Vets fret as private equity firms snap up clinics, pet care companies
HUNTSVILLE, Ala. — About a year ago, veterinarian Melissa Ezell started noticing subtle changes at the midsized animal clinic in Huntsville, Alabama, where she works.
She said she and other vets were feeling pressure from management to make a certain amount of money from every appointment. If a pet owner wasn’t going to spend enough, the message from management was to offer more services. She was urged to pack in more patients outside of normal business hours.
“Before, I never felt any pressure to be making a certain amount of money in a day,” Ezell, who started working at the clinic in 2021, told Stateline. “It was just, ‘Fill your schedule, practice good medicine, everything else will come.’”
The clinic is owned by National Veterinary Associates, one of the largest veterinary chains in the nation. In 2020 the company was acquired by JAB Consumer Partners, a global private equity firm based in Luxembourg. By early 2023, Ezell said, she felt a shift in atmosphere at the clinic and a greater focus on increasing profits.
Private equity’s foray into the human health care industry in recent years has drawn public outrage and legislative scrutiny as firms have been blamed for increasing prices, slashing services and shuttering hospitals to maximize shareholder profits.
Now, some veterinarians and advocates are sounding the alarm that private equity’s entry into the pet health care industry could lead to similar results.
Some states already have laws that prohibit non-veterinarians from owning veterinary practices, and some consumer advocates want states to review large-scale acquisitions in the industry.
“A large number of these funds are seeing veterinary medicine as a good profit center,” said Dr. Grant Jacobson, an Iowa veterinarian who serves on the board of the
Independent Veterinary Practitioners Association. He said he’s seen corporate-owned chains in his region drive up prices for consumers, suppress market competition and skirt state laws that ostensibly prohibit veterinary practices from being owned by non-veterinarians.
Private equity firms such as Shore Capital Partners, KKR, TSG Consumer and JAB Consumer Partners have spent billions over the past few years on veterinary practices, specialty animal hospitals, pet insurance services and pet food companies. Among the companies owned by private equity are PetSmart, PetVet Care Centers, FIGO, Thrive Pet Healthcare and ASPCA Pet Health Insurance.
Private equity firms say those investments are giving clinics and other providers the capital they need to buy better technology, and that they are improving efficiency. And in many cases, corporate chains can offer their employees better workplace benefits, such as health insurance.
In a statement to Stateline, National Veterinary Associates said its corporate philosophy is “grounded in vets making medical decisions and not a corporate office,” and that its program of shared ownership by veterinarians is “the industry’s largest such program and unique among our peers.”
“Our vision is to build a community of hospitals that pet owners trust, are easy to access, and provide the best possible care,” National Veterinary Associates said in the statement.
JAB Consumer Partners did not respond to Stateline’s request for comment.
More pets, more money Private equity uses pooled investment money from pension funds, endowments and wealthy individuals to buy controlling stakes in companies. The firms typically look for a quick return on their investment before selling it within a few years. They have been gobbling up small businesses in myriad industries in recent years — from nursing homes to car washes.
As pet ownership soared during the COVID-19 pandemic, private equity followed close behind. The pandemic years of 20202022 were “the peak years for private equity acquisitions of veterinary services and practices,” said Michael Fenne, senior coordinator for health care at the Private Equity Stakeholder Project, a nonprofit watchdog group that advocates for communities affected by private equity ownership.
Americans spent a record $147 billion on pet products and services last year. From 2017 to 2022, private equity spent $45 billion on deals in the veterinary sector, according to PitchBook, which tracks investment data.
The vet industry is attractive because it’s mostly made up of small, privately owned businesses that corporations can buy and consolidate into larger chains. And it’s mainly a cashbased business: Unlike in human health care, veterinary customers typically pay out of pocket, rather than rely on third-party payers such as insurance companies.
In some cases, private equity firms and other corporations buy community clinics from the veterinarians who own them for two, five or even 10 times their value. Then the firms roll them up into a larger chain of clinics that can corner a regional market.
It’s a strategy that can push other private owners out of the business, said Jacobson, the Iowa veterinarian. He spent nearly 20 years working at a privately owned practice in Iowa and had hoped to buy it when the original founder retired.
But the founder sold the practice to a large veterinary chain owned by Mars Inc. — the private company best known for owning candy brands that include M&Ms — for more than $1 million above his offer, Jacobson said. Mars, while not a private equity firm, is the biggest consolidator of pet care companies in the United States, owning pet food companies, pet pharmacies and veterinary care clinic chains such as Banfield Pet Hospitals and BluePearl.