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Pet Health Care Monopoly
Is the Mars acquisition of VCA cause for concern?

An explosive, must-read article in Bloomberg Business Week looks at what happens when big business monopolizes the pet health business and how this corporatization might not be in the best interests for our dogs. 

Ever wonder why many veterinarians do not heed the 2003 American Animal Hospital Association’s recommendation for core vaccines to be administered every three years? Instead a number of vets still prescribe annual vaccinations—with boosters for distemper, parvovirus and adenovirus. According to the Bloomberg article the immunologist, Ronald Schultz, from the University of Wisconsin School of Veterinary Medicine, was one of those researchers who recommended this three-year protocol in the 1970s. He recalls that the AAHA Canine Vaccination Task Force, facing a revolt from vets about the decrease in their future vaccine incomes, struck a compromise at three years instead of the once-in-a-lifetime approach that he and others recommended. But yet you can find that annual vaccines are still being recommended by the 1,000 Banfield Vet Clinics in this country. Another surprising fact is that pet vaccines seem to be the only vaccines where one size, seemingly, fits all—the doses are the same regardless of weight or size of the animal, so the same 1 milliliter is given to a Chihuahua or an Irish Wolfhound—very little research has ever justified that approach. Bloomberg points to an example from Banfield's software program "Pet Ware," used to instruct the veterinarians in diagnosing and prescription advice:

“the book shows a checklist of therapies for a dog with atopic dermatitis, or itchy skin. Doctors are encouraged to recommend a biopsy, analgesics, topical medications, antibiotics, a therapeutic dietary supplement, an allergy diet, and a flea control package. They’re required to recommend antihistamines, shampoos, serum allergy testing, lab work, a skin diagnostic package, and anti-inflammatories. It’s a treatment course that might run $900 for symptoms that, in a best-case scenario, indicate something as prosaic as fleas. The manual reminds doctors: You cannot change items that were initially marked Required. They must remain required.

No wonder the pet health industry is booming and going through a period of rapid consolidations, Banfield, located in many PetSmart stores, was purchased in 2007 by Mars, the candymaker and pet food giant (the largest in the world with over $17 billion in sales from brands like Pedigree,  Cesar, Eukanuba, Iams, Natura brands, Royal Canin, Sheba, Nutro). Then in 2015 the Mars Petcare portfolio of vet clinics grew when they acquired BluePearl Veterinary Services, with an additional 55 locations.

Mars, seemingly, facing a slowdown in consumer purchases of prepared/package foods and sugary products, is acquiring even more veterinarian companies and it was announced that their newest acquistion that they are paying $7.7 billion is VCA, Inc., the veterinary and doggie day-care business based in Los Angeles. VCA owns 750 hospitals and employs 3000 vets and 23,000 people, and had a 2015 revenue of $2.1 billion. The Los Angeles Times noted that “VCA has used acquisitions to combine hospitals, diagnostic labs and veterinarians into its network. In 2014, the company even acquired a dog day-care chain called Camp Bow Wow.” 

And similar to Banfield’s approach, the Times notes that “VCA has been criticized at times by some customers for requiring tests that can be costly, but VCA maintains that it’s against its policy to sell unnecessary tests or treatments.” But 41 percent of VCA’s operating profits comes from their company’s Antech Diagnostics that also does bloodwork and other tests for more than half of the country’s hospitals, including their own of course. As Bloomberg reported, Tom Fuller, VCA’s chief financial officer, puts it this way when he speaks to investors: “Diagnostics is what grows the industry.” And the company’s business strategy has been “to leverage our existing customer base by increasing the number and intensity of the services received during each visit” (as found in their annual financial reports by Bloomberg reporting.)

Pushing tests unto clients is “good” for business, if not always for their clients’ pets,

"according to Wendy Beers, a veterinarian who resigned in 2014 from a VCA hospital in Albany, Calif. 'Every month they would print out things to say how many packages you sold, how many procedures you did,' she says. 'And if they came out and said, ‘This month we want everyone to do 20 heartworm tests,’ and you only did eight, well, next month you have to do better. I don’t feel when they’re lecturing us that their chief interest is to make sure animals get the best care.'”

According to Ken Shea, an analyst at Bloomberg Intelligence, who says that with Mars’ expanding presence in animal hospitals, the company will have an opportunity to use the facilities to sell even more of its pet foods. Is this troubling news for pet parents? A recent class action suit brought on behalf of consumers by a San Francisco law firm thickens the plot further when you consider that this suit contends that pet food manufacturers (including Mars) and retailers (such as PetSmart) are using "prescriptions" to justify overcharging consumers for food that contains no restricted ingredients. Neither the FDA nor any other government agency mandates such prescriptions.

Bloomberg clearly makes the case why all these things, like over vaccinations, unnecessary testing, false prescriptions for pet food matters is that veterinary medicine is largely unregulated. And one of the reasons why businesses like Mars find the pet industry a good investment strategy is that

“...pet owners pay cash: Vets don’t deal with insurers haggling for better prices or questioning whether that vaccine or ultrasound or blood panel is really necessary. (A small percentage of pet owners carry insurance, but they pay vets upfront, like anyone else, and then take on their insurers for reimbursement.) What’s more, when veterinarians make fatal mistakes, they face no real financial consequences. The law hasn’t changed to reflect the attitudes of the average pet owner; courts still treat pets as property. Damages paid to owners whose pets have been killed or injured are so low that a typical medical malpractice insurance policy for a veterinarian costs less than $20 a month. Damages are so low, in fact, that few pet owners can find a lawyer willing to take even the most egregious case of veterinary malpractice.”

So, yes, it should matter, and as always, it is good to understand what you are up against, what to expect if you use any of these services, to double check before you agree to over vaccinations, or receive a “prescription” for pet food, you are after all the only advocate your dog has and the better informed you are, the better decisions you will make. Nancy Kay, DVM, author of Speaking for Spot: Be the Advocate Your Dog Needs to Live a Happy, Healthy, Longer Life, added that she “feels truly disheartened for my profession” about this expansion of Mars’ vet monopoly. Be sure to read the Bloomberg story and get the word out.

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Claudia Kawczynska is The Bark's co-founder and Editor-in-Chief.

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