Thoughts on the Mars Purchase of VCA Inc.

A Little Background

VCA has grown tremendously over the past 30 years, in good part by purchasing existing animal hospitals. You may be surprised to know that your local vet's office could in fact be part of the VCA operation as quite a few retain their original name.  In fact, VCA generates a bit of controversy in their continuous solicitations to independent hospitals to be bought out.  A lengthy piece on that topic is at VIN News Service.

Mars, as most know, is by and large a candy company.  Yet, in 2007 they bought a vet clinic chain called Banfield, perhaps the largest such in the United States.  These clinics are located with PetSmart stores, often found in large shopping centers.   Unlike VCA whose operations are generally perceived as good quality, though perhaps pricey, there do seem to be many complaints about care from Banfield clinics. 

The Merger

So what to make of this merger?  IMPS thinks the best place to start is the idea of "corporate" medical care.  Even a small vet practice may be a corporation for legal and tax purposes, but what is really meant by corporate medical care is large chains of clinics and hospitals.  VCA is one such that grew largely by purchasing existing practices.  But is this bad? Maybe, maybe not. 

On the one hand, the larger corporate entity has certain advantages of scale.  They are able to negotiate better pricing on medical equipment and supplies.  Because costs are spread far and wide, they are also able to hire dedicated specialists in other fields, such as information technology.  They, too, have the ability to stay on top of the latest advances in medical care without day to day work suffering.

However, on the other hand, there is the loss of flexibility and community.  Once a clinic or hospital becomes a branch of a larger entity, it begins to loses control on how unique situations are handled.  Where as a stand alone operation can make personal, case by case judgments, for instance on payment, that is next to impossible at a group level.  Personal touch tends to go by the wayside. 

In some cases, the overall operation can become rigid to the point of losing track of the reason why the clinic or hospital exists in the first place - to help injured and sick pets.  Methods and procedures become more important than the result of a healthy pet; profit pressures trump all¹. Those are the kinds of problems that have been reported about the Banfield clinics.

Now VCA will also be owned by Mars, Inc.  There lies a further concern.  Most mergers take place with entities in the same or similar industries and even those can run into cultural and operational problems.  Here, Mars is less inexperienced in managed veterinary care and that which it does have dose not appear good to many outside observers.  Will adding VCA to the mix leave VCA unaffected but improve the whole subsidiary?  Perhaps.  Though IMPS feels the risks are more heavily weighted to Mars damaging the VCA brand; that could be tragic for some pets. But only time will tell.

Recommendation

Problems, if they do emerge, are not likely to really become obvious for at least a year. Pet parents who use VCA operated facilities need to keep their ears and eyes open for reports of problems as VCA transitions to Mars ownership.

1. IMPS is not against for profit medicine or any other type of business.  However, IMPS does realize that corporations, public ones in particular, often face shareholder demands for instant gratification by out sized returns. The end result is often not a happy one.