WHAT ARE THE CAUSES FOR THE SOARING COSTS OF VETERINARY CARE?
The common industry narrative for the rapidly rising costs of veterinary care is primarily caused by a combination of factors including increased demand for veterinary services, shortage of veterinarians and support staff, rising labor costs, advanced medical care for pets, high cost of veterinary education resulting in significant student loan debt, increased cost for medications and supplies, and the growing presence of large corporate entities buying up veterinary practices.
CORPORATIZATION OF VETERINARY MEDICINE:
https://www.pets.care/corporatization-veterinary-medicine/
- Over the last decade, increasing numbers of privately-owned veterinary hospitals have been acquired by large corporate entities — often veterinary consolidators are backed by private equity firms.
CONSOLIDATION:
https://www.pets.care/corporate-consolidator-ownership-of-veterinary-practices/
- Nearly 1 out of 3 general practices are now owned by corporate consolidators. The consolidation of veterinary practices is accelerating. In 2020, the number of consolidator purchases overtook independent transactions for the first time — however, market share is greater than 50% as corporations typically acquire larger hospitals that employ many doctors.
PROFIT-DRIVEN VETERINARY MEDICINE:
https://www.pets.care/common-employee-complaints-of-veterinary-consolidators/
- Many employees of corporate consolidators say their employer prioritizes profits over patient care.
INCENTIVIZED WORKFORCE:
https://www.pets.care/compensation-models-for-veterinarians/
- Approximately 2 out of 3 associate veterinarians are paid on production — how much revenue they bring into the practice. Doctors can earn up to 25 percent of their production.
CONSOLIDATORS REQUIRE LARGE INFRASTRUCTURE OF MANAGERS AND SUPPORT STAFF:
https://www.pets.care/support-structure-of-veterinary-consolidators/
- Many of the employees of veterinary consolidators are not directly involved in providing veterinary care. These employees provide administrative, financial, marketing or other support functions within the organization — includes multiple levels of management that are highly-incentivized.
VETERINARIANS FEEL MORE PRESSURE TO GENERATE REVENUE:
https://www.pets.care/news/2023/12/differences-in-perceptions-and-satisfaction-exist-among-veterinarians-employed-at-corporate-versus-privately-owned-veterinary-clinics/
- Recent study found that veterinarians working in corporate practices reported feeling more pressure than those in private practice to generate revenue and see more clients per shift.
VET CARE PRICES INCREASED IMMEDIATELY AFTER CONSOLIDATOR ACQUISITION:
https://www.pets.care/news/2024/05/whats-behind-the-high-cost-of-vet-care/
- Preliminary research found significant differences in pricing between corporate and privately owned veterinary practices in the same geographic region — prices increased immediately after the sale.
LARGE CONSOLIDATORS EARN HUNDREDS OF MILLIONS OF DOLLARS IN PROFIT EACH YEAR
https://www.pets.care/news/2024/12/blue-river-petcare-reportedly-launches-sale-process/
- Group revenues can more than double as EBITDA margin grows all within a few years. These entities are often sold to a new investor(s) for more than $1 billon.