Vets No. 1 Consolidation
Consolidation of veterinary clinics is a strategic opportunity that many are taking advantage of across the nation. The industry, which has a long history of independent practitioners and veterinarians who opened shop in standalone practices and animal hospitals, is undergoing a transformation, riding the wave into the 21st century of consolidation.
Multi-practice operations account for nearly 11 to 13 percent of animal hospitals in the U.S. According to leading market researcher Packaged Facts, consolidation, or roll-ups, are paving the way for veterinary practices.
“[Consolidation] is doing good things for veterinarians, and I’ve got no problem with that,” says Donald Powell, DVM and co-founder of Pender Veterinary Centre in Fairfax, Virginia. “We’re currently dealing with a shortage in veterinarians, so some corporations are offering a six-figure starting salary, and help pay off some student loans as well.”
In addition to providing an increase in pay, roll-ups in the vet industry also offer comprehensive benefits that smaller, private practices may not have the resources to fund.
“To me, the number-one advantage of working in a corporate practice is the benefits we can offer our associates, which don’t compare to any private practice I know of,” says Dr. Ashley Harris, director of veterinary quality at Banfield. “That’s everything from health insurance, to paid time off, medical leave and volunteer opportunities, to covering the costs of continued education and licensing — whether for our doctors or our para-professionals.”
For many, student debt looms overhead and haunts the path to a successful career. Corporations often provide the leadership skills veterinarians are interested in learning, minus the financial risk of building one’s own team. Large companies are eliminating the doubt (and debt) of newly graduated veterinarians, simultaneously creating a stable future for the profession and increasing the knowledge base by sharing data, tools, and insights with professionals and pet-owners alike.
Consolidation is also maximizing efficiency throughout the industry by providing consumers with what they want—the convenience of pet health plans, which leads to increased clinic visits and revenue; improved patient care; and a bond between the practice and client. Packaged Facts estimates the market will continue to see an increase in mergers and acquisitions (M&A), plus investment dynamism through 2019 and beyond. This is because private equity firms and the larger pet players are sensing “significant opportunity in the still-fragmented veterinary world,” says Daniel Granderson of Packaged Facts.
There are many well-known roll-ups reshaping the veterinary industry. A few include Mars Inc., who has scooped up some of the largest animal hospital chains under its expansive wings, such as Plus, Banfield, BluePearl, Pet Partners, and most recently, VCA. PetSmart, Petco, and Walmart have each added or are in the process of adding expanded vet services to their stores. Private equity firms such as KKR and Shore Capital Partners have been acquiring clinics as well. All of these corporations play a unique role in the future of vet practices, igniting excitement and concern across the field.
One major concern with consolidation amongst veterinarians is a lack of family culture. Maritza Perez-Bruno, DVM, owns West Orange Animal Hospital, a family-run practice where patients have been going for generations.
“People come in here and say they remember when they were a kid,” says Perez-Bruno. “It’s being kept by the same person for over 30 years, people know you in the community and you’re a part of the community.”
While consolidation is rapidly increasing across the industry, it is not the end for small practices. Out of the total 26,000 veterinary medical firms in the U.S., only 3,000 are owned by corporations, proving that there is room for both. Introducing them to both sides of the spectrum, veterinary students are the decision-makers for the upcoming trends.
“As more of our veterinary graduates find their place in the veterinary profession, they’ll start shaping the pathways themselves,” says Lorin Warnick, DVM, Ph.D., the Austin O. Hooey Dean of Veterinary Medicine. “And I’m confident the field will be richer and more robust for it.”