I have owned an independent veterinary practice for the last 10 years. In some ways, it has been the hardest thing I have ever done; in others, the most rewarding. Overall, it has been a worthwhile endeavor which has proved, both personally and professionally, satisfying—lucrative, too. So, why aren’t more veterinarians excited about controlling their own personal/professional destinies and making money?
I have been thinking a lot about this lately. For starters, it is getting to be stressful owning a growing practice. My original aim was to spend a decade investing in this entrepreneurial undertaking so I could afford a full-time writing career. The idea was to sell the practice to my associates or to another coalition of veterinarians so I would not have to “sell out” to a corporate overlord. Unfortunately, I have not found any takers.
So far … crickets
There are plenty of reasons I could offer to explain why finding a like-minded group of entrepreneurial veterinarians might prove difficult, but let it suffice to say finding even one willing to purchase a percentage has been remarkably challenging. Given this realization, I have fully given up on the idea of forging a coalition willing to purchase the entire practice. It is just not realistic.
If I had to name one overriding reason, I would say it comes down to the fact few veterinarians are interested in owning a practice—and I get that. In fact, by 2014, I had already written at least 10 articles openly citing my personal reluctance to pursue practice ownership.
However, all of that changed once I was offered an opportunity I could not pass up at a small practice that might have otherwise folded. So, when seeking veterinarians interested in buying in, I figured I would be able to entice at least a couple of converts to the cause, much the same way I would become convinced—but so far … crickets.
An outsider’s assessment
Last month, my mother forwarded an article from The Atlantic titled, “Why Your Vet Bill Is So High.”1 After reading its title and caption, I knew it would be a hit job condemning recent changes in veterinary medicine’s evolution with respect to practice ownership. I also had to admit it was somewhat more nuanced than the introductory language had led me to believe. Here’s what it concluded:
Veterinary medicine is no longer run by veterinarians. Individual practices are encumbered by forces too powerful to control by the very professionals they rely on for their existence. Therefore, the prices pet owners pay for the privilege of our service are no longer in the veterinarian’s hands, but rather in those of the private equity money that flows into, controls, and corrupts our financial structures for the betterment of animal-uninterested investors.
Of course, this overriding assessment is accurate to some extent, but it is also shockingly simplistic. After relying on veterinarian testimony to the trials, tribulations, and tension of working for a corporate master, the article goes on to describe some additional factors underpinning these changes. Sure, it details veterinary reluctance to enter into practice ownership, but it skimps on some of what I consider the most salient issues as it demonizes the easiest of targets: corporate greed.
An insider’s rebuttal
Now, if you have read any of my past posts and columns you will know there is no love lost between myself and our industry’s corporate interests. (Indeed, I decry them at most every turn.) In this case, however, I will have to admit to the presence of forces—both intrinsic and extrinsic—affecting the makeup of veterinary professional attitudes, altering them in ways that make us increasingly averse to entrepreneurship in general—not just to practice ownership.
Here’s a list of those forces as I see them, starting from the industry outsiders most egregiously overlooked factors to our associates’ most oft-cited reasons as to why they don’t plan to pursue practice ownership:
1) The higher cost of higher education
This is the most obvious and least cited cause for the expansion of corporate interests in veterinary practices. When you have graduated with $200K-plus in student loans, who in their right mind has the stomach to take on even more debt? As someone who finally discharged her debt only two years ago (after the age of 50!), I hear you. I could not even contemplate practice ownership until well into my 40s, when I had paid down the bulk of it.
Ever since land-grant institutions became a thing of the past, and veterinary medicine was no longer subsidized by governments interested in graduating veterinarians in the interest of public good, things have been going downhill for veterinarians even marginally interested in private practice ownership. Coupled with the emergence of for-profit veterinary colleges (with their corporate stakeholders), the higher cost of debt, and rising prices in higher education overall, it is a lose-lose-lose-lose for anyone harboring even the most meager practice ownership aspirations.
2) Diminishing margins among independent practices
“The Big Squeeze” is what I call it. The amount of money to be made by owning a veterinary practice is no longer what it once
was. Consider:
- Pharmacy incomes and product sales have tanked given alternate distribution routes and corporate consolidation among manufacturers and distributors (leading to much higher wholesale prices, which further fuels price-shopping).
- Consolidation in veterinary laboratories and other outside equipment and service providers has also forced diagnostic margins into the toilet.
- Then there’s the rising cost of payroll and… the hugely advantaged corporate competition.
It is no wonder independent practice profit margins hover in the high single digits. It’s hard to make it work unless you are a seasoned, savvy entrepreneur. In today’s world, practice ownership is a harrowing prospect for all but the boldest.
3) The unsurmountable price of practice ownership
Practices are getting pricier all due to increasing competition from the private sector. I’m talking millions … for even the smaller practices. Starting your own often comes with even higher risks. What solo veterinarian—even a seasoned one making top dollar—can afford one?
After all, starting salaries may be high, but our earning potentials plateau pretty quickly and lending comes at a premium these days.
Forming a coalition of veterinarians is one obvious answer. Unfortunately, I have learned (the hard way) herding cats is easier said than done. Consider the truism: Those who have the drive to own do not often possess the drive to share.
4) Decreased aspirational diversity
I’m going to advance an unpopular notion: As veterinary student debt soared and veterinary earnings declined (in relative terms), the profession has experienced an attrition in interest from those who see veterinary medicine as a path to generating wealth. Now, this is not a bad thing—in theory. When there is a lack of diversity in motivations, interests, and experiences among a profession’s membership, the result can be catastrophic.
It is not necessarily about gender, ethnicity, or anything else traditionally considered “diversity.” It is more about diversity of thought, experience, educational background, and culture. Our lack thereof effectively renders us what is arguably the most culturally homogenous profession in the U.S. The result is a group of like-minded people who may love science and animals more than any other generation in the history of our profession, but, sadly, also lack a range of personal and professional goals.
Other reasons
There are so many other powers in play (educational, generational, familial, and geographical factors, etc.), but in my view, these four are the most daunting stumbling blocks to practice ownership. To be sure, practice consolidators play an outsized role, as The Atlantic advances. Nevertheless, we would not be here if more insidious forces hadn’t conspired to crush our profession’s once-thriving entrepreneurial spirit.
Patty Khuly, VMD, MBA, owns a small animal practice in Miami, Fla. and is available at drpattykhuly.com. Columnists’ opinions do not necessarily reflect those of Veterinary Practice News.
Reference
- https://www.theatlantic.com/ideas/archive/2024/04/vet-private-equity-industry/678180/