Ex-Banfield execs spin off from 'impersonal behemoth'

Leaders say new veterinary company is 'completely different'; reviews mixed

December 13, 2018 (published)
By Leslie Helm

VIN News Service photo
At a newly built veterinary hospital located at WellHaven headquarters in Vancouver, Washington, CEO Dr. John Bork and Chief Medical Officer Dr. Robert Lester stand in front of a mural that is part of the WellHaven branding.

In the rapidly growing field of veterinary practice consolidators, one new company counts among its core team members 12 people who previously worked for the largest practice brand in the world, Banfield Pet Hospital.

The new player is WellHaven Pet Health, established in 2017 and headquartered in Vancouver, Washington, within 12 miles of Banfield headquarters.

WellHaven CEO Dr. John Bork was a vice president at Banfield for 17 years, with responsibilities that included hospital openings and business development. WellHaven's chief medical officer, Dr. Bob Lester, likewise was at Banfield for 17 years. As an executive there, he worked also for Banfield parent Mars Inc., the international candy maker conglomerate, which owns practice brands VCA, BluePearl and Pet Partners in North America, and other chains in Europe.

Lester also worked within the past two years for LegacyVet, a consolidator that has resold at least some of its acquisitions to Banfield.

Their histories notwithstanding, Bork and Lester say their intent at WellHaven is to build a company that not only is unrelated to but notably distinct from Banfield.

Bork said that the kind of nimble, innovative company he wants to create would be impossible at a large operation such as Banfield, with its 1,040 hospitals and 17,000 employees, 3,500 of whom are veterinarians. "At WellHaven we have small groups, so it doesn’t take two years to roll out something new," he said in an interview. "At our size, we are better able to react; we don’t have to be cookie-cutter."

Added Lester: "We are completely different from Banfield. We are organized with doctors at the top; it’s not MBAs in the corporate office telling people what to do."

An advertising agency in Portland, Oregon, that helped develop WellHaven's brand describes the company origins this way: "... Bork, and a small team broke away from the monochromatic, impersonal behemoth and set out to create something entirely different."

The WellHaven website in August showed 14 team members. Twelve were former Banfield employees, judging from their respective LinkedIn profiles.

Dr. Daniel Aja, who joined Banfield in 2014 as senior vice president of medical operations and became its chief medical officer a year later, told the VIN News Service he was unfamiliar with WellHaven but said there is "room for both."

Responding to WellHaven's implicit criticism of the Banfield way, Aja said there is more than one way to do things. He said he spent 25 years working in pet hospitals, including 21 years as an owner. Aja said what he likes about Banfield is that it has "a good group of expert vets that make all the medical decisions, but we also have experts on different facets of running the business that help us be more efficient, and therefore, more affordable."

WellHaven's website shows today that it owns 36 veterinary clinics in five states: Washington, Oregon, Montana, Colorado and Minnesota. Ten have WellHaven as part of their name; the others do not.

Several WellHaven veterinarians interviewed by VIN News expressed hope that the company will live up to its intention to be less bureaucratic and more responsive to veterinarians. Among them, two were uncertain or skeptical that that will be the case. The veterinarians asked not to be named for fear of retaliation.

"I'm glad they are offering an alternative to Banfield, I want them to succeed, but they are a bunch of men from Banfield who don’t know what it's like working in a small practice," one veterinarian said. "I worry that they are trying to grow too large too fast."

Bork wouldn't say how large he wants WellHaven to grow, only that he expected the company to have as many as 50 hospitals by year-end. According to the consulting firm Veterinary Business Advisors, "investors need to buy approximately 50 hospitals before they benefit from consolidated infrastructure" — in other words, price advantages on supplies, equipment and technology.

In July 2017, WellHaven received an undisclosed amount of private funding from Capricorn Healthcare, a private equity firm. In an announcement of the transaction, Capricorn described WellHaven as "a rollup of companion animal general veterinary practices across the Western U.S.," a descriptor that doesn't distinguish WellHaven from any other consolidator. But Bork suggested that, in contrast with the typical private-equity investor who expects a high return in five years, the Capricorn investment was guided by the longer-term vision of Jeff Skoll, a philanthropist who founded the investment group with the stated goal of "pursu[ing] his vision of a sustainable world of peace and prosperity."

While the usual private equity firm won't invest in broad infrastructure to support hospitals because such investments don't net a quick return, Bork said, "[W]e do it because we are in it for the long haul. We'll be here for 100 years."

The WellHaven executives say their intention is to acquire practices, keep the principals in place, and provide them with capital, technology and administrative support so that veterinarians can maintain work/life balance while still expanding their respective businesses.

A focus on local management, ample staffing

In its attempt to avoid the bureaucracy associated with large companies, WellHaven is using a pod approach. Each pod of 10 to 12 hospitals is led by a veterinarian who has 15 to 20 years of management experience. The lead veterinarian acts as a kind of consultant, suggesting ways that each clinic might improve its operations.

By way of example, Bork said pets often have significant neglected dental issues. The "consultant" might point out that one practice has just 3 percent of its revenues from dental care, while other WellHaven practices have as much as 23 percent. The consultant would then discuss with the practitioners in the 3 percent clinic whether its team needs more training in dental care, a new practice manager or new dentistry X-ray equipment to increase its dental business.

Contrary to a common assumption that practice owners looking to sell are male baby boomers nearing retirement, company leaders said they have found a different demographic of willing sellers. "Seven of the first 10 practices we acquired were run by women," Lester said. And rather than looking to retire, virtually all of those owners just wanted to spend less time on administrative tasks and more time with their families, he said.

Bork noted that many of the hospitals WellHaven purchased were so short-staffed, they didn’t want to see even one more new patient. "They were on the edge of burnout and suicide," he said.

"[To] the first 21 hospitals we acquired, we added 24 doctors," Lester said. He noted that WellHaven tries to avoid "one-doctor days," encourages four-day workweeks and provides benefits that include health, dental and vision insurance.

To better serve its many women veterinarians, they said WellHaven is making an extra effort to put women in top management positions. The company's chief operating officer, chief veterinary officer and a great majority of its lead doctors are women.

Next year, the company plans to open a center in downtown St. Paul, Minnesota, to provide on-site and online training and counseling to the veterinary community on issues that plague many doctors, including compassion fatigue, educational debt and depression. In the same building as the center will be a veterinary hospital that is one of 14 new "builds" that are open or will be open by the end of March and that will offer such services onsite.

Bork and Lester also touted the use of technology, which increasingly is found in independent and chain-owned practices alike. They said, for example, that WellHaven is testing a number of telehealth applications that will allow for remote analysis of clinical signs. In the not-too-distant future, “[V]eterinarians will be able to have virtual work days from anywhere," Lester said.

'In the background, we have this company helping us'

At least two doctors who sold their businesses to WellHaven seem happy with their decision. Dr. Anne Cooley, who sold a practice in Aspen, Colorado, to WellHaven in October 2017, had been reluctant to give up ownership. But, she told VIN News, she felt pressured by soaring health-care costs for her 15 employees and her growing workload. “We had two-and-a-half doctors doing the work of four. We barely get in bed quick enough before we have to get up and go back to work," she said, "but I didn’t feel comfortable borrowing more money to hire another doctor."

After joining WellHaven, the practice went from 2½ doctors to five, and added several nurses. Cooley said, "Revenues went up 16 percent while my stress level went down 90 percent."

Cooley said WellHaven gives her enough decision-making power that she still feels it’s her practice. "They want the principal doctors [in place] because we know the community and we know what works in our area," she said. Meanwhile, clients "don't really know we are corporate, but in the background, we have this company helping us."

Dr. Mary Philippson, director of a hospital in St. Paul, said she was working six-day weeks before she sold to WellHaven last year. The new ownership enabled her to hire a second doctor and buy an X-ray machine, which she said led to a revenue boost of 40 percent in one year. Best of all, she said, "I get paid more and work less."

At the same time, WellHaven has drawn internal criticism for the way it's introduced some new programs. For example, after the company installed software called FuturePet in its clinics, the program sent vaccination reminders to clients whose pets had died years ago. This upset personnel at the hospitals whose clients were involved.

Bork said introducing FuturePet was a mistake. “The technology was expensive and not fully developed. We tested it and it didn’t go well,” he acknowledged. The company has since stopped using the software and has committed to testing new technology before introducing it to all hospitals, he said.

Lester confessed that WellHaven has made other mistakes, including choosing scrubs that they thought would be good to use company-wide. When one doctor protested the choice, "We took a deep breath and brought her in on the decision and offered options," he said, adding, "We have a culture where doctors are willing to call us."

Still, the company doesn’t necessarily make decisions based on how well they're received by veterinarians. Last summer, for example, the company discussed with doctors the idea of introducing a pet wellness package — a preventive-care plan under which a regular monthly payment would cover immunizations, office calls and some other specified issues.

Some doctors voiced concerns at the time that the wellness programs would not cover the costs of treating more complicated illnesses, something that would be hard to explain to clients who might believe their pets were fully covered. The doctors also worried the services they provided for "free" under the program could end up reducing the production bonuses they are supposed to receive on top of their salaries. One veterinarian previously worked at a hospital where doctors were seeing too many pets a day because so many clients had wellness plans. She said that problem had not surfaced at WellHaven to date, but worried it might. “I won’t let eight to 10 pets be dropped off just so the company can meet some kind of quota [for the sale of wellness plans]," she said.

WellHaven stuck with the plan, causing some dismay. "I want to be a doctor, not a business owner," one veterinarian said. "I absolutely think they have a chance to make this a superior place for doctors to work. If they consolidate clinics and do it right, they are taking the burden of insurance and payroll off of us. But they have to listen."

Lester told VIN News that the wellness plans are designed to prevent complex problems from occurring in pets, and that WellHaven makes clear to clients what is or isn't covered. Cooley agreed. She said in her experience, customers have not been confused by the plans, and that the plans have been effective at encouraging clients to bring in their pets more regularly.

Lester maintained that WellHaven will continue to listen to its doctors because it must, in order to succeed. “Our number one metric for success is doctor retention," he said. That measure is something the broader community of veterinarians should find relatively easy to track.

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