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Satellite practices: academic evolution or unfair competition?

OSU to open emergency, specialty practice in Columbus suburb


October 26, 2012
By: Jennifer Fiala
For The VIN News Service



Photo: The Ohio State University
The Ohio State University is opening a 24-hour emergency and referral satellite clinic in Dublin, roughly 9 miles away from the institution's veterinary medical teaching hospital.
Pet owners in suburban Columbus soon will have another choice for veterinary care with the opening of The Ohio State University’s 24-hour emergency and referral practice in Dublin, roughly nine miles north of campus.    

The 10,000-square-foot hospital is scheduled to open next spring.    

The veterinary community is split on whether to view the new practice as a collegial move to provide greater care and student training or encroachment on the business of private practices. In addition to emergency care, the OSU satellite facility will offer general and orthopedic surgery and internal medicine.   

OSU’s decision to open a satellite practice was months in the making, said Dr. Rustin Moore, chairman of the department of veterinary clinical sciences and associate dean for clinical and outreach programs. OSU seeks to give veterinary students greater access to clinical cases and real-world experiences by opening an off-campus practice that runs like a private operation, he said. Facilities of the veterinary teaching hospital on campus are strained by the college’s burgeoning student body. At the same time, the satellite clinic will fill a need for emergency and specialized care in the area.   
      
“We have received continual feedback from clients and veterinarians, and the feedback has consistently indicated they would like us to be more accessible in the community and to provide additional capacity and services,” Moore said by email. “Additionally, results obtained from a marketing research firm that surveyed veterinary practitioners and clients ... indicated a perceived need and requested availability of increased emergency services in a ‘closer to home’ suburban location.”   

He added: “The majority of feedback has been supportive.”   

Some veterinarians, however, worry about market saturation. Columbus, the state's most populous city, has nearly 800,000 residents. The Ohio Veterinary Medical Association estimates some 450 veterinarians live and work in Columbus and its suburbs. The total number of private practices in the area is unclear.    

The VIN News Service identified at least six practices within 20 miles of the OSU veterinary medical teaching hospital in Columbus that offer after-hours emergency care. Many of those practices also provide specialized medicine.    

Dr. Fred Gingrich, a mixed animal practitioner and OSU alum, recently turned to the message boards of the Veterinary Information Network (VIN), an online professional community, to air his angst about OSU’s satellite venture. Branching out beyond a teaching hospital’s borders and into the private sector, he says, smacks of unfair competition, given that state funds support academia, and non-profits don’t shoulder the same tax burdens as most small businesses.      

It’s a money grab, he said.    

“I just think that overall it is a very dangerous path for our universities to take,” Gingrich wrote. “To me, it means they are exploring all avenues of generating revenue, and they are unconcerned about any consequences it might have on our profession. Perhaps they won't SAY that, but their actions suggest otherwise. Increasing tuition beyond what is reasonably able for a new grad to pay back, increasing enrollment significantly more than the market can consume and now opening private hospitals. This is a bad direction, and I see nothing good that can come of it.”   

Satellite practices invigorate academia   

Ever-increasing tuition and enrollment aren’t unique to OSU’s veterinary medical program. Nor is the emergence of veterinary school satellite facilities. 

Fifteen of the country’s 28 veterinary medical programs report having a variety of satellite clinics, and at least three more are fielding plans for them. The missions of these practices range from equine medicine to shelter care.    

Such academic sprawl reflects a changing dynamic in veterinary medicine — in particular in specialty referral practice. Historically, general practitioners referred difficult cases to teaching hospitals where specialized medicine was taught and students underwent clinical training. Nowadays, private specialty practices can be found in a majority of urban areas, making teaching hospitals — in some ways — obsolete.     

Dr. Bennie Osburn, former dean of the University of California-Davis School of Veterinary Medicine (UC Davis), isn’t shy about saying that satellite facilities generate needed funds for veterinary medical programs that are struggling.    

“Our colleges are facing a financial crisis,” Osburn said. “You can’t support programs on tuition alone, so you end up being more competitive with private practices.”   

State appropriations to veterinary medical programs have been cut more than $104 million during the past two years, according to the Association of American Veterinary Medical Colleges.  

Dwindling caseloads also pose problems for many veterinary teaching hospitals, Osburn said. Years ago when state legislatures amply funded veterinary academia, teaching hospitals enticed clients with low prices. “This is no longer the case,” he said, noting that UC Davis’s veterinary school has two satellite practices throughout California, in part because the school’s main campus is in a rural community that does not attract great numbers of clinical cases.    

Dr. Katherine Barnes, a 2006 graduate of the University of Georgia's veterinary college, said she understands a school program’s need to expand into the private sector. On campus, she says, students fight for clinical cases; emergencies are hogged by interns and residents.     

“What can it hurt to have a secondary practice, which runs more like a for-profit place than a teaching institute, where people can actually learn what they need to know while still actually in school?” she asked in a VIN discussion. “It seems to me that a lot of students never leave the area they went to school in, hence a barrage of referral facilities in the area that ultimately steals clients from the university.”   

Uncommon arrangement  

What makes OSU’s Dublin practice unique is that a privately owned, for-profit management firm in Cincinnati has been contracted to run its day-to-day operations.    

"I've never heard of anything like it," said Osburn, the former UC Davis dean.    

How OSU hooked up with Veterinary Specialty Management Services of Ohio (VSMS) is unclear. Officials close to the deal say OSU vetted the firm during months of talks. Joseph Hoelker, CPA, and OSU alumnus Dr. Douglas Hoffman, co-owner of the specialty referral practices Cincinnati Care Center and Dayton Care Center, own VSMS.   

Hoffman told the VIN News Service by email: “Ohio State has traditionally contracted with outside entities when the university feels it lacks the needed expertise in a particular area, such as hiring food service vendors for athletics events. I want to be clear that this new facility is an Ohio State business. We have only been hired to manage the facility.”   

The deal’s financial parameters are unclear. The VIN News Service requested from OSU a copy of the college's contract with VSMS but has not received it to date. Moore, the school's associate dean for clinical and outreach programs, said the university has a nondisclosure agreement with the management entity.    

Franklin County records show that on Aug. 31, VSMS Real Estate Group — a company registered in June in Hoelker’s name — purchased the 9,900-square-foot building for OSU’s Dublin site from Interstate Gas Supply Co.    

The price tag: $840,000.    

Moore says that the university has agreed to loan the veterinary college up to $2 million to buy equipment and retrofit the space.   

"No donor or tuition dollars are involved," he said. "The money we generate will go back to the university."   

He added: "We will not be providing any routine/general practice services, and we will accept emergency and specialty patients on a referral basis from private practices during the day."   

Notable silence  

Whether that fact appeases veterinarians in the area is questionable. Many veterinarians were disinclined to go on the record with their opinions about OSU’s expansion to Dublin. Most of the practice owners contacted by the VIN News Service did not return phone calls.    

An official with MedVet, Columbus’s largest 24-hour emergency and critical care practice, asked not to be identified after giving a curt “We have no comment.”    

Dr. Barbara Lightner, co-owner of Capital Veterinary Referral Center, echoed that statement when asked whether OSU’s proposed ER facility might impede on her business or if the area could support more emergency veterinary care.    

One local practitioner who holds academic degrees from OSU and occasionally teaches there spoke on condition of anonymity for fear he’d be “blackballed” by officials with the university.     

He suspects that the silence of some might stem from a fear of becoming an outcast in a veterinary community with deep ties to one of the nation’s largest veterinary institutions. In the Columbus region, OSU has the power, he said, to hurt a veterinarian’s reputation and career. The veterinary college also is a major employer, even facilitating temporary jobs at weekend horse or dog shows.     

“People don’t want to get the university down on them; it’s a losing battle,” he said. “I don’t think there is a need for another emergency service — none of us do. But most of us don’t want to speak publicly about it.”    

A few veterinarians and clinic owners did speak, however. One was Renee Kelley, owner of Noah’s Ark Veterinary Hospital, a non-profit 24-hour emergency and primary care practice. Kelley is vehemently opposed to adding an emergency practice to an area she describes as oversaturated in veterinary services.    

Kelley is not a veterinarian. Her practice, which caters to a multitude of rescue organizations, is a 15-minute drive from OSU’s Dublin site. She employs four practitioners; two are recent OSU graduates.     

“I don’t know what Ohio State is thinking,” she said. “I’m an owner, I live in the real world, and it’s tough out here. I think they’ll take a lot (of business) away from people trying to make a living. It seems they can bully their way in anywhere.”    

Kelley notes that in her experience, veterinarians fresh out of OSU’s veterinary college lack real-world training and experience. Yet she doesn’t believe rotating students through OSU’s Dublin facility will provide them with the skills they need to be successful post graduation.    

“If they think they’re going to give these kids a real-world experience … oh, cut me a break. It’s still academia,” she said.     

Different medical, business models   

Dr. Jim Harrison, a board-certified orthopedic surgeon, agrees with that sentiment but doesn't think that an OSU-owned emergency and referral facility will take much business away from private practices.    

The former OSU adjunct professor and MedVet co-founder who has since cut ties with the practice explained that bureaucracy and procedural red tape bog down academic institutions, a situation that frustrates many pet owners.     

“Most people want one-stop shopping, a concept that is difficult to provide in academic institutions such as OSU,” Harrison said. “Cases there tend to be difficult ones and therefore take a lot of time and expense. Many patients require hospitalization and tests. Also, teaching is very time-consuming. When some pet owners experience such expense and delay, they begin to search for alternatives.”    

OSU draws clients from a wider demographic market than most Columbus-area practitioners, he added.     

“Between Chicago to New York, Columbus is a Mecca for specialization in veterinary medicine,” he said. “For OSU, the market is not just Columbus. It’s really a three-state area: West Virginia, Northern Kentucky and some of Indiana, and is therefore less of a rival for local clinics.”    

Harrison, whose clinic is situated between MedVet and OSU’s Dublin site, believes some people will seek his services rather than those of the new practice.    

“I get people who want to have things done cheaper, faster and just as good,” Harrison said. “In that environment, I don’t just survive — I thrive.”     

Still, he acknowledged that economic times are difficult for many practices.    

“Veterinarians are having to slice the pie thinner and thinner,” Harrison said. “This not only lessens income, it threatens the ability of a practice to grow and provide better care for its patients. However, northwest Columbus is a growing area and should be able to absorb another clinic.”   

Across the street from OSU’s Dublin facility is Dr. Michelle Gonzalez’s Rascal Animal Hospital and Emergency Care, a 24-hour practice. Asked whether OSU’s new venture generates greater competition, Gonzalez said she doesn’t see it that way.   

She thinks the new location will make referring cases to OSU more convenient for her clients.   
    
“We’re pretty full service here,” Gonzalez said, “but the clientele that seeks to go to Ohio State University isn’t the same clientele that’s coming to us. We’re a low-cost clinic, and most of our clients cannot afford emergency fees elsewhere.”   
    
Gonzalez explained that while her practice charges $60 for after-hours examinations, the rate at other area emergency practices ranges from $110 to $180.   
    
“We have a low markup on everything, even surgery," she said. "We are trying to decrease the amount of euthanasia due to cost by providing affordable care.”     

Success not guaranteed   

While the majority of satellite facilities are successful, not all are warmly received or survive economically.    

In 2006, the Virginia-Maryland Regional College of Veterinary Medicine (VMRCVM) sought to unite with the privately owned practice chain Banfield Pet Hospital to open a general practice offering some specialty and emergency care in Christiansburg, Va., about 15 minutes south of the institution’s campus in Blacksburg.   

The goal, university officials stated in a news release, was to offer more clinical training to students rotating through the practice and expose them to “everyday activities of routine veterinary care.”    

Right away, a statewide backlash brewed, with veterinarians voicing opposition to the venture. Many took aim at Banfield’s involvement, considering the chain’s controversial standing in the profession. Others railed against the prospect of academia creating greater competition for local practitioners — a possibility acknowledged by university officials.    

“It is possible that the introduction of more service capacity may introduce some competitive pressures in the immediate area in the short term,” the news release stated. But the VMRCVM’s teaching hospital in Blacksburg, Va., has always competed with local practices, officials reasoned.    

“Looking back over the past 25 years, a number of successful veterinary practices have developed within 20 miles of the college, suggesting that a growing critical mass of veterinary capacity actually increases awareness and demand,” said the news release.    

By March 2007, however, the university dumped the idea of collaborating with Banfield or opening up a satellite practice. Public outcry from the veterinary community was cited as the reason.   

That same year, the University of Wisconsin-Madison School of Veterinary Medicine's opened its satellite venture in Sun Prairie, 15 miles northeast of campus. Less than two years later, the specialty referral practice for companion animals closed. Its failure was blamed on the economic downturn and market saturation.     

Gingrich, the outspoken OSU alum and mixed animal practitioner, hopes that's the case for OSU. "To be honest, I hope this venture is a miserable failure for them," he said by email.  

He continued: “I am not afraid to go on the record and say this move by OSU is selfish and without thinking of what they are doing to the future of veterinary medicine. If they do not have enough room in their hospital to educate the students, perhaps they should stop increasing class size!”    

Two years ago, OSU added 20 seats to its veterinary medical program, raising the class size to approximately 160. The number of veterinary students enrolled in the graduate professional program is now 596, up 16 students from 2011, according to an OSU report.    

"The icing on the cake is they then tell students they need $70,000 salaries while they take business away from us and flood the market with veterinarians," Gingrich wrote in a VIN discussion. "I asked a student last week if she knew how much money she had to generate to justify that income and she had no idea. She told me they have never told them that, just what they need to retire debt."    

Some veterinarians outside of the Columbus region are equally opposed to OSU's plan. Dr. Warren Kaplan, a practitioner on Long Island, notes that the trend is spreading nationally. The Cornell University graduate's alma mater in 2010 opened a satellite facility 40 miles northeast of New York City.    

“All you alumni who send money to your vet school and/or parent university during their fundraising drives, WISE UP!!” he wrote in a VIN discussion. “You are sending them the bullets to put in the gun that is aimed at your practice!!” 

Dr. John Daugherty in Poland, Ohio, said he recently was asked to make a major donation to the OSU veterinary college, where he graduated in 1984. He declined, citing concerns about OSU’s satellite practice opening in Dublin, an area he considers well served by the specialty referral practices already there.    

“The explanations and rationale put forth by OSU to justify such a move are not convincing,” he said. “I’m hoping this isn’t just a way to increase income for the veterinary college.”    

   

   

   




VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email news@vin.com.



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