FTC acts against private equity firm’s acquisition of veterinary clinics • Hacker News Board

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#151

Post by clairity » Mon, Jun 13, 2022, 6:55 PM UTC

PragmaticPulp wrote: post #61

Vet clinics became very popular private equity targets recently. One of the people I know in PE described their profit margins as being surprisingly high even before PE roll-ups. They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic. There was a secondary rush where people were trying to acquire vet clinic…

don't ever go to any ACCESS animal hospitals then. they're prominent in southern california, and probably beyond, and sold out to PE many years ago. they take advantage of pet owners in the most acute veterinary situations to bilk them (or their insurance) out of many thousands of dollars. it's despicable.

i was so furious i nearly punched a vet there who was hard-selling me on very expensive cancer treatments for my (then dying) cat a few years ago when he hadn't even confirmed it was cancer (there was much more to the story, but i'll leave it at that). that was my one and only visit. never again.

i've since found a great vet working at a non-profit rescue organization. she's no-nonsense, genuine, caring, but importantly, unconstrained by financial metrics. when the sibling cat was dying, she recommended palliative care (and generic medicine from a formulary) over low-odds treatment, because the best case was a few more months at the cost of significant agony for my cat.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#152

Post by barbecue_sauce » Mon, Jun 13, 2022, 6:56 PM UTC

zucked wrote: post #87

jey wrote: post #14

Interesting. Doesn't Mars own a ton of specialty vet clinics too? (E.g. the VCA chain)

Like... Mars candy? looks Yep, that Mars. What timeline am I stuck in?! I want off this train :(

I mean, they own Banfield and have been in the pet food business since the 30s, so...

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#153

Post by idrios » Mon, Jun 13, 2022, 6:56 PM UTC

PragmaticPulp wrote: post #61

Vet clinics became very popular private equity targets recently. One of the people I know in PE described their profit margins as being surprisingly high even before PE roll-ups. They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic. There was a secondary rush where people were trying to acquire vet clinic…

My mom and step-dad have run a small veterinary clinic for the last 20+ years, they recently sold to one of these companies for a lot of money because mom was completely burnt out and wanted to retire. Step dad agreed to continue working for 3 more years though to ensure a smooth transition, mom worked for an additional 6 months and very recently retired.

They both despise the company. Before selling they were not beholden to any boss or investors, and worked hard to do the best for their clients and their pets. Now they're forced to use systems they have no control over. People can schedule appointments online through a system they don't manage, which means they could end up needing to euthanize an animal that they've known for 15 years at 9 in the morning, and then 5 minutes later have to pretend they're completely ok and happy to accommodate a new client with their new puppy. Step dad says it makes him feel like a psychopath.

They also take issue with the fact that there's no screening of the appointments that are scheduled. To test it, he scheduled an appointment to a nearby hospital on the same network with the description (and I apologize for the morbidity, keep in mind this didn't really happen and he just was making a point), "Garage door was accidentally shut on my dog's head and severed it. Can you please reattach it." It was approved and apparently nobody noticed it until an hour before the appointment was supposed to happen.

On top of that, now he's started dealing with corporate politics that he's never encountered before, and he says he's worried there will come a day that he just loses all motivation to go to work.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#154

Post by snapetom » Mon, Jun 13, 2022, 6:57 PM UTC

AlotOfReading wrote: post #21

nominusllc wrote: post #5

I don't understand how some ( to me ) obvious anticompetitive corps seem to go unnoticed, but in this case veterinary clinics are receiving scrutiny.

My partner works in this industry and in fact has friends that are affected by this merger. While the FTC can and does have the ability to do many things simultaneously, the current situation in the vet industry is dire . Corporate vets are more profitable (through price-gouging), have a virtual stranglehold on increasingly limited labor pools, and are pretty much the only ones that can afford to invest in specialty…

My wife is a vet and is affected by this. We are not in the states affected, but she works for one of the corporations involved.

This has been a long time coming. As another comment said, with a few anecdotal exceptions I can think of, many vets simply aren't good business people. Margins have been incredibly small since veterinary care became a thing. Vet schools have required business literacy classes for a few decades, but this is an industry where people get into it to help animals first, not get rich.

Corporatization came in to fill a void, but whether it's good or bad, the economics for veterinary care, and especially consumer perceptions, are due for a reset.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#155

Post by shakes_mcjunkie » Mon, Jun 13, 2022, 6:59 PM UTC

mirntyfirty wrote: post #113

shakes_mcjunkie wrote: post #82

Earlier quoted context omitted.

> They said that some PE firms were on a mission to acquire all of the vet firms in metro areas and then drive prices up even further because the demand is so inelastic. I searched recently for a nearby vet in Chicago and probably out of 15, only 1 was not owned by a larger chain or company. Big bummer. It's hard to trust that a vet that's part of a chain isn't going to have perverse incentives when it comes to carin…

True although some of the large PE firms do their best to hide the affiliation.

Oh yea I'm sure. Many of the chains I'm not sure what type of company they were. But just the fact that vets aren't a small, locally owned businesses concerns me. I'm sure some of the larger chains are either PE firms or owned by PE firms.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#156

Post by andjd » Mon, Jun 13, 2022, 7:00 PM UTC

I'm bothered by these half-measure enforcement actions. At the end of the day, the company is allowed to buy up 16 clinics but must divest of 6. At these numbers, it seems like if there is a threat of monopolistic market failure from the merger, then even with this countermeasure there is still a threat.

Leading into this is the obvious observation that a company forced to divest some of it's assets to comply with an order like this is incentivized to shed it's lowest-performing assets, and is also incentivized to sell them to an incompetent operator. This makes it likely that the divested assets won't end up being an effective competator.

Consider with the T-mobile/Sprint merger. One of the brands spun off as part of that deal has already ceased operations, and the other has negligible market share.

The oversight regulations are also odd. They are a tacit admonition that the resulting company has too much market power. If they have too much market power today, why would these restrictions sunset in 10 years? Sure, they may not have unreasonable market power that far in the future, but shouldn't the company have to petition to be let off of this oversight, e.g. to prove that they no longer are a dominant player with excessive market power?

It seems like the correct answer for the FTC when they address mergers like this it to just say no.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#157

Post by AlotOfReading » Mon, Jun 13, 2022, 7:00 PM UTC

PragmaticPulp wrote: post #146

IG_Semmelweiss wrote: post #114

The only answer to this issue (and make no mistake, its happening in medical care for humans too) is to not restrict conpetition. With yields so low, and the stock market still above 2019 highs, PE firms are diving into the few areas of the economy where there is value due to lack of competition and it is also not completely overheated. However, take out the permit and licensing requirements and you would plummet PE…

> However, take out the permit and licensing requirements Remove permitting, licensing, and educational requirements from people selling surgical procedures for animals? No thanks. I don't actually see occupational licensing as a bottleneck for a job that requires significant education and training to do properly anyway We don't have a backlog of veterinarians out there who completed all of their years of training bu…

Currently about 3,200 vets graduate each year. About 4,400 veterinary positions open up annually according to the BLS [1].

[1] https://www.bls.gov/ooh/healthcare/veterinarians.htm#tab-6

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#158

Post by WaxProlix » Mon, Jun 13, 2022, 7:01 PM UTC

pclmulqdq wrote: post #142

Avicebron wrote: post #129

Earlier quoted context omitted.

what do you mean? That's exactly capitalism, it favors inequality heavily. The Vet made it to the top of the heap, and is now utilizing the PA as an exploitable workforce. Tech example, BigCo A gets first mover advantage, equally good BiggishCo B is a bit behind (for whatever reason), BigCo A leverages their position to prevent B from being able to compete long term - usually by acquisition, they work for us now.

It's not capitalism because a licensing cartel artificially keeps the supply of vets low by keeping out qualified PAs and nurses who could handle easy cases.

It's exactly capitalism because concentrations of capital form and end up with a critical mass that controls various aspects of society - in this case licensing. It's also something that's literally happening under capitalism, right now, in very capitalist America.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#159

Post by renewiltord » Mon, Jun 13, 2022, 7:01 PM UTC

I actually really enjoy the rush of private equity into things like housing and veterinary clinics. The thing with these industries is that it was distributed protectionism. Some people were either running a licensing protectionism operation or a political protectionism operation. Now, private financial firms are exploiting that gap which is making it visible.

There's no difference between the guy who's all like "Why should I let my property values drop?" and the firm who bought the home next to him with the same mindset. The outcome is the same.

Re: FTC acts against private equity firm’s acquisition of veterinary clinics

#160

Post by falcolas » Mon, Jun 13, 2022, 7:02 PM UTC

tyrfing wrote: post #110

jessaustin wrote: post #79

Earlier quoted context omitted.

It's mostly health insurance firms. That's a much bigger sector in USA than it is anywhere else on earth.

Low single-digit operating margins aren't typically described as "so profitable" in any other context.

An average of 5.5% margin against revenue in the *trillions of dollars* is astonishingly profitable.