The corporatisation of Australia’s veterinary industry is causing anxiety for some independent practice owners. But whether you want to cash in or compete, the rapid expansion of corporate networks could be putting the power back into your hands. By Shane Conroy
The rapid corporatisation of Australia’s veterinary industry is set to continue at pace with US-owned VetPartners recent acquisition of National Veterinary Care. The deal, worth close to $250 million, brings more than 100 vet clinics across Australia and New Zealand into the VetPartners network.
That puts VetPartners ahead of Greencross as the largest veterinary practice owner in the region with more than 300 Australian and New Zealand vet clinics on their books. And that could be just the beginning. VetPartners CEO John Burns says VetPartners plans to acquire around 15 to 20 clinics in Australia and New Zealand over the next five to eight years.
So with the large corporates seemingly dug into the Australian and New Zealand markets for the foreseeable future, what is the way forward for independent practices?
Cashing out, cashing in
Jane Bindloss, director of SANE Management Solutions, says the corporatisation of the domestic veterinary industry is not all bad news for independents. She believes it offers a handful of positive opportunities for smaller practices.
“This could actually be great news for vet practice owners who may be looking for an exit strategy. As corporates look to acquire more practices, it becomes a seller’s market and practice owners could see the value of their clinics increase as a result.”
But even if you’re not necessarily looking to cash out completely, selling to a corporate interest could enable you to keep practising without carrying the stress of ownership on your shoulders.
“Practice ownership is not for everyone,” says Bindloss. “It comes with a heavy management workload and significant financial stress. Some vets may be quite happy to hand the management aspect of their practice over to a corporate while staying on to simply practise as a vet.”
But Bindloss urges practice owners to do their homework and carefully assess the corporate network they are selling into.
“This is particularly important if you’re planning to stay on in the business,” she says. “While corporates tend to excel at running the management side of practices, not all companies do it as well as they could. The corporate networks all have different models of ownership, so you need to ensure you’re choosing to sell to a company that shares your values and provides an operational framework that you’re comfortable with. In other words, make sure you read the fine print.”
Taking on the big guys
But what if you want to continue to own and run an independent vet practice? Can you expect to compete against a vast corporate network? Mark Ethell, chairman of Independent Vets of Australia (IVA), believes you can. “There is support available for independent clinics,” he says. “For example, IVA provides a business development and management support network for independent practice owners. It’s like tapping into the business support and buying power you get in a corporate network, but you keep complete ownership and control of your practice.”
Ethell urges independent practice owners not to fear competing against corporate-owned practices. He believes independent practices may actually hold the upper hand.
“Successful independent practices are embedded in their communities,” he says. “They have the opportunity to build strong personal relationships, and have the flexibility to offer customised treatments and solutions on a more individualised basis. Corporate-owned practices may not have the same agility to deliver that level of personalisation.”
Bindloss adds that the corporatisation of the industry offers an opportunity for independent practices to reassess their market position. “It’s in this personalisation where independent practices can really shine,” she says. “Australians will spend money on their pets, and there is an opportunity for independents to focus on the upper end of the market that wants high-level customised care, and will pay for it.”
However, Bindloss and Ethell agree that to compete effectively, independents must have their house in order.
“Corporate-owned practices will tend to have good business processes in place and operate very efficiently—that’s their bread and butter,” explains Bindloss. “Independents need to take a similar approach to business management.”
“Corporate networks also invest in good marketing practices,” adds Ethell. “Independents may need to up their game in that department.”
A brighter future
Bindloss notes that corporatisation could also help to solve the industry-wide skills shortage. Corporates could attract new talent to the industry by appealing to the younger generation who are burdened with student debt and may be turned off by the additional financial stress of practice ownership.
“Traditionally, practice ownership has been the principal career pathway for vets,” she says. “You start as a young vet, build your experience, then buy into an existing practice or open your own clinic. However, not everyone sees themselves as a business owner and may not want to take on the financial responsibility. The corporate networks give them an alternative career path.”
Ethell, however, disagrees that corporate networks open a new career path for vets. “Vets can choose to remain employees for their entire careers whether they are in independent or corporate practices,” he says. “In fact, it is the corporates that have the most trouble attracting and retaining staff. Vets and nurses are constanty leaving corporates to work in well run independent practices.”
Ethell points out that while selling to a corporate is an option for vets at the end of their careers, IVA is committed to “actively helping young vets with ambition to realise their dreams of practice ownership”.
Despite fears to the contrary, corporatisation is unlikely to kill Australia’s veterinary industry. It gives practice owners another option to shed stress and cash in on years of hard work; offers young graduates an additional entry point into the industry; and affords proud independents the opportunity to reassess their market position and potentially move into greener pastures.