Screenshot from vets4pets.com
Balloons signal the opening of a clinic in December 2016 in Sudbury, a small town about 60 miles northeast of London.
When the practice where Dr. Sarah Croft works was acquired last year by the CVS Group, the largest veterinary corporation in the United Kingdom, Croft got an immediate £8,000 (US $11,400) per year pay raise. Croft didn't know what to expect from the ownership change but she was happy to be paid more.
About four months later, Croft, an equine veterinarian in her third year of practice, started becoming disenchanted.
First came a change in the gasoline-expenses policy. Croft, who drives as many as 2,000 miles a month to see patients, said the company stopped paying upfront for fuel. Instead, it began requiring practitioners to submit mileage claims for reimbursement — at a rate that she said doesn't quite cover the expense.
Croft, who asked to use a pseudonym in this story because she still works for CVS, said that of even greater concern, she next started being pushed to meet revenue targets.
“There was a lot of emphasis put on just bringing in more money, rather than on clinical standards and clinical performance,” she said. The pressure was exerted by her manager; Croft said there was no clear evidence to suggest the pressure was systemic in the company.
But a veterinarian at another CVS property says he got the same message. “I was told if I wanted to see salary progress, I would have to improve my turnover,” said Dr. John Browne, who likewise asked to use a pseudonym.
For Croft, the apparent emphasis on production over quality medicine was too much. She recently accepted a job at an independent practice, taking a significant pay cut in the process.
In addition to better pay at CVS, Croft acknowledges that she'll miss out on some other good things. Training programs and support networks, such as human-resources services, are more prevalent at big employers, she said. There also are more career opportunities, including in management and research.
But for veterinarians who prefer working for an independent practice, their employer options appear to be shrinking as corporate influence in the profession grows.
From Canterbury to crematoria
No one keeps precise tallies on what proportion of U.K. veterinary practices are owned by large corporations, but news releases and information posted online by the companies indicate a distinct upward trend.
According to its website, CVS owns more than 450 veterinary clinics throughout the U.K. and the Netherlands. The company (no relation to the U.S. drug-store chain CVS Pharmacy) was established in 1999 “to acquire and operate veterinary practices which were well established within their local community and had a reputation for high quality service,” the company states.
Its first property was the Barton Veterinary Hospital & Surgery in Canterbury. Today, CVS holdings include diagnostic laboratories, veterinary crematoria, a recruitment agency, an online dispensary and private-label products.
Another big player, Independent Vetcare, has acquired practices at an even faster pace. In January, it announced that it had “broken the 500 practice mark” after starting out in 2011 with 20 premises. Independent Vetcare's business model is different from CVS’s in that it encourages practices to maintain their original branding, thereby projecting an image of independence. Key business functions such as marketing and human resources, however, are managed centrally.
Independent Vetcare claims on its website to employ a significant number of veterinarians at the senior management level, while maintaining an “independent spirit” at the practices it acquires. “Your clinic is the heart of your community, and we want it to stay that way,” the company says.
Pets at Home is another large player. A pet-supplies retail chain, Pets at Home has 450 practices operating under two brands that it owns, Companion Care (introduced in 1999) and Vets4Pets (acquired in 2013). The company has acquired four specialty-referral practices, as well. Like CVS, Pets at Home is publicly traded on the London Stock Exchange.
It follows yet another kind of model: New practices mostly are built rather than acquired, and veterinarians who elect to become "joint-venture partners" may own a 50 percent stake in their practices, potentially funded by a loan arranged by Pets at Home.
Another large group is Medivet U.K., which owns about 250 sites. According to its website, “Medivet is owned and run by veterinary surgeons, and we are not a corporate entity but a partnership.” Like Pets at Home, it allows practitioners — known in Britain as veterinary surgeons — to own a share of their respective locations.
Combined, CVS, Independent Vetcare, Pets at Home and Medivet own more than 1,650 premises. Then there are smaller companies such as Linnaeus Group, which shows 17 practices on its website, including specialty referral hospitals.
The total number of registered veterinary premises in the U.K. in 2016 stood at 5,536, according to regulatory body the Royal College of Veterinary Surgeons. That means the four largest owners control about 30 percent of all practice locations.
By the reckoning of the Federation of Independent Veterinary Practices (FIVP), a nonprofit association established in 2016, half or fewer than half of practices in the U.K. are independently owned.
The group acknowledges that the estimate is anecdotal and notes that definitions of “independent” are fluid. FIVP governing committee member and practitioner Dr. Tim Wilson said the organization generally defines a practice as independent if the person in charge is physically based at the surgery.
CVS, Independent Vetcare and MediVet declined to comment for this article.
At Pets at Home, the director of corporate affairs, Brian Hudspith, said the company’s joint-venture model allows veterinarians to focus on building their clinical practice while the company takes care of things such as finance, marketing and HR. He said the group also provides field support in areas such as employee well-being, business development and the promotion of clinical best practices.
“For our joint-venture partners, our model is structured so that, once their practices are debt-free, they receive all the dividends that their practices generate. In addition, if they decide to sell their shares in the practice, they receive all the proceeds from the sale,” Hudspith said.
A 'perfect storm'
Companies such as CVS and Independent VetCare are growing aggressively because their business strategy, like many corporations', depends in part on generating cost savings through scale. CVS has become more efficient still by investing in its own laboratories and drugs.
CVS’s diverse holdings within the veterinary realm are reminiscent of the North American company VCA Inc., which owns animal hospitals in the U.S. and Canada, as well as a large veterinary diagnostic laboratory; and a purveyor of veterinary medical equipment. It also partly owns companies dealing in electronic client-communications and marketing; and in home-delivery of pharmaceuticals.
VCA itself was purchased last year by Mars Inc., an international conglomerate best known as a candymaker. In the veterinary realm, Mars now owns some 2,000 pet hospitals, including the practice brands Banfield Pet Hospital, Blue Pearl and Pet Partners. It also owns multiple pet-food brands, including Pedigree, Whiskas, Royal Canin, Greenies and Iams.
The U.S. also has a variety of mid-sized companies that are expanding rapidly, including National Veterinary Associates (NVA), VetCor and Pathway Vet Alliance. Like the U.K.'s Pets at Home, the retail chain PetSmart houses clinics in its stores. Last year, PetSmart's chief rival Petco began a concerted effort to place veterinary clinics in its stores, too.
In the U.K., the pace of consolidation is fueled by a “perfect storm” of factors favoring corporations, according to Wilson at the FIVP.
Among key drivers is the aspiring independent owners’ more limited access to capital. Wilson’s personal experience is a case in point: Co-owner of an independent practice in Somerset, Wilson borrowed about £345,000 (US $491,350) in 2005 to make the investment, using an unsecured loan carrying a “very good” interest rate.
“Now, post credit crunch, you're never going borrow that amount of money, you’ re never going to get it unsecured and the percentage above the base rate is going to be much higher,” Wilson said.
By comparison, corporations generally have greater access to capital, and therefore often can outbid veterinarians wishing to go into business for themselves.
Another factor Wilson cites is an attitudinal shift among younger workers, who he says want more flexible hours and are unwilling to assume the stress associated with starting a business. They’ re also likely to have student debt, since U.K. veterinary tuition has risen to around £9,000 (US $12,817) per year.
Other factors driving corporatization, he believes, include increased numbers of women joining the profession — some of whom may find it tough to balance family responsibilities with starting their own businesses, considering that women continue to shoulder more of the child-rearing duties than men. More than three-quarters of U.K. veterinary school graduates are female, according to the RCVS.
Government requirements — such as the new European data-protection regulation — also may weigh more heavily on independent practice owners, Wilson says, making it harder for them to compete with large companies that have their own dedicated compliance divisions.
Wilson said he joined the FIVP as a committee member because he believes independent practices are stronger together. Wilson did not provide membership figures, saying only that the numbers started picking up in the past year or so.
Membership in FIVP costs £10 (US $14) a month per veterinarian, capped at £50 (US $71) per month for practices with more than five veterinarians.
The association provides a business-listing service, promotes independent practices at council meetings and congresses, and offers members personal development and practice improvement services. Last June, it established a recruitment portal that lists job vacancies online. Also last year, FIVP formed a sponsorship deal with Vetsure, a buying group that also offers pooled insurance coverage. (Another buying group, VetShare, recently was acquired by CVS.)
Beyond the impacts of corporate consolidation on veterinarians' working conditions, Wilson said he fears that companies making drug-purchasing decisions from centralized offices can't cater well to the unique requirements of clients in different locations. For example, he cites a particular prevalence of tick-based infections near his clinic that might not be covered by a head-office decision targeting common worm infections.
“You know your area” better, he said, than someone who sits in a distant office ever will.
For its part, Pets at Home said its veterinarians have the latitude to prescribe their preferred treatments. “Clinical freedom is a central tenet of our model,” Hudspith said. “Our role is to leverage the scale of the group to make sure that our vets get the best prices for the drugs and services they require, but this is never at the expense of clinical freedom.”
Will everything become consolidated?
The U.K. veterinary market hasn't become concentrated enough to alarm antitrust authorities, which haven't stepped in to block recent merger deals, such as Pets at Home’s acquisition in 2013 of Vets4Pets.
Hudspith said the company doesn't expect independent practices to disappear altogether. “Our strong belief is there will always be a place for good independent practices and that competition from corporate groups will lead to better quality care and better services for pet owners.”
Companies including CVS and Independent Vetcare typically have targeted larger practices for the scale benefit, but Wilson said they're now approaching smaller outfits with just a couple of surgeons (including his own), as the number of larger targets dries up. He predicts there will be mergers among the large companies, as well, as has happened in the United States.
“At the moment, I would say it's a race to the top. They're just buying whatever they can,” he said.
Others aren't so sure. Brown, who works for a CVS practice and is considering leaving to set up an independent practice, doubts that the activities of large companies will stop talented veterinarians from starting their own businesses. Those who can't afford to might leave the profession altogether, he warns, causing a talent shortage that could crimp corporate-expansion plans.
“The problem with corporatization is that you remove one of the few remaining carrots in the profession to a long-term career: the opportunity to own your own business and the freedom that that might give,” he said.
He also wonders if big companies will be able to keep growing their profits while struggling to find staff and paying a premium to acquire practices. CVS Group shares have fallen by about 31 percent since they hit record highs in November, compared to a flat performance on the benchmark FTSE 100 index. Pets at Home shares are trading around 36 percent below their 2014 initial-public-offering price.
“At the rate it's going at the moment, there’s so much money being poured in that money has got to come back out at some point. So there's probably going to be a slowing of the rate of independent-practice acquisitions,” Brown mused.
“It's just a question of what state the profession is left in when that starts to slow.”