Veterinarians react to academia’s expansion into private sector

Ohio State's new specialty practice pits school against alumni, critics say

April 11, 2013
By: Jennifer Fiala
For The VIN News Service

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VIN News Service photos

Ohio State's decision to open an emergency and specialty referral practice in Dublin, less than 10 miles from the university's Columbus campus (above, right) has riled area veterinarians who say competition from academia is unfair to private practices. MedVet Medical and Cancer Center for Pets (above, left) will be one of several direct competitors.

Officials with The Ohio State University gathered April 9 at Confluence Park Restaurant in Columbus as part of an eight-city tour to talk with practitioners about the issues impacting the profession, including the veterinary college’s new emergency and specialty practice opening this month in Dublin, nine miles north of campus.

Given that half a dozen or so specialty and emergency practices reside within 20 miles of the Ohio State satellite hospital, contention is brewing about the added competition.

Strife between the veterinary college and some Ohio veterinarians — an estimated 85 percent of whom are alumni — has been building around the 10,000-square-foot satellite hospital since plans for its construction were announced last summer.

Dr. Barbara Lightner, a board-certified surgeon and co-owner of Capital Veterinary Referral Center, located less than 10 miles south of Ohio State’s Dublin practice, learned she’d have to compete with her alma mater for clients the morning plans for the new practice made the local papers.

“There are some significant issues when a (university supported) enterprise comes in to compete with people who’ve had to undertake private loans to start their businesses,” said Lightner, whose practice employs 10 veterinarians.

Ohio State's specialty practice in Dublin, like the veterinary college and university, is not-for-profit and tax exempt. Revenues above expenses will be reinvested into the academic and clinical program on campus, officials say.

“Anyone can come to a corner and set up a practice,” said Dr. Lonnie King, dean of Ohio State's veterinary college. “Columbus is growing. Why shouldn’t we be in that market?”

Because it’s already oversaturated, critics say. Between New York and Chicago, Columbus is a hotbed of tertiary veterinary care. At least half a dozen area practices already provide 24-hour emergency care and/or specialized veterinary medicine.

“In these economic times, the market cannot absorb another specialty referral practice,” Lightner contends.

Whether or not that’s true is debatable. King reports that the small animal caseload at the veterinary teaching hospital on Ohio State's campus grew 37 percent between 2008 and 2012; nearly 35,000 cases came in last year. “And that’s during a recession,” he noted.

Dr. Rex Riggs, owner of a general veterinary practice in Powell, Ohio, shares KIng's perspective and encourages Ohio State's move to Dublin. He notes that referring veterinarians now will have more choices for specialized care.

"... I feel this allows practices to choose the best for their patients," Riggs said by email.

He insists that negative feedback surrounding the project is being generated by a minority of area practitioners: "I really do think that we should look at this as a positive thing."

For many, however, the Ohio State-Dublin deal is less about slicing the economic pie than a philosophical, if not moral, quandary: Should academic institutions encroach on the businesses of private veterinary practices, many of which are owned by their former students?

Some, such as Dr. Michael Kotlikoff, dean of Cornell University’s veterinary college in Ithaca, N.Y., believe that moving out beyond campus is key to growth for many academic programs, including his own. Cornell opened a satellite specialty referral practice two years ago in Stamford, Conn.

“If you don’t want someone to compete with you, there’s a lot of reasons you can find why they shouldn’t do it,” he said. “No one wants to destabilize someone’s livelihood, but referral practices will only succeed if they are perceived as valuable by referring veterinarians. This is about market competition, and it can be done with sensitivity.”

If that’s the case, some veterinarians destined to compete directly with the Dublin specialty hospital aren’t feeling it. They counter that academia has a financial leg up compared with private practitioners looking to start a business. What’s more, a veterinary college dean has less to lose if a business goes south than the owner of a private clinic whose livelihood depends on it.

There’s “no skin in the game” for academicians, says Dr. William DeHoff, co-founder of MedVet, the Columbus region’s largest emergency and specialty referral practice. MedVet employs more than 70 veterinarians and is less than 10 miles from the new Ohio State-Dublin practice.

“Ohio State sponsoring this kind of activity against small business entrepreneurs is wrong,” he said. “Imagine if they opened a law firm in downtown Cleveland, or a dental practice in the suburbs. I think any other profession would go bonkers.”

Dr. Eric Schertel, also of MedVet, put it this way: “Who wants an unlimited supply of money plopped down next door to them? This is counter to anyone’s sense of fair play. Why would the university want to go against the veterinarians they graduated?”

Ohio State's name-recognition gives another advantage to the school hospital over nearby private-practice specialists, Lightner added.

“This appears to be a for-profit venture, and we’d like to know how it is germane to the college of veterinary medicine’s mission to benefit society through the education of veterinarians and protect the health of animals,” she said.

The answer, King said, is that the Dublin satellite will help finance the education of veterinary students on Ohio State’s main campus. He hopes that opening a hybrid specialty hospital with academic ties will help alleviate dwindling state support of the college’s $80-million annual budget.

“This practice will be a revenue generator,” King acknowledged. “And it fits with our mission: teaching, discovery and service. We will have our students, those who have an interest, do elective rotations through the facility. This will be a supplemental and complementary learning experience.”

King isn’t alone in his quest to shore up new streams of revenue. In recent years, at least half a dozen accredited veterinary medical colleges have turned to satellite practices to buttress their bottom lines and diversify revenues in the face of tremendous budgetary strains.

Cornell University’s veterinary college is one of them.

Changing landscape of academia

In June 2010, Cornell announced that it would launch “the world’s largest and most comprehensive university-affiliated veterinary satellite facility, employing 40 veterinarians.” The 20,000-square-foot Cornell University Veterinary Specialists, or CUVS, opened on Jan. 14, 2011, in Stamford, Conn., where Dean Kotlikoff says it’s been successful.

The location was chosen over Westchester County, an area of New York known for its wealth, after veterinarians there said the market couldn’t absorb another specialty practice, Kotlikoff said.

“When we first thought about starting this project, we had a large, open meeting in Westchester County and veterinarians there clearly had a number of concerns about competition,” he recalled. “They said, ‘We’re saturated,’ and we listened.”

That’s when Cornell administrators set their sights on Connecticut. “What we said was for this practice to be successful, we’d have to have the support of referring practitioners,” Kotlikoff said. “We looked specifically at Stamford because it was a fairly large area with no ER or specialty practice.”

That doesn't mean the area is devoid of tertiary care. While the VIN News Service could not identify a privately owned specialty referral practice in Stamford, a VCA general practice that employs board-certified veterinary surgeons is on Main St., a seven-minute drive from CUVS. Several other specialty hospitals are within a 20-minute drive, including VCA Veterinary Referral and Emergency Center in Norwalk, less than eight miles from CUVS in Stamford.

Officials with VCA did not return phone calls from the VIN News Service. A receptionist who answered the phone warned that because VCA owns the practice, veterinarians working there likely would not be permitted by the corporation to speak publicly about Cornell moving into the area.

Phone calls to other veterinarians in Stamford were not returned. Dr. Cheryl Sackler, who practices 18 miles north in Fairfield, says there are so many specialists in the state, “they’re cannibalizing each other.”

“I would never, ever consider opening a referral practice here,” she said. “We have traveling surgeons, plenty of referral oncology options and more general practitioners are keeping cases. The clients are getting sick of the expense. I’ve had more and more people absolutely turn me down for referral.”

Kotlikoff believes that most Connecticut veterinarians are OK with the Cornell satellite practice. “We had a good dialogue,” he recalled of meetings Cornell held with private practitioners. “The bottom line is that CUVS has grown tremendously through the referrals of surrounding general practices, who perceive it as valuable. The practice has an advisory group of local veterinarians who suggest services, procedures, and Continuing Education Programs that they would like CUVS to offer. We did our market analysis, and we did this in a collaborative manner.”

As for competing with the VCA specialty hospital, he notes that it's owned by a large corporation. “I think you could equally argue that providing referring veterinarians with more choices is not a pernicious activity. The only way we succeed is if individual veterinarians choose us over someone else,” he said.

What’s more, Cornell’s satellite practice operates as a for-profit, which levels the playing field, Kotlikoff said. “We pay our taxes.”

Still, there will always be naysayers, he added.

“I don’t think you can discount the fact that there is a conflict of interest if you go into any market and ask existing businesses, ‘How do you feel about me competing with you?’ You’re not likely to get overwhelming enthusiasm,” he said.

Conversely, campus teaching hospitals face competition from specialists who’ve set up shop in their areas. “Why shouldn’t Ohio State go out and compete with large specialty referral practices owned by groups of veterinarians?” Kotlikoff asked. “Are you saying that it is OK for those practices to compete with Ohio State’s teaching hospital, but not OK for Ohio State to offer a competing product and let it succeed or fail on its own merits? You could just as well say, ‘Ohio State trained you with referral cases, and now you’re coming in and taking those cases.’ I don't think that these practices went to the dean and asked, ‘Should we compete here?’”

Inside the Dublin deal

Competition aside, Columbus-area veterinarians have questions about the innerworkings of the soon-to-open Dublin specialty practice. In what some characterize as an unusual arrangement, Ohio State has outsourced the day-to-day management of the satellite practice’s operations, including the hiring and payroll of the practice’s employees.

Ohio State’s contract is with Veterinary Specialty Management Services of Ohio, which spent $840,000 last August to purchase the Dublin practice’s building in the name of a sister company — VSMS Real Estate Group.

The Dublin specialty practice appears to be the first academic client of Veterinary Specialty Management Services of Ohio, a company founded last year by Ohio State alumnus Dr. Douglas Hoffman and his longtime business associate Joseph Hoelker, a CPA.

Hoffman co-owns two specialty practices: Cincinnati Care Center and Dayton Care Center. Both are competitors of MedVet’s sister practices in the Cincinnati and Dayton areas.

How Ohio State’s deal with Hoffman’s management firm evolved is unclear; however Dr. Rustin Moore, chairman of Ohio State’s department of veterinary clinical sciences and associate dean for clinical and outreach programs, insists that the company was thoroughly vetted before the deal was made. Asked why the contract to run Ohio State’s Dublin practice wasn’t put to bid, university officials explained that the finance department has the authority to approve special purchases without going through a competitive bidding process, which Ohio law requires of most state agencies.

“State universities are specifically exempted from those requirements," communications official Shelly Hoffman said by email. She explained that the exemption is spelled out in the state's regulatory code.

Hoffman did not respond to a request by email from the VIN News Service to talk about the Dublin practice’s opening on April 29. In an interview last October, he explained his involvement with the project by stating, “Ohio State has traditionally contracted with outside entities when the university feels it lacks the needed expertise in a particular area …”

The 10-year contract between Ohio State and Hoffman’s company, received via a public records request, specifies that Hoffman’s Veterinary Specialty Management Services of Ohio will be paid a $403,164 fixed fee during the first 14 months of the practice’s operation, or $28,797 a month. From there, payments will be based on revenues: 8 percent in year two; 7 percent in years three and four; 6.8 percent in year 5; and 6.3 percent in years six through 10.

The management firm will receive bonuses based on the practice's success.

Any leftover revenues will go to the veterinary college, explained Moore. The university extended the veterinary college up to $2 million in loans to get the practice running, which must be paid back at a 4.5 percent to 4.75 percent interest rate within five years of opening.

"No donor or tuition dollars are involved," Moore said. "The revenue generated beyond expenses will get reinvested into the veterinary medical center.”

King added: “There’s no state money going into this project."

For now, several Ohio State veterinary students have been hired to work as assistants in the Dublin practice. In the future, fourth-year students and residents will have the opportunity to spend time in the Dublin practice through elective rotations, Moore said.

Student involvement is outlined in an Ohio State-authored FAQ about the Dublin facility, published in the January/February edition of the Ohio Veterinary Medical Association's magazine. In it, officials acknowledged that some clients prefer not to interact with students. "The (veterinary specialty practice) at Dublin will offer these clients an alternative delivery model where students are not required to be part of the visit ..." The FAQ went on to say that students "will not be involved with cases the same way they are at the main (veterinary medical teaching hospital)."

Whether or not Ohio State’s new facility serves an educational role matters little to Renee Kelly, owner of Noah’s Ark Veterinary Hospital, a non-profit 24-hour emergency and primary care practice that’s a 15-minute drive from the Dublin emergency and specialty hospital.

She vows to avoid referring cases there.

“I’m just one small owner, so my opinion won’t change a thing, but I think opening in Dublin is disrespectful to the veterinary community here,” she said. “I’m not anxious to be in competition with the university for emergency patients.”

Dr. Tom Klein, a private practitioner in Hilliard, just outside of Dublin, offers a resounding "absolutely not" when asked if he will refer cases to Ohio State's new practice.

"We've taken this as an affront," he said. "We're all private business owners here, and Ohio State sprung this on us. Clearly, this is about Ohio State making money. It wasn't a community-minded decision."

King, dean of the veterinary college, believes such comments represent a “small group of vocal people.”

“We’re not going to please everybody, and I can’t be in that business,” he said. “I’m in the business of developing this academic program.”

URL: //news.vin.com/doc/?id=5771646

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