Part of the issue at hand is that doctors and physicians are notoriously bad businesspeople. So once they build up a big enough practice, a lot of them will jump on the chance to sell the side of the business that they hate to a management firm.
Like many physicians these days, they see benefits of just being a W2 employee. It’s also a demographic wave, there’s a lot of near retirement folks that are winding down and these PE firms are providing liquidity for their practice. For the consumer though, it’s probably not a good thing at all
"Financialization" means the insistence on seeing "business" as a machine which is to be optimized to maximize return on money. It's in contrast to people doing good work for a fair price.
Compare these two veterinary practices.
One has an owner who is a vet, who got into the practice because they love animals. They hire staff who love animals. They charge enough money to live reasonably comfortable lives and pay off their vet school bills. They could charge more but they don't. They don't try to push unnecessary services to raise more money.
The second is owned by private equity, who got into the field because it has inelastic demand. Prices are carefully calibrated to extract the maximum amount of cash possible. They hire staff who focus on getting the most bang for the buck: they focus and push for expensive operations and do them in the shortest amount of time; operations which aren't cost-effective are passed over or simply not done. At every step of the road, "upselling" is a thing, to maximize money taken from pockets.
The first is what I consider the best kind of "business": Doing good fork for a fair price. Those kinds of businesses make the world a better place to live in.
The second is what I would call "financialization", and I consider the worst kind of business: Extracting as much money as possible for the least effort. Those kinds of businesses make the world a terrible place to live in.
The first kind of business is the kind of capitalism I want, not the second.
It makes sense for some businesses to actually be an "asset" - eg Coca Cola company. It is a reasonable argument that it doesn't make sense for a vet practice to be an "asset". Nor a law firm.
The problem is there's no rule you can apply that distinguished between those two, in a court of law or elsewhere. Unless you just look at if a bigger firm owns the vet office. But that doesn't help with the upselling vet or the large national organization who wants to help animals.
And say the owner-Vet who is doing it from a place of love takes a lone and needs to make some interest payments....what then!
Indebtedness and greed are hard to distinguish when black boxes. Always remember that.
Meanwhile, the PA next to him has what it takes from years of training but she will never open a vet clinic of his/her own.
Thats not capitalism.
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.
Just because a lot of regulations are bad (or enforced poorly) and some licenses are onerous does not mean "regulation === bad" or "licensure === bad."
But when bad regulations cause bad outcomes, it's pretty weird to focus the blame on the people warning that bad regulations can cause bad outcomes instead of how the regulations are flawed and whether they can be fixed.
See taxi medallions. Another example for a long time would have been FAA approval of new aircraft type certificates and the requirements creating a huge barrier for entry to get them that artificially prevented competition.
I haven't checked, but I assume that today there are more rules and regulations on doctors in the US than there were on the entire Soviet economy. Some of those rules are good, but most of them are in place because a hospital system or a medical association lobbied to put them in place so that they could keep barriers to entry high.
It’s actually very surprising we trust doctors so much (have inelastic demand for them) because for most of history doctors were more likely to kill you than not.
We didn’t get dirt cheap electronic because some engineer squeeze costs down and competed on price.
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 caring for my pets.
Also, another thing that I imagine is driving up vet prices is the unregulated pet insurance industry.
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.
Rescue organizations are often the best resource for finding a reputable vet.
One of my neighbors went to a big chain vet clinic to have her cat spayed. They charged her almost $120.
Meanwhile, the city will spay any cat you bring to the pound for free.
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.
Probably because more and more people are buying pet insurance -- our insurance paid nearly $20,000 to Sage for my dog's cancer treatments. I doubt I could afford emergency vet treatments without insurance.
I've always had vets peddle weird stuff but that was a real eye opener.
Then again I’m seeing places like Aspen Dental popping up all over the place so who knows
A free market (scary!) would lower the barrier to entry for proper vets to compete.
But because of rent, labor, and regulatory overhead, you are left to deal with an entrenched and disinterested incumbent.
A free market can also create an environment where pets are hurt and owners are defrauded. Regulations reduce waste, improve quality, and create more efficient markets.
Very curious that despite all of the licensing and regulatory schemes out there, these things still happen? What's the backlog like currently for such cases?
The courts are not an efficient solution, and it's too late for your pet. I don't want to sue people, I want my pet taken care of.
> Very curious that despite all of the licensing and regulatory schemes out there, these things still happen?
I don't understand: You're saying that regulations don't perfectly prevent all bad behavior?
Strict regulations don't guarantee this. Additionally, they can be counterproductive by blocking competition, resulting in only a few compliant vets in your area who might still harm your pet.
>I don't want to sue... courts are not efficient If a monopolistic vet knows they won't lose their license or face charges/fines because a court can't take do so, why would they be incentivized to be extra careful with your pet?
This is why medical care (human or pet) and capitalism don't mix well. If you are having a heart attack, you aren't comparing prices, and if your animal "child" is throwing up, you aren't calling around various vets.
Comparing human and (non-human, but I'll omit that) animal healthcare is flawed. Humans are paying for healthcare themselves and place an infinite financial value on their own lives. Animals don't pay for their own healthcare, so it doesn't matter how much they value their own lives, what matters is how much the owner values its life, which is in many cases not at all infinite.
e: Sorry, sometimes forget what kind of science denialism is cool now. Climate denial out, economics denial in.
Increasing profits does not make start up costs worse.
There's also a secondary problem whereby the existing chains can incentivize new vet grads to simply join up. Why go through all of the risk and trouble of starting your own clinic when the local chain is offering a huge sign-on bonus and reasonable annual salary?
Artificial price caps set by legislation or "benevolent" collusion of owners will only lead to fewer pets being treated overall.
This is just basic microeconomics.
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 clinics in anticipation of flipping them to PE roll-ups later.
My local vet seems to have gone down this slide. A long time ago it felt like a staff that really just cared about animals and had good prices. On my last visit it felt like I was bombarded with practiced pitches for different products and services at every step of the process. They even added some expensive vitamin product to my bill despite me declining it during the service. They removed it when I caught it on the bill before walking out the door, but only after a last attempt at pitching me on it. I could tell they were heavily incentivized to sell as much as possible. I didn't go back, but at this point I don't know where else to go.