Oregon is poised to allow unrestricted ownership of veterinary clinics in the state at the same time that it implements a new law requiring practices to be registered and undergo periodic inspections.
Proposed rule changes, scheduled for a vote of the Oregon Veterinary Medical Examining Board on Oct. 24, eliminate a provision that limits ownership of veterinary practices to Oregon-licensed veterinarians.
A facility owner who is not a licensed veterinarian would have to designate a licensed veterinarian as the "managing veterinarian."
The board has for years discussed removing the ownership limit, mainly because it’s difficult and costly to enforce, said Lori Makinen, executive director of the board. But the regulators were reluctant to lift the limit without first establishing authority over veterinary facilities, she said. Through its power to grant and revoke licenses, the board has jurisdiction over veterinarians as individuals but not over animal hospitals.
A bill passed by the Legislature in June and signed by the governor on July 1 gives the board authority over veterinary facilities by prohibiting their operation unless they are registered with the board.
Facility owners will receive registration forms and instructions in November, according to a letter recently sent to state licensees. Anyone with ownership interest in an Oregon veterinary facility who does not receive registration forms is obliged to contact the board. The letter states that veterinary medicine may not be practiced in an unregistered facility after Jan. 31. The proposed rules exempt government-owned facilities and teaching facilities at accredited schools.
The cost to register is $150 per year. The money is expected to help fund inspections that will be conducted at least once every two years starting in 2017. For 2016, registrants will be asked to self-certify that they meet the minimum standards. The standards, which generally relate to lighting, ventilation, cleanliness, orderliness, the availability of potable water and sufficient equipment to support the services offered, are not new, Makinen said, but have been in place all along.
However, up to now, the state has inspected facilities only to investigate complaints. Makinen estimated that the board has conducted six clinic inspections in the past 10 years.
State oversight of veterinary facilities is not unusual. The American Veterinary Medical Association counts 32 states plus the District of Columbia as having specific regulations governing the operation of veterinary facilities.
As for the number of states that allow open ownership of veterinary facilities, that’s harder to quantify. “There are so many gray areas,” said Adrian Hochstadt, former assistant director of state relations at the AVMA. “You have to check each state’s law, and even then, you better confirm with a licensed attorney or the appropriate state agency.”
An article by lawyer Edward J. Guiducci in 2008 outlines four general approaches taken by states. In addition to outright prohibiting or fully allowing ownership by non-veterinarians, some states permit ownership by non-veterinarians of up to 49 percent. Others have for-profit corporation acts that allow — sometimes in conflict with their professional corporation acts — non-veterinarian ownership.
But even in states that directly prohibit non-veterinarian ownership, there are workarounds. Guiducci says some allow non-veterinarians to provide administrative services to practices that technically are owned by a veterinarian. The veterinarian contracts for those services, which could include the physical facility, equipment, furniture, instruments, marketing, accounting, billing, training and recruitment of professional staff.
In an interview, Guiducci said he hasn’t conducted a comprehensive review of state laws since he wrote the article seven years ago but he believes there is a national trend of increasing ownership by non-veterinarians.
In Oregon, the rule that only veterinarians can own practices dates to the late 1990s, when corporate chains of veterinary practices emerged. Makinen, executive director of the state veterinary board, said the board at the time naively believed it could prevent the rise of big veterinary corporations in its state.
“Well, corporate practices found legal workarounds to keep their practices compliant,” she said. “We’ve never been able to enforce the [concept].”
Banfield Pet Hospital, the largest veterinary chain in the world, is based in Oregon. Another large chain, VCA Inc., also has multiple locations in the state.
The inability of the state to enforce veterinarian-only ownership is “a budget issue,” Makinen said. “We can’t afford to go up against an international corporation. If we can’t challenge corporate ownership structures, it wouldn’t be fair to go after the little mom and pop shop where the mom or pop is part owner [but not a veterinarian].”
Over time, the board came to believe that ownership wasn’t the critical point, she said. “We realized we really don’t care who owns the practice as long as we have somebody who’s accountable for compliance.”
In fact, sometimes having authority over a veterinarian-owner isn’t enough to uphold the standards, Makinen said. She pointed to a case recently investigated by the veterinary board and U.S. Drug Enforcement Agency (DEA) in which inspectors found myriad violations at a high-volume, low-cost clinic. The problems included poor sanitation, crowding, bad ventilation and missing controlled drugs.
On one visit, Makinen said, a regulator literally was sickened by the smells and sights.
The DEA asked the veterinarian to surrender his DEA registration, and the board revoked the veterinarian’s license on an emergency basis.
However, the clinic remains open because the owner has associates on staff, Makinen said, and pet owners continue to come, drawn by low prices.
The Oregon Veterinary Medical Association is in favor of the new law requiring facility registration and inspection, as well as the proposed rule change allowing unrestricted ownership.
“The focus will be on standards of care and the parameters around standards of care,” said OVMA executive director Glenn Kolb.
While some veterinarians favor ownership limits as an attempt to impede large corporations or nonprofits from running veterinary facilities, Kolb said such rules may also or instead impede family ownership.
A commonly given example is that of a veterinarian owner who dies, forcing the non-veterinarian spouse to sell a business he or she may have helped operate, thereby losing his or her livelihood.
In a real-life variation of the theme, Kolb said he knows of a practice manager in the Portland area who has run his father’s practice for years. The father is nearing retirement. “Father would like to sell to son, son would like to buy it. Current rules would not allow it,” Kolb said.
Still another variation involves a certified veterinary technician who’s also certified in practice management and aspires to own a clinic. “She’s mentioned to me, ‘Maybe I need to consider moving to a state that allows me to have that opportunity,’ ” Kolb said.
Requiring facility registration and inspections makes for more consistent government oversight, Kolb said. “This [oversight] will include veterinary facilities owned and operated by veterinarians as well as corporate-owned practices and facilities owned and managed by nonprofit groups. And it would include any facility owned by a veterinary practice manager,” he said.
Dr. Helen Sutthill, a practitioner in North Bend, is ambivalent about changing the ownership rule. “I can see the pluses and minuses of having non-veterinary owned and the benefits of having veterinary-owned,” she said. “I could argue it either way.”
One aspect of the proposal leaves her distinctly uneasy — the part where a veterinarian is made responsible for upholding the standards regardless of who owns the facility. “They’re giving the responsibility to people [in] a system where they may not be the person in charge,” Sutthill said. “All of the responsibility and none of the control? To me, it’s a train wreck waiting to happen.”
Sutthill owns her practice so her concern is not for herself but for colleagues, especially those just beginning their careers. “It would have been an issue for me when I was one, two years out [of school],” she said.
Makinen said the proposed rules require the facility owner to provide documentation that the managing veterinarian is authorized to maintain standards.
“The board would determine what form documented authority would take, [such as a] notarized statement from the owner of record, etc.,” she said. “The managing veterinarian would not need to prove lack of authority, only legitimate inability to effect compliance. An example would be an owner who refuses to correct structural, plumbing or air-conditioning deficits, or refuses to budget for or authorize purchase of required medications or equipment.”
The proposed rules allow an individual to be named managing veterinarian of no more than four separate facilities at any one time; none of the facilities may be more than 100 miles apart. The managing veterinarian also must be physically present at each facility at least five days in a 30-day period.
Figures provided by Makinen show the state with 1,864 licensed veterinarians. The board estimates the number of facilities at between 400 and 600.