Private Equity Kicks Your Dog!

Well, folks, it looks like we’ve reached the pinnacle of absurdity in the never-ending quest to vilify private equity. This time, Senator Warren has zeroed in on what she believes is the latest threat to American society: private equity firms owning veterinary clinics. Yes, you read that correctly—veterinary clinics. Because, obviously, that’s where the real menace lies in our economy for the forgotten common man. Our elected leaders have triaged the mounting economic pressure of inflation, stagnant wages, rising unemployment, the pending insolvency of social security or medicare and medicaid, and have determined that attention must first turn to private equity ownership of veterinary clinics. 

Let’s be real here.  A deep dive into the “nefarious” world of pet care -- is this the best use of senators’ time? You have to wonder if Senator Warren’s team is spinning a wheel labeled “Random Industries” every morning to decide what private equity will ruin next. Today, it landed on Fluffy’s vet. What a revelation!

I keep an eye on private equity news, and I can’t help but notice that nearly half of my feed over the past month has been dominated by a “private equity is evil” narrative applied to various industries. It’s like every week, someone new decides to write their magnum opus on how PE is single-handedly destroying the world as we know it. And now, Rolling Stone has jumped on the bandwagon, although—thankfully—they managed to resist their usual temptation to fabricate stories from whole cloth, I was half expecting to hear Sarah McLaughlin playing while pictures of kittens perishing in these “sinister” private equity-owned clinics.

But let’s talk about the real world, where veterinarians—actual professionals who spent years training to care for animals—are selling their practices to private equity firms. Are they being forced to sell at gunpoint? Are they secretly weeping behind closed doors? Nope. They’re cashing in, happy with the deal, and likely enjoying a well-earned vacation. But Senator Warren would have you believe that these vets are victims in some grand conspiracy.

And what’s the big concern? That these firms are trying to run more efficient businesses? Heaven forbid someone comes in and makes a veterinary practice operate more smoothly, with better resources and potentially lower costs over time. Because as we all know, the true American way is to keep professionals passionate about providing a service (be it veterinary, or dentistry or medical care), bogged down managing and running business operations, and unable to combine with other practices for efficiency in scale.  Senator Warren’s alarmist rhetoric would have us think that private equity is on the verge of turning your local vet into some kind of pet care dystopia. But the reality is much less thrilling. Private equity is bringing in capital, expertise, and likely standardized operational improvements—things that generally lead to better outcomes for everyone involved. The veterinarians who sell, the pets who get better care, and even the owners who (gasp) might appreciate a more streamlined experience.

And as for the rising costs in veterinary care? That’s what happens when technology advances or when a higher-tier service is offered. It’s not some grand scheme to bleed pet owners dry, it’s a segmentation of the market.  Even the alarmist Rolling Stone article notes private equity (note, that means many different PE firms) own 'nearly 30%' of the market.  Even if that was one private equity firm, with 30% of the market, that’s hardly significant pricing power.  If vet visit costs are up 60%, it’s not the monopoly pricing power of a PE fund with seven vet locations in the US . But hey, it’s much easier to blame private equity for everything under the sun than to acknowledge that, sometimes, things just cost more because they’re better.

A suggestion for our senators, maybe it’s time to step away from the vets’ offices and focus on something a little more pressing. Or at least spin that wheel again—who knows, tomorrow it might land on something terrifying, like PE ownership of pest control businesses. But until then, let’s stop pretending that private equity seeing an opportunity to add value to an industry and make a profit requires congressional scrutiny.

https://www.rollingstone.com/politics/politics-news/elizabeth-warren-targets-private-equity-firm-veterinary-offices-1235075465/