Who Owns Veterinary Specialty Hospitals

Who Owns Veterinary Specialty Hospitals

I have published two previous blogs looking at who is buying veterinary hospitals.  The pace of acquisitions is continuing.  I now estimate that large groups (those that own more than 10 hospitals) control approximately 4200 hospitals which is approximately 13.5% of the overall veterinary market in the United States.  In the past, I have not looked at specific segments of the market, such as veterinary specialty hospitals.

The pace of acquisitions has been higher for larger hospitals than for smaller hospitals.  This is especially true for large multispecialty hospitals.  Many veterinary specialty hospitals were formed in the 80s, 90s, and early 2000s.  A large number of these hospitals grew quickly, had concentrated ownership, and now appear too expensive to be bought by single individuals. Many of the owners of these groups are now looking to retire.

The Veterinary Emergency and Specialty Market

I was interested in understanding the state of consolidation specifically for specialty and emergency hospitals. It is difficult to know exactly what percent of the market is consolidated because there is no documented total number of emergency or specialty hospitals.  These hospitals are also difficult to count because they have multiple forms including:

1) Single specialty practices that may be mobile, see patients out of multiple locations, or have a stand-alone practice

2)  Emergency hospitals which may be stand-alone, may provide care after hours and on weekends inside of a general practice, or may be part of a multispecialty hospital.

3) Multispecialty hospitals which may be a single group, work in the same building as a general care practice, or may be in one hospital with multiple separately owned groups.

Current Status of the Veterinary Specialty Market

After researching the market, I now believe that somewhere in the neighborhood of 70% of all specialty and emergency hospitals are owned by large groups. For the specialty analysis, I defined a large group as any ownership entity that owned at least 5 specialty hospitals or at least 15 primary care and specialty hospitals. As with the overall market, ownership falls into a few categories.

Wealthy Families

MARS, the 3^rd richest family in America, is by far the largest player in the veterinary space with its ownership of VCA, BluePearl, and Pet Partners.  The Reiman Family, which is one of the richest family in Germany, is now the runner up in this category.  The Reiman Family’s investment arm, JAB Holdings, acquired both Compassion First and NVA this year.  The Desmaris Family, one of the richest family in Canada, owns Lakefield Veterinary Group.  While, this group owns mostly primary care hospitals, it also has some emergency and specialty locations.

These 3 families now control over 200 of the largest veterinary hospitals in the country.

Private Equity Backed Groups

Private equity backed groups, including Pathway, PetVet, Community Veterinary Partners, Innovetive, Amerivet, Southern Veterinary Partners, and Alliance, own both primary care and specialty hospitals.  All of these groups pursue non-branded strategies, which means that it is difficult for pet owners to tell that the hospitals are not controlled by local veterinarians.

I suspect we will shortly see changes in ownership in this group as the private equity financing runs its course.

Specialty Groups with Investment Backing

Ethos Veterinary Health, MedVet, and SAGE all started as veterinary owned and controlled groups.  All three took investment partners in order to continue to grow.  The level of investment and influence of the financial backers varies among the groups.

Veterinary owned groups that do not appear to have outside equity partners

It is interesting to see how large some veterinary owned groups have become, sometimes with a single owner or a small group of owners.  Several of these groups have focused on a single specialty, which could be a continuing route for veterinary control in the future.  These groups are a testament to the opportunities that are present for entrepreneurial veterinarians.  However, it is unclear whether and how these groups will transition if they want to have continued veterinary ownership and control.

Interesting Counter Trends

I was intrigued to find a number of new specialty and emergency hospitals in competitive markets.  Many of these hospitals were started by veterinary specialists who had left specialty practices that had been acquired within the past few years.   This trend is more visible in states like California where non-compete clauses for associate veterinarians are not allowed. However, there are new specialty hospitals in a number of locations.  Given that much of the consolidation has happened in the past several years, it is possible that this trend could grow.  While students are graduating with large amounts of debt, financing for new practices has continued to be available.

Why do I publish these articles?

While I understand the reason behind these trends, I believe there are risks to patient quality, client cost, and veterinary work satisfaction if the industry is monopolized and not controlled by veterinarians.  My hope is to publish these articles to generate conversation and discussion in the veterinary community.  While change in all professions is inevitable, I believe veterinarians need to understand and drive the change rather than just be swept up in it.

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