[PragmaticPulp]

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.

[legitster]

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.

[conductr]

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

[trhway]

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.

[ShrigmaMale]

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.

[banannaise]

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.

[lordnacho]

But you can have capitalism without financialization.

[Ericson2314]

"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.

[gwd]

> 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.

[hoseja]

The second business goes on to make so much money it can buy the first, unless the owner is very determined to not be bought (insignificant minority).

[danielmarkbruce]

It might make sense to split it into "professional services" v "business". Legally it's hard to tell them apart, but people tend to know the difference.

It makes sense for some businesses to actually be an "asset" - eg Coca Cola company. It is a reasonable argument that it doesn't make sense for a vet practice to be an "asset". Nor a law firm.

[HWR_14]

> The first kind of business is the kind of capitalism I want, not the second.

The problem is there's no rule you can apply that distinguished between those two, in a court of law or elsewhere. Unless you just look at if a bigger firm owns the vet office. But that doesn't help with the upselling vet or the large national organization who wants to help animals.

[shkkmo]

Markets can work fine with inelastic demand if there is adequate information, freedom of choice and proper regulations.

[WaxProlix]

More like, could than can as far as I can see. Markets kick ass under certain circumstances, but in some areas it's almost impossibly hard to achieve those circumstances.

[adgjlsfhk1]

the problem is that some markets inherently can't have adequate information because the customers by nature of being customers don't have time to shop around.

[ryan93]

Unfortunately government restricted the supply of doctors below population growth.

[beowulfey]

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.

[IG_Semmelweiss]

A veterinarian cannot open a practice without doing a bunch of licensing and spending hundreds of thousands of dollars in education.

Meanwhile, the PA next to him has what it takes from years of training but she will never open a vet clinic of his/her own.

Thats not capitalism.

[shkkmo]

The solution to that is reforming the educational and licensing system, not putting finance people in charge.

[mschuster91]

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.

[wolverine876]

It's a fantasy of libertarians, etc., but I think it is exceedingly rare for someone to have a serious career as a lawyer without a law degree.

[Avicebron]

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.

[pclmulqdq]

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.

[stefan_]

You have just realized that most actors in capitalism prefer to the rig the game rather than compete.

[guelo]

No idea how an increased number of vets would prevent capital from consolidating this industry.

[shakes_mcjunkie]

Licensing can be used to monopolize markets and consolidate private ownership. Licensing isn't inherently bad but it can be used in a capitalist system to increase profits and drive out competition.

[pc86]

Capitalism doesn't become "not capitalism" because practitioners need to be licensed and public safety and/or public opinion demands regulations be put in place.

[WaxProlix]

It's exactly capitalism because concentrations of capital form and end up with a critical mass that controls various aspects of society - in this case licensing. It's also something that's literally happening under capitalism, right now, in very capitalist America.

[Jarwain]

It's not capitalism the same way soviet Russia wasn't communism

[djmips]

People seem to think capitalism == meritocracy.

[BurningFrog]

We've had capitalism for 250 years, and are still far from this alleged inevitable end state.

[refurb]

If the finance guy is driving down costs and some of that makes it way to me, the consumer, I’m all for it.

We didn’t get dirt cheap electronic because some engineer squeeze costs down and competed on price.

[cyanydeez]

It's happening to engineering firms too? The great duopoly America is coming swiftly.

[shakes_mcjunkie]

> 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.

[dhosek]

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).

[zippergz]

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).

[shakes_mcjunkie]

Oh interesting I'm going to look into a house call vet!

[mirntyfirty]

True although some of the large PE firms do their best to hide the affiliation.

[shakes_mcjunkie]

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.

[clairity]

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.

[reaperducer]

i've since found a great vet working at a non-profit rescue organization

Rescue organizations are often the best resource for finding a reputable vet.

One of my neighbors went to a big chain vet clinic to have her cat spayed. They charged her almost $120.

Meanwhile, the city will spay any cat you bring to the pound for free.

[torbTurret]

PE are truly the cockroaches of our society.

[guelo]

Please show some respect for your overlords.

[idrios]

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.

[Johnny555]

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.

[shakes_mcjunkie]

Yes. Pet insurance is an unregulated market and also has to be driving up prices.

[lotsofpulp]

I would have guessed increases in demand for healthcare for pets greater than supply of healthcare for pets to be driving up prices.

[SomeBoolshit]

It all started going a very wrong way when animal health insurance became a thing.

I've always had vets peddle weird stuff but that was a real eye opener.

[rentfree-media]

Maybe we should try insurance for people going to doctors and see if that turns out any different, oh wait lol....

[amelius]

Dentists will go down the same route.

[pclmulqdq]

Dentists seem to generally be decent businesspeople, while doctors and vets aren't, so they may resist PE buyouts for a while.

[ROTMetro]

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.

[pc86]

I'm curious why this is as it seems to have been the case in my experience as well.

[pclmulqdq]

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.

[vrc]

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

[jsiaajdsdaa]

>I don't know where else to go.

A free market (scary!) would lower the barrier to entry for proper vets to compete.

But because of rent, labor, and regulatory overhead, you are left to deal with an entrenched and disinterested incumbent.

[wolverine876]

> regulatory overhead

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.

[jsiaajdsdaa]

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?

[wolverine876]

> 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?

[jsiaajdsdaa]

>I want my pet taken care of

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?

[wolverine876]

Nobody mentioned strict regulations or eliminating courts. Effective regulation, which is definitely possible, works more than adequately.

[acegopher]

> 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.

[dantheman]

Almost all healthcare spending is not on emergencies.

[kaashif]

> 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.

[brightball]

PE is going after every market segment. It’s crazy.

[whimsicalism]

This is how markets function - rising profits for vets will encourage more providers to enter the market.

e: Sorry, sometimes forget what kind of science denialism is cool now. Climate denial out, economics denial in.

[astockwell]

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.

[whimsicalism]

As profit increases, those barriers become increasingly more worth it to climb.

Increasing profits does not make start up costs worse.

[willcipriano]

The barriers go up higher as the increased profits are funneled towards the creation of new regulations to prevent competition.

[falcolas]

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.

[PragmaticPulp]

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?

[markovbot]

I'm sure that'll be a huge relief to all the people who no longer afford healthcare for their pets. Maybe they simply should have not been poor!

[whimsicalism]

See multiple other people on this thread discussing how their vets are not taking any new customers & not raising prices.

Artificial price caps set by legislation or "benevolent" collusion of owners will only lead to fewer pets being treated overall.

This is just basic microeconomics.

[temp8964]

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.

[ROTMetro]

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'.

[temp8964]

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.