WATERTOWN, Mass. — When most of the state’s powerful Democrats are decrying private equity investments in the health care system, U.S. Sen. Elizabeth Warren is making a pitch against investment firms wading into the care of animals as well.
Private equity has bought about 30% of all veterinary practices in the United States, Warren said during an appearance at the Heal Veterinary Clinic on Monday. These firms have also vertically integrated in the industry, many also buying up the labs where medical testing is done, and the insurance firms that pay for — and more and more frequently deny coverage for — a pet owner, the senator said.
“The consequence has been that the quality of care has gone down while prices have gone through the roof. We’ve seen about a 60% increase in prices overall,” Warren said.
Steward Health Care used private equity investments in its eight community hospitals in Massachusetts. Those hospitals were reportedly mismanaged before the company went bankrupt earlier this year, leaving two hospitals closed in its wake.
The senator from Cambridge met with owners of private practice vet offices, veterinary technicians working in the field, and one vet tech who said he left the industry in December after working under a corporate company because of the structural issues he saw.
They described vet offices bought out by these companies as dedicating less time to patients and focused on upselling pet owners to opt into more expensive care, and vets feeling overburdened and leaving the industry due to working longer hours while understaffed — what they described as profit-enlarging measures that aren’t reflected in their paychecks.
Focused on profit
“There’s these average cost-per-transaction expectations for doctors, and they’ll say they want to offer the ‘gold standard of medicine,’ which is full diagnostics, full blood work, panels done in hospital — which is more expensive than sent out — full X-rays, sometimes urinalysis as well, when it’s not necessary for what they’re there for,” said Isabel Urban, a veterinary technician. “It’s pushing clients to do more than they really need to do.”
Urban works at a corporate-owned veterinary office, but asked that her employer not be named.
Karen Holmes, owner of Holmes Family Veterinary Clinic in Walpole, said one of her patients had to go to a private equity-owned urgent care for emergency care recently when her dog was throwing up, where she paid $1,700 for a full examination when they “proposed a laundry list of possibilities” but but ultimately just sent them home with stool softener.
Holmes said she does not blame the vets for being thorough, but that she could have given more focused medical attention that would not have racked up the same cost — and that as a private practice owner she sometimes absorbs the price of certain things for her patients.
“She’s an older woman. I don’t know what her income is, but it’s not a lot, and she loves her dog,” Holmes said. “I see my clients struggling and suffering, and I’m loath to send them to places where I know the same blood work that I run, that I send to the same labs, is going to be two or three times what I charge them.”
Vets’ high suicide rate
Urban said that patients have accused her of killing their pets when she presents them with the high cost of their care.
Zack Beckwith formerly worked at a private equity-financed vet hospital, but said he had to quit in December because his mental health was suffering due to the job. He said he was working in unsafe conditions with the animals, he was often putting in extra hours of unpaid labor outside of his shift to help when they were understaffed, and that employees were chided for taking time off for family emergencies.
“They’re continuously looking for more profit, more hospitals,” Urban said. “They want to open 60 hospitals in a year, and they don’t care that these corporations can’t staff these hospitals. They’re like, well, it’s OK, if one person works overnight and they’re drowning, as long as they continue to do that and they can continue to be paid the minimum amount, it’s OK.”
Beckerwith said the suicide rate for veterinary technicians is five times higher than the general population. When Warren asked what they could do to get him to rejoin the understaffed industry, he said he didn’t think he would ever go back.
“Right now it seems so hard to get out of the hole that’s been dug in this field,” he said. “I just wish humanity would come back to the field. My management, over time, just got less and less human and cared less and less about our people.”
‘Only value in the mix’
Warren asked the veterinarians what they thought of the argument that private equity comes into businesses that are not running as profitably as they could be, and disciplines them to become more profitable.
Amanda Leef, co-owner of Heal Veterinary Clinic in Watertown, and Holmes said they get approached multiple times a week by firms interested in buying their companies.
“Every business should be profitable, and sure, it allows us to buy a new X-ray machine, because we have capital to invest. But what’s really different is having profit be the only value in the decision mix,” said Jamie Leef, co-owner and general manager of Heal.
He continued, “We have other values. They are about community. They’re about taking care of clients. Once you bring those things into the mix, the profit starts to subside a little bit as being the driver of decisions.”
Consolidation of care
Warren sent a letter last month with Sen. Richard Blumenthal of Connecticut to private equity firm JAB Holding Company with their concerns about their spending “billions on buying up veterinary practices” and “the rapid consolidation of veterinary care.”
Private equity isn’t exclusively seeping into health care industries. It is infiltrating other markets, managing roughly 20% of all business in the U.S. as of 2021, according to Forbes.
“For more than a decade, private markets have enjoyed a remarkable period of sustained growth, more than doubling from US$9.7 trillion in assets under management (AUM) in 2012, and are estimated to have reached $24.4 trillion AUM by the end of 2023,” says a report from EY.
Private equity companies benefit from tax advantages carved out by Congress.
“Your tax dollars are helping private equity come chew up the veterinary industry, and this is something we have got to make changes in this area, but particularly when health is involved,” Warren said Monday.
Warren’s visit was aimed at garnering support for a bill she filed with Sen. Ed Markey, in light of the Steward Health Care hospital crisis, to better regulate private equity in health care.
“It would take away the tax advantages that they have. It would force them to be more transparent. So if your veterinary practice gets bought out by private equity, you will know that, so that our regulators will know to take a closer look at what goes on, and then special provisions in the health care field when life and death is on the line. We need to have more oversight when private equity moves in, and we need more responsibility when these private equity executives alter the delivery of health care so that lives are put at risk, then they need to be held personally responsible for that,” Warren told reporters.
The bill hasn’t had much traction with her colleagues — as her previous attempts to take on private equity in health care have also been met with resistance in Congress.
“I have not enough to get it across the finish line, I’ve got a lot of people who are learning about private equity, but it won’t surprise you to learn private equity hires lobbyists and family veterinary practices don’t, so it’s not a level playing field in trying to get the message across,” she said.
