It’s cooling off some, according to this article in Veterinary Practice News.
For so long veterinarians have been criticized as, “only being in it for the money.” We all know how untrue that is, but consolidation and private equity groups – they certainly are in it for the money.
Senior veterinary students are being offered lucrative signing bonuses and attractive first-year salaries to attract them these corporate practices. This has industry-wide effects, driving up veterinary cost to consumer is the biggest. If a privately held practice has experienced growth and wants to hire a new graduate, they’ll have to offer something just as attractive. That money will have to come from somewhere – most likely some healthy price increases or creative expansion of services.
And those associates who have been working for several years for a practice ? They certainly have a wealth of experience to offer – hopefully those price increases allow them to be paid for the value they bring. These corporate consolidators offering wild multiples of 5-18x as the article mentions crushes the dreams of those associates who were hoping to buy-in to the practice they’ve called home for a few years. It leaves them the option to start up their own practice, buy a small practice that doesn’t interest consolidators, or just stay on and work for the corporation.
Those attractive starting figures presented to graduating veterinarians will last a year, but we all know their salary will eventually have to be tethered to the revenue they produce. In subsequent contracts, they’ll be paid 25% of their production. It is tough not to think about up-selling someone to make your numbers that the company is pushing. Consolidators will adjust prices upward to support their goals.
On the equine and large animal side of the industry, where I’ve spent my career so far, the lower salaries that have historically been a problem is now even more of an issue. Consolidation is limited in equine practices to mostly referral hospitals. It’s nearly impossible to market a primary care large animal job to a senior vet student – lower pay, longer working hours, higher risk of injury, and emergency duty that encroaches on their family life. There a few exceptions, especially those who have had positive mentorship experiences with these practices. These young veterinarians have the same student debt as their companion animal colleagues who are entertaining much higher offers. So, we’re now seeing equine practices having to increase pricing, beyond what inflation required, to generate the revenue needed to retain young associates and hopefully attract new graduates to replace those retiring.
We have long-discussed the lower salaries in veterinary medicine compared to other doctoral level health professions, so perhaps we are catching up some. It’s happening fast. I worry about rural and lower income areas. Practices in these areas often do not make enough to be of interest to consolidators and revenue doesn’t permit the clinic to offer a salary that attracts a new doctor.
It’s challenging to wrap my head around it. I am happy to see veterinarians being paid their value. I’m happy for retirement age doctors who have sacrificed so much to receive a generous buy-out. But I also know that working conditions and conflicts of the heart and mind have powerful effects on longevity and happiness. Euthanasia due to finances and anger directed at veterinary staff when money becomes an obstacle takes its toil. I know that when production goals are pushed at a team, it will interfere with care. It is challenging to know that the main interest in leaders at the top is profit. These companies buy one another so much, and many are now foreign entities.
Personally, I’m happy to see consolidation cool down some. I like the bubble popping. We have to take time to adjust to a new normal and understand effects this has across the industry. We also have to take care of the patients in front of us, and support the communities that support us. We have to say yes to mentoring students to be sure we are still getting good people with great intentions into our profession. We have to make sure they know how important it is to be a part of a community and the opportunities entrepreneurship allows for them to do that and to make decisions in-house that best serve the team, clients, and their animals.
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