of it's areas. And that is probably what is being exploited here.
Most people are faced by more than one choice of vet. Most people do not live in rural areas.
If vets are able to charge high prices and people will still pay them, maybe more vets will enter the market to provide services to the underserved market.
These markets really are tiny and vets have been closing down over the years. Even in suburban areas you might only have a single vet within a reasonable distance of your home. People in this thread are even saying their entire local vet markets have been taken over already by these corporations.
It’s not. That’s a hypothetical that nearly never happens. Or when it does the pet owner just gets to decide if they want to pay, let the pet go without, or travel to nearest competition. If a place is that rural, it’s likely the vet can’t gouge as they need to eat too and nobody would hire them
We had this challenge when we moved into our house. Our current vet was over 30 minutes away and we have to take our dog in 3x/week for fluids. Our new neighborhood has five vet clinics. Four were not taking any new patients. Luckily we were able to get into the fifth clinic because they were brand new and were building up their client list.
That wasn't unique to our area either. We've heard from several friends that they've had similar issues getting into vets.
We're in a similar boat. We only got our new dog into the practice because they'd cared for our previous dog for 13 years. The prices aren't great, but they're bearable and the staff there are absolutely first-rate animal lovers.
Well, the above post said the cop vets were price gouging. If the local vets are price gouging too, then it seems to have nothing to do with corporate ownership.
Local clinics pay higher rates for supplies (few economies of scale) and depending on the practice, often do quite a lot of charity on the side. There are private practices that compete with the corps on margin, but they're relatively rare to my knowledge.
Because one typically only uses the Vet closest to the pet. If your only options are the guy(s) down the street(s) in any direction are "which vet is closest to me" and they ALL happen to be the same corporate entity who can grid the community with vets... you'll get gouged.
What will be interesting is when they go buying up all the farm vets -- and then hiking THOSE prices up, which will put further costs on farms and animals, food and crops... and then that translates into an ADDITIONAL increase in costs of food/collapse of independent farmers and further control of the price-supply-line of all foods...
They alread did this in conjunct with pharma and agri-fertilizer bullshit...
I wouldnt be surprised if Monsanto is behind this...
Do these funds mandate the vendors from whom the vets can buy medicines and supplies from, likely the other companies they own.
This is "Serious Business" -- and these people are EVIL.
They dont give a fuck about anything, but have paid a bunch of quants to maths death into profits.
Clinics are facing severe labor shortages. It doesn't matter what the demand is, because they have a limited supply of veterinary care to give. My partner's clinic recently became corporate-owned because they simply could not hire new vets to be able to take new clients. Any days off any vet took had to be covered by one of the others on their "weekend" or the clinic would be forced to shut down.
Like other forms of healthcare, people want to take care of their pets properly and that makes demand relatively inelastic. If one clinic isn't taking appointments, they'll go to another even if the prices are 20% or more higher, especially if that one is more convenient to access. Once they're there, they'll usually stay for a long time.
Agree with the demand elasticity, but I'd like to add something about higher prices. It's been studied in the industry very well that you can't have good care without higher prices and "things." It's just not possible, and people that say their vets are "good and cheap" are just fooling themselves.
As an example, prior to certain surgeries, my wife offers drug A to the clients. It adds to the cost but increase the chance of survival. However, drug B is not an option because studies have shown in increases survivorship by 50%. She bakes it into the cost of the surgery and refuses to do the surgery without it. Clinic down the street offers both drugs as options, bringing the base cost of the surgery down.
So now she has a reputation of being expensive vet. If she offers drug b as an option, patients die more frequently and she has a reputation as a bad vet.
She'd much rather have the reputation as an expensive vet.
Maybe it would be better if they charged more and paid their vets more so that there were actually enough workers to help people's pets? If that's what PE is doing because the local owners are too afraid to raise prices, more power to them.
Higher prices == worse Yelp reviews. You then get a reputation for being expensive, and Yelpers warn people to stay away.
This is an emotionally charged industry where 99.9% of the customers have no clue what goes on business-wise behind the scenes. Yelp has been a curse, giving voice to these people.
In addition to what snapetom said, there are about 4400 annual vet jobs and 3200 new grads. Someone is going to miss out.
Graduates who want to make money will go to commercial or fisheries operations, which pay better overall. We're in the bay area, one of the highest-demand regions in the highest-demand state. There aren't many people left to compete over. Corps are currently offering 5-6 figure sign-ons and bonuses in our area. Even if the salary can be matched and they accept, there's still the tech shortage snapetom mentioned. Those people are often commuting from places like Tracy to have reasonable housing costs and many have simply left the industry entirely. You can raise salaries, but there's still only a limited number of people with RVT licenses.
It's not as simple as hiriing vets. It's having techs to support the vets. Minimum, you need two techs to support a vet, ideally three. Many states require techs to be licensed and have at least AA degrees, so you're paying for an additional 2-3 educated people plus the vet.
Of course, the "ideal" rarely happens, the point is, with every vet you add, issues of juggling staff, scheduling, and turnover skyrocket
I'd assume it ends up being that once the company owns all of them it can assign vets to whichever office needs "coverage", jack prices, and raise salary somewhat, too.
To be fair to the companies, they do usually work to "maximize vet time" where they hire or outsource the other stuff the office does so the vet is spending most of their time vetting instead of paperwork and office work.
Most of the corporations don't make it known that the clinic is corporate owned. They sweep in, buy the clinic, and keep the owner in charge. Marketing and branding is kept as-is to keep the small, neighborhood clinic feel.
Some of that is changing depending on the corporation. Sometimes you'll see "Main Street Vet Hospital, a Megacorp Vet Clinic" or they'll rebrand speciality clinics and large hospitals with the corporation branding. However, a lot of small general practice clinics still make no mention of corporate ownership and clients would never know unless they ask. And they never ask.
Ideally they shouldn't care. I was giving an example of why consumers would choose to go to a corp clinic over independent - they simply don't know it's corporate owned.
I'm not going to argue whether it's bad. I've met plenty of good independent vets, plenty of bad ones. Plenty of good corporate vets, plenty of bad ones.
I think this is a bigger issue among emergency clinics. There used to be a few private emergency clinics in my area, but they are, to my knowledge, gone, and replaced by larger corporate operations.
It's entirely possible that an FTC employee or some politician was screwed over especially badly by one of these corpo vet offices and decided to make it a personal mission. People love their pets.
That's completely made-up! It's possible someone had a bad date with a PE executive; it's possible they are susceptible to sunstroke, spent too much time outside on a summer day, were a little woozy, and approved something that they otherwise wouldn't. Maybe they were going after PE for something else, but that fell through and they limited it to vet clinics. We can go on forever! Or maybe, they discovered a violation by the PE-owned clinics and did their job by acting on it.
Regulatory DDoS.
Hint: if you see it, write your Congresspeople, and tell them you'd like the matter referred to DoJ/the proper regulator. Then, if you really want to make sure, submit something to the same regulator.
If the red flag never gets waved, nobody even bothers/knows to look, and with the way the justice system works, there is no crime until a DA has sufficient info to start building a case there is one.
Do this for both State, and Federal at a minimum. Local if such authorites exist and are not preempted.
I think it is partly because FTC gets caught up in pursuing what the news media thinks is important and these "niche" segments aren't as newsworthy so they don't get the media's attention.
There's also a sort of an unsaid quid pro quo here. News media highlights things that it thinks are important and if the FTC chairs decide to act on those, news media praises them which, in the end, helps them get the recognition that they need for their future aspirations.
> You can miss the bigger picture,” Khan said in an interview with the Financial Times. “Every individual transaction might not raise problems, but in the aggregate you’ve got a huge private equity firm controlling, say, veterinary clinics. So that’s a concern.”
PE firms have a horrible track record at doing anything other than maximizing revenue and profit without regard to any other issue. A quick look at what they have done to the motorized wheelchair industry makes that very clear. Wait times for service in DRM enabled wheelchairs can be 4 weeks or more. The thought of your only means of mobility being taken from you for a month because profit comes before service is terrifying.
Where I live we are already limited in our vet options and this will make it worse as they continue to gobble up small clinics.
I'm bothered by these half-measure enforcement actions. At the end of the day, the company is allowed to buy up 16 clinics but must divest of 6. At these numbers, it seems like if there is a threat of monopolistic market failure from the merger, then even with this countermeasure there is still a threat.
Leading into this is the obvious observation that a company forced to divest some of it's assets to comply with an order like this is incentivized to shed it's lowest-performing assets, and is also incentivized to sell them to an incompetent operator. This makes it likely that the divested assets won't end up being an effective competator.
Consider with the T-mobile/Sprint merger. One of the brands spun off as part of that deal has already ceased operations, and the other has negligible market share.
The oversight regulations are also odd. They are a tacit admonition that the resulting company has too much market power. If they have too much market power today, why would these restrictions sunset in 10 years? Sure, they may not have unreasonable market power that far in the future, but shouldn't the company have to petition to be let off of this oversight, e.g. to prove that they no longer are a dominant player with excessive market power?
It seems like the correct answer for the FTC when they address mergers like this it to just say no.
It's clear that no one in the comments section has actually read the article.
There are specifically 6 clinics that JAB has to sell to a third-party after the acquisition - all of them are either emergency or specialists of which the market is uniquely bare of options.
The FTC has no problem with clinics rolling up into a chain.
I actually really enjoy the rush of private equity into things like housing and veterinary clinics. The thing with these industries is that it was distributed protectionism. Some people were either running a licensing protectionism operation or a political protectionism operation. Now, private financial firms are exploiting that gap which is making it visible.
There's no difference between the guy who's all like "Why should I let my property values drop?" and the firm who bought the home next to him with the same mindset. The outcome is the same.
This has been a systematic issue that I'm glad the FTC is taking a closer look at. Does anyone know if veterinary medicine spots are controlled a la the AMA's control on residency spots?
Zero rate interest - almost free money given to large institutions - creates possibility for all PE firms to buy up entire industries and jack up prices.
So the thing you have to understand about private equity is this: Things are only sacred in the corner of their vision. They may think marriage is sacred, but only if they're not looking into LexisNexis acquisitions of divorce proceedings private documents. They may think abortion is wrong, unless they're dealing with the companies spicing up heartbeat tracks for optimal maternal reluctance to abortion (in either direction, the state decides how to spice the tracks up, I think they're spiced-up tracks that are synched to a spyced up rendition of ventrical pulsing, it's shitty. Sometimes it's real but that doesn't get the percentages desired).
They may think they are good, but when the chips are down, they are invariably bad. Just bad, why would I put it any other way? What word do you want me to use instead, how do you want me to water it down?
But when the chips are up they're great! They have all this money, *donate* to *causes*, like the museums of New York and Philips [Exeter/Andover], their alma mater, and a list of non-profits the public never hears about because they're too elite, it's not that they don't give. They give. And sometimes they do pull off business miracles, they're super sharp guys, very hard-nosed buttoned down, great students, if an industry requires getting shaken up they'll really shake it up.
They're a rebranding of leveraged buy-outs from the 80's, they gut companies.
Which companies sometimes need. Like appendicitis or colectomy (removal of colon, should be called colonectomy but doctors are avid boggle players), like in cases of cancer.
But, private equity eats what it cuts, so there's a...there's a conflict of interest, I guess you could say. You could say "conflict of interest" instead of "bad".
How about doing something to deter PE firms snapping up rental and housing properties? Is the FTC doing anything about it? Housing affordability (or lack thereof) is the issue plaguing the millennial cohort and even incremental progress on this front can make a big difference to a lot of people.
It took 12 hours for my dog to be seen at the emergency vet I went to recently. It was brutal. And that was the only one that would agree to have us come in. It was over an hour a way. All the local clinics said don’t come in unless it was a last minute euthanization or the animal was unresponsive. Crazy.
I'm not sure if it's just the proliferation of COVID puppies or what, but in the last two years it has become remarkably more difficult to get a vet appointment.
I accidentally stepped on my dogs paw about a year ago and getting an appointment less than a month out took DAYS of calling around. Ended up going to a vet 40 miles away.
My wife's practice has gotten insanely busy post-COVID. She doesn't deal with dogs and cat's so it's not that boom. Decreasing slots due to safety and health was an issue at first, but they've since returned to normal towards the last half of 2020. Staffing shortages, sure, but the slots are still the same as before.
The only thing she can think of is with more WFH, more people are noticing things wrong with their pets.
I don’t think this has anything to do with PE acquisitions of emergency veterinary clinics. It’s just typical post-Covid staff shortages due to retirements and such. Because of the working hours, emergency gets the brunt of the shortage before the normal 8-5 shifts.
I’m familiar with a few clinics that have been hiring DVMs at $120k in low CoL areas for 6+ months without success. It’s hard to raise prices enough to pay more than that in those areas.
Interesting to see animals get more protections than people. You don't see the FTC doing anything about these private equity firms buying up entire housing stocks in poor/lower-middle class neighborhoods in the south.
The term "end stage capitalism" (or the more palatable "late capitalism") I've heard a lot recently and things like this really make me wonder.
The voracious and insatiable appetite for profit has led to some really disgusting practices for example:
- Goldman Sachs driving up food prices, which quite literally kills people, for profit [1]
- Hedge funds buying up trailer parks and jacking up the rates [2]
- Medical price gouging (eg epipens, insulin) [3];
- Abbott shutting down a baby formula plant that was poisoning infants to essentially end-run a possible investigation [4] where ultimately the government begged (paid?) them to reopen it; and
- Russia's invasion of Ukraine is a massive boon to the US military-industrial complex, a sector that might otherwise have found hard times thanks to the wars in Iraq and Afghanistan ending.
If you look at these you see regulatory failure at pretty much every level thanks to the revolving door and resulting regulatory capture by these industries.
Compare this to China, who executed two people found responsible for a tainted milk scandal [5].
It's hard not to see just how much rent-seeking and monopoly-creating goes on in the modern economy. When is it enough?
> term "end stage capitalism" (or the more palatable "late capitalism")
The problem with this language is it implies inevitability and a near-term conclusion. Neither is a given.
You've correctly identified regulatory failure (specifically, our inattention to competition) at the root of these problems. Fighting that takes effort. When I hear the terms late-stage or end-stage capitalism, I hear nouveau nihilism. The situation is far from unfixable. And the present state can persist and fester for generations more.
An analogy might be found in a deteriorating factory. Management complains the factory is in its final stages. The foreman, meanwhile, sits bewildered next to a list of neglected maintenance. This wasn’t inevitable. It still isn’t inevitable. We’re just choosing not to fix it.
I may be wrong about this, but my understanding of the term is that “late-stage” refers to the system turning towards ever more predatory and self destructive methods of profit extraction to continue “growing” once the easy money to be made from resource extraction is exhausted.
Hedge Funds don't invest in trailer parks, if they did they wouldn't be hedge funds they would be PE firms or REIT's.
While the US Industrial Complex is a cancer to the system I don't think they're to blame for Russia invading Ukraine. Instead, the US government needs to stop non-bid contracts and paying these companies "cost + Percentage" contracts.
Also the FP article misses out on a lot of nuances in the futures markets but thats a bit too much of a pain in the ass to get into.
Regulatory captures is a specific thing, it's not so much applicable to 'housing' because contractors don't have some hill to climb vis-a-vis regulations that big contractors have some kind of advantage.
Drugs, where we definitely want regulation, have that kind of issue, there are huge regulatory hurdles to jump through that require scale.
The only answer to this issue (and make no mistake, its happening in medical care for humans too) is to not restrict conpetition.
With yields so low, and the stock market still above 2019 highs, PE firms are diving into the few areas of the economy where there is value due to lack of competition and it is also not completely overheated.
However, take out the permit and licensing requirements and you would plummet PE money pouring in right away.
> However, take out the permit and licensing requirements
Remove permitting, licensing, and educational requirements from people selling surgical procedures for animals?
No thanks. I don't actually see occupational licensing as a bottleneck for a job that requires significant education and training to do properly anyway
We don't have a backlog of veterinarians out there who completed all of their years of training but then got stuck getting licensing.
We also don't really want amateurs vets opening up clinics and just winging it with people's pets.
> We also don't really want amateurs vets opening up clinics and just winging it with people's pets.
In a couple decades, people will be saying this about to fresh veterinary school graduates who want to open their own hospital instead of joining one of the conglomerate private equity firms.
We don't have a backlog of trained unlicensed veterinarians because it's the training that's the bottleneck. You could be the most ambitious person in the world but if you don't get into vet school then that door is closed. You can't get a license if you don't go to an accredited institution.
I wouldn't get rid of the license requirement, but I would definitely change it to something that is not rate-limited by the number of available vet school seats per year. Imagine if drivers licenses were handed out the same way, if each DMV only offered the mandatory prerequisite training to 500 people per year and nobody else was allowed to drive. Driving would become an elite institution too, and we'd be complaining that it's better that way because nobody trusts amateur drivers operating these several-thousand lb machines.
This is like saying taking out the "permit and licensing requirement" for pilots would lower the cost of airline tickets. It's just...more complicated than that. The cost of paying physicians is a drop in the healthcare bucket. The inefficiencies and anti-competitive practices appear at an institutional level.
Now, make the kind of regulatory changes that would allow small healthcare businesses to compete successfully and create a freer market and you might get traction.
One of the people I know in PE described their profit margins as being surprisingly high even before PE roll-ups. They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic. There was a secondary rush where people were trying to acquire vet clinics in anticipation of flipping them to PE roll-ups later.
My local vet seems to have gone down this slide. A long time ago it felt like a staff that really just cared about animals and had good prices. On my last visit it felt like I was bombarded with practiced pitches for different products and services at every step of the process. They even added some expensive vitamin product to my bill despite me declining it during the service. They removed it when I caught it on the bill before walking out the door, but only after a last attempt at pitching me on it. I could tell they were heavily incentivized to sell as much as possible. I didn't go back, but at this point I don't know where else to go.