Corporate veterinary medicine

Almost 20 years ago, when incorporation of veterinary practices was explicitly permitted by law in only 3 provinces, Douglas Jack wrote an article in The CVJ explaining the benefits of incorporation of veterinary practices (1). Jack noted the dual responsibility of veterinarians, namely, competent practitioners using their education and experience in the service of their patients, and entrepreneurs running a business. He explained that incorporation provided a means of protecting personal assets of the practitioner from risk associated with the business and had advantages related to tax rate, income splitting, capital gains, succession and financing. Not surprisingly, many practices in the United States and Canada have incorporated over the years. For the most part these involve relatively small businesses in which the practitioner is owner of his/her practice.

Big corporations have become increasingly involved in the business of delivery of veterinary services. Banfield Pet Hospital (2), the world’s largest pet hospital, operates around 800 clinics, mostly in PetSmart stores. This hospital began expanding substantially in 1994 when it teamed up with PetSmart; it was purchased by the Mars group of companies in 2007. National Veterinary Associates (NVA) became the largest private owner of freestanding veterinary hospitals in the United States in 2007, with 99 clinics in 29 states (3). NVA currently owns over 186 animal hospitals. VCA Antech, founded in 1986, was among the earliest of the large veterinary hospital corporations; it raised millions of dollars through public share offerings, enabling it to purchase and operate veterinary clinics in the United States. The company owns Antech diagnostics and is highly profitable; in 2013 revenue increased 6.1% to $1.8 billion and gross profit increased 9.2% to $409.4 million (4). In 2012, VCA Antech purchased Alberta-based Associate Veterinary Clinics Ltd. (AVC), which operated 44 clinics in Alberta, British Columbia and Ontario (5). The company now owns over 600 animal hospitals with over 3000 veterinarians.

The large corporate practices assert that veterinarians are free to concentrate on medical practice and not worry about management of the business. These large organizations can bring efficiencies through scale of operation, consolidation, and centralization of management and other services. American investors interested in the health field apparently like veterinary medicine because, unlike the human health field, veterinarians get paid directly and have low malpractice insurance rates and the field has seen steady growth (3). In some countries, associates’ unwillingness to buy into practices is making it attractive for retiring owners to sell to the large chains.

Some view these corporations as bringing value to the practice of veterinary medicine. These values are identified as capital, business know-how, and databases. Capital is used to upgrade facilities, records systems, and information technology, and to purchase clinics. Valuable databases may be created as is the case with the Banfield database, which is managed in cooperation with Purdue University. Similarity in protocols and software has facilitated the development of a large national database, which is a valuable resource for the profession. Others view these large corporations as monolithic structures that suck profits that would otherwise accrue to veterinarians. Some suggest that small practices will never be able to compete with these giants and will be an outmoded way of delivering veterinary services. Others point to the relatively slow growth of the large veterinary corporations (3).

However we view large corporate veterinary practices they are likely here to stay and to grow. Other models of veterinary practice appear to be growing alongside the mega practices. These include the traditional stand-alone practice, small numbers of practices under a single veterinarian owner/manager, and co-operative organizations in which independence of clinic ownership is preserved in a structure that allows shared purchasing. These alternative arrangements have been particularly well developed in Canada. In addition to the traditional 5 large co-operative veterinary supply organizations, there are new organizations such as Vet Alliance, which is a veterinary affiliate buyers group that serves about 200 Canadian member hospitals (6). This range of possibilities will likely allow veterinarians with varying degrees of interest in practice management to find their niche. However, the days of the totally independent veterinary practice seem to be numbered.