Consolidation nation: Why veterinarians who hate corporate ownership end up selling out
January 31, 2018
Christopher J. Allen, DVM, JD
“When expensive diagnostics and therapies nobody could pay for out of pocket came along, the insurance juggernaut was launched. ”
…private medical practice is disappearing, much like the bison in the late 19th century. For better or worse, human medicine has emerged as corporate, notwithstanding that any given hospital chain might be organized under state law as “not for profit.”
In the veterinary world, some would argue that a matching scenario is unfolding for clinicians who treat animals. Diagnostic equipment is too costly for individuals and small partnerships; pet insurance is proliferating, along with its inherent red tape.
While the government used to stand fast against the corporate ownership of “learned professions,” today, sure enough, I can buy my pills and my glasses at Walmart. How could this happen?
Consider Justice Tilzer of the New York State Supreme Court……..seminal litigation like the People v. Sterling Optical case opened the door for virtually every licensed profession to be “operated” by big business. Wall Street set about feasting on the dentists’ lunch, then the undertakers’-and now there’s rapidly developing interest in ours.”
Corporations don’t have to make a profit at the start. With their extensive financial resources and backing, consolidators have an advantage over independent veterinarians in negotiating a clinic purchase. If a practice’s location, demographics, staffing and culture are solid and can be significantly improved under new management, a roll-up can offer an outsized price to a seller.
Consolidators don’t have to compete with online pharmacies. They can purchase product at the same price as online pharmacies due to their size and scale.
Practice buyers proliferated and clinic prices rose. The luxury of choosing to buy a practice “at a convenient time in life” devolved into a scramble to locate a hospital-any hospital-that hasn’t already sold or whose price has not already been hopelessly bid up.
Bottom line, if a DVM wants to be an owner now, she’d better be alert when opportunity knocks, savvy when negotiating price and terms, and disciplined enough to compete with the big dogs when she finds herself the owner of a veterinary business.
Dr. Christopher J. Allen is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via email at firstname.lastname@example.org.