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Our previous episode, No. 531, was called “Should You Trust Private Equity to Take Care of Your Dog?” Private-equity firms have been buying up veterinary practices lately, so this seemed like a pretty straightforward question — but as it turned out, it’s hard to answer. In some industries where private equity has been around for a while, like human healthcare, there is years’ worth of data that economists have analyzed. And they’ve found some good outcomes for patients and employees, and some not so good. With pet care, it’s just too soon for that kind of analysis. So we’re trying to figure out as much as we can in real time. Because let’s be clear: private equity is coming for your pet. Today on Freakonomics Radio: we will hear from one veterinarian who worked at a practice that was bought by a private-equity firm.

Rose PETERS: We had a huge staff turnover, so out of 16 to 20 doctors, they maybe have five of the original bunch. 

We’ll ask the C.E.O. of a big pet-care company what’s going on.

Greg HARTMANN: It’s a very competitive labor environment for the best veterinarians, the best technicians.

Along the way, we’ll get a quick economics lesson.

Elena PRAGER: Monopsony is typically the labor market analog to monopoly. 

And I’ll tell you what happened at the vet where I took my dog, and how that led to our making these episodes.

*      *      *

Last week, we started our inquiry with a veterinary neurologist who told us about examining an alligator that was weak and lethargic.

PETERS: But he wasn’t so weak and lethargic that they didn’t still have him strapped from head to toe to a big table, and everybody stayed about ten feet away, just in case. 

But we didn’t get to really know her, and her story. So let’s do that now.

PETERS: My name is Rose Peters. I’m a veterinary neurology specialist, and I am currently working at the University of Illinois as a professor of clinical teaching.

The University of Illinois is where Peters earned her degree in veterinary medicine, back in 2005. Her current job is a blend of academic instruction and clinical practice at a veterinary facility that’s attached to the university.

PETERS: And we’re really dealing with patients all day, every day. But attached to those patients, we have veterinary students, we have interns, we have residents.

DUBNER: Can you break down the top five animals you see? I’m assuming dogs and cats are one and two or two and one.

PETERS: Yes, dogs and cats are far and away number one and two. Horses and cows are the next two, for sure. And then maybe goats and pigs.

DUBNER: We should say, you are in the Midwest.

PETERS: I sure am. Yeah, we’re in farm country in central Illinois. I also was at the University of Florida for my residency there. I saw a huge variety of animals there because they have a very strong zoo-medicine program. I saw alligators and tigers and anteaters and birds of all kinds.  

DUBNER: Let me just ask you quickly why you wanted to be a veterinarian in the first place.

PETERS: Well, I think like most vets, I have always loved animals. And we always had pets in the house. And my grandparents lived on a farm with many animals, and it was just always a part of our life.  

DUBNER: Do you think that most people who become physicians, medical doctors, love people the way that most vets love animals? 

PETERS: That’s a good question. I hope they do, to some degree. But I can’t imagine everybody is wanting to walk into, say, my annual exam appointment and want to be ready to give me a big hug and a kiss on the head.

It was only recently that Peters moved back to her native Midwest. She was in Florida for more than a decade.

PETERS: Even by the middle of 2021, it still wasn’t really in my head to leave.  

She was working at Veterinary Specialty Hospital of Palm Beach Gardens, where she was head of neurology. Here’s how she thought about her situation:

PETERS: I really like my job, I love my house and where I live, and this can be a job I can retire into, so I can be here for a long time. So it wasn’t until things changed pretty drastically after the acquisition, to make it much more challenging for me to feel like I could do the medicine that I felt comfortable doing.

“The acquisition” that Peters mentioned was the sale of the veterinary hospital where she worked.

PETERS: The practice was privately owned by a married pair of specialty veterinarians. 

Peters had already seen a lot of change in her industry in just the previous couple of years. She told us about this one Christmas party.

PETERS: Yeah. So we usually have a holiday mixer for our referring veterinarian community. And we get to chit-chat about families and holiday plans and, “Oh, gosh, let me ask you about this dog with seizures.” But this time is the first time that, when I talked to someone, “Hey, how’s it going in your practice?” “Oh, well, I sold and I’m actually about to retire,” and “Oh, I am entertaining offers to sell my practice,” or you know, “Everybody else around me has sold their practices. I’m feeling like I’m crazy not to.” At least half of the people I talked to either had sold, were entertaining offers, or were just talking about the real difficulty they were facing in trying to recruit other veterinarians to come in and help them because they were across the board very busy. The pandemic made a lot of hospitals very, very busy. So trying to get technicians and doctor staff to come in and help them, they were competing against big signing bonuses. 

Who was offering these big signing bonuses? It was the corporations, usually backed by private-equity investors, that were scooping up independent veterinary practices. And now it had happened to hers. It was bought by a company called Pathway Vet Alliance, which has since been rebranded as Thrive Pet Healthcare, which is based in Austin, Texas. They operate roughly 350 pet hospitals across the U.S., and more than 100 veterinary clinics. And who owns Thrive? That would be the San Francisco private-equity firm T.S.G. Consumer Partners, whose other investments include the Robinhood stock-trading platform, Mavis Discount Tire, and the Pabst Brewing company. And now the formerly independent vet hospital in Florida where Rose Peters had worked for six years was under that same umbrella.

PETERS: We had a huge staff turnover, so out of, say, 16 to 20 doctors, they maybe have five doctors of the original bunch.

DUBNER: That turnover was over a period of how long?  

PETERS: About a year to a year and a half.

DUBNER: Oh, my goodness. Why were they leaving?  

PETERS: Well, I think it was different reasons for everyone. So, for some, it was issues with the contract terms that were changing a little bit as we were being taken over by this new company. For some, it was being unhappy with changes in management — so, the management team and culture in the hospital changed quite a bit afterwards. And for others, it was just feeling that stress and strain from that transition and unhappiness with the slow progress of trying to find solutions, and really having better options elsewhere.

DUBNER: I mean, the corporate promise is that when they come in, they will take care of a lot of the administrative tasks, especially, that really take time. Did you find that that was an upside of corporate ownership, that it let the medical personnel focus more on medicine? 

PETERS: No, I had, unfortunately, the opposite experience. You know, it used to be I could go in the office and say, “Hey, manager, I’ve got this issue. Here’s what I propose we do to try and fix it.” We talk together a little bit, and then in the pretty near-term future, we could have a solution playing out. Whereas now we’re having to look at different levels and waiting for approval from regional directors, and things taking a lot longer to get accomplished. One person said to me, “You know, I have 400 doctors that I have to answer to, and everybody has big problems right now. So I literally can’t help you.”

DUBNER: Can you give an example of the way in which the actual practice of medicine became more difficult or less satisfying? 

PETERS: I had skilled technician staff, and for me, I need technicians who can run anesthesia, which is something that is dangerous and relatively complex and not something that can be taught quickly. 

DUBNER: And these are not dedicated anesthesiologists, is that true? 

PETERS: Well, in veterinary medicine, we usually have a technician who is trained in everything. So, lab work, anesthesia, animal restraint and blood draw and placing catheters. And especially when we’re talking about anesthesia, we need people who know what they’re doing because every level or step in anesthesia has the potential for something to go wrong. So I had that staff replaced with individuals who have not gone through a veterinary technician training program. 

DUBNER: And when you say you “had them replaced,” what does that mean?

PETERS: So we lost a lot of staff to other local practices. Some who went from specialty to general practice, private practices, academia. And some who just left vet med all together, and said, “I’m burned out, and I can get paid more working at, like, Target than I am in your hospital.”

DUBNER: So you sound to me like a particularly kind and compassionate and, I would argue, psychologically astute person. So if I were to bring my animal to you, I think I would feel really comfortable and grateful with your approach and your attitude and so on. When you practice veterinary medicine, do you find that you are able to exercise all this compassion and kindness, or does the business sort of take over?

PETERS: You have to go above and beyond in compassion. So, we’re still a service industry first and foremost. We’re all smart people; it’s hard to get into veterinary school. We can all figure out medicine and how to be good at surgery, but that human component is not so easy to teach. So just in terms of business, it’s good business to be kind.

DUBNER: Does the ability to exercise this kindness change if your practice is bought out by a corporate or investor group? 

PETERS: I don’t know that it should change. But as we see maybe more people getting inserted into the business, especially on the management side of things, who maybe aren’t from vet med, then I do think there gets to be some disconnect in how compassionate, as a business, we might be.

As Peters told us earlier: she liked her job, she liked her house, she liked Florida. She didn’t want to leave. She says she tried to make things work at the hospital under new ownership. But eventually, she gave up. She would have liked to stay in Florida, but her contract had a non-compete clause that made it difficult.

PETERS: And I was very lucky that at about that same time, this job came up at the university. So it’s with people that I really like from when I was here a long time ago as a veterinary student. And it’s close to my family.

The Rose Peters story is just one story of what happens when a veterinary hospital gets a new, corporate owner. How typical is it?

*      *      *

We’ve been hearing how private-equity firms are directing their investment dollars down the commercial food chain, from big healthcare and consumer-products firms to surprisingly small targets like car washes and veterinary practices. Here’s the economist and private-equity expert Eileen Applebaum.

Eileen APPELBAUM: I think any fragmented industry is attractive. So doctors’ practices, billing companies, check-cashing places — they’re everywhere. They bought up all these — what used to be little companies and molded them into behemoths, really. So there’s nothing too small or too unusual — if it’s a fragmented industry, and you see a possibility of growth, that’s going to be really attractive.

And why is it so attractive to buy even small and unusual businesses in a fragmented industry?

APPELBAUM: This is about market power. They want to monopolize, to the extent they can, the provision of whatever services it is in a local area. So that when you need a procedure for your pet or the pet does not seem to be doing well, they could charge more for it because you don’t have a choice. All of the pet stores in your vicinity are charging that, because they’re all owned by this company, as it turns out, even if they have different names. 

So that’s how consumers can be affected by a private-equity rollup — especially if it achieves something close to monopoly power. How about employees? To talk about that, we need to learn a new word:

PRAGER: Monopsony is typically the labor market analog to monopoly. 

That’s Elena Prager, an economist at the University of Rochester. And monopsony is what, exactly?

PRAGER: Monopsony is when a firm can dictate market conditions for the things that it purchases, rather than for the things that it sells. And one of the most important inputs that companies purchase, of course, is labor from their workers. So a monopsonist is a company that has the power to make working conditions worse or make wages lower without immediately losing all of its employees who decide to quit and go to another competitor.

Imagine, for instance, that you are an experienced, well-trained, high-end chef, and there’s only one or two high-end restaurants within a few hundred miles. Those restaurants have monopsony power. Now imagine that you’re a veterinarian, and while there may be a lot of pet hospitals in your area, imagine that most of them are owned by the same corporation. That, too, is monopsony power. And oh yeah, that corporation may be headquartered thousands of miles away, and they may own concentrations of pet hospitals in other parts of the country. In a situation like that — a situation that’s getting closer to reality every day — what should the people who work in veterinary care expect? Well, Elena Prager can offer some evidence from another industry that has seen a lot of consolidation: human healthcare. She recently coauthored a paper, with Matt Schmitt, called “Employer Consolidation and Wages: Evidence from Hospitals.” Their data came from hospital mergers, which typically result in a more concentrated labor market.

PRAGER: Our main finding is that wages grow slower for workers following mergers that substantially increase labor-market concentration than in markets where there has not been a merger or there has been a merger, but it didn’t affect labor-market concentration very much. 

Some types of workers were affected more than others.

PRAGER: We see wage growth slowing down the most for the pharmacists and our nurses. For them, we see that over the four years following these really highly concentration-increasing merger events, wage growth is 1.7 percentage points slower per year than it would be absent a merger.  

One-point-seven percentage points per year of lost wage growth may not sound like much — but it adds up. Let’s say you’re a pharmacist working in a hospital. Under normal circumstances, without any mergers, you might expect your salary to go up by something like $12,000 over four years. Those raises are driven in part by competition — your employer needs pharmacists, and if they don’t pay you enough, you might go work at another hospital. But with a hospital merger, there may be fewer companies bidding for your labor. And with less competition, you’d expect smaller raises — to the tune of 1.7 percentage points less per year.

PRAGER: That means instead of your salary going up $12,000 from four years ago, it’s only gone up by $7,000.

But Prager found that this loss in wage growth didn’t happen everywhere.

PRAGER: This was actually a result that I found surprising, and therefore it is among my favorite takeaways from the paper. We find that almost all of the losses in wage growth happen in parts of the country where unions are weak. Having strong unions in a state almost completely erases the losses in wage growth that you get from highly concentration-increasing mergers. 

Okay, so here’s what we know from this research: when hospitals merge and create a highly concentrated labor market, wage growth slows for some medical specialties, but almost entirely in places where there isn’t a labor union. And how does Prager see the concentration of pet-care facilities playing out for those employees?

PRAGER: I would expect that as the share of vet jobs that are controlled by a single, or maybe a small handful of companies, rises, veterinarians will be less able to extract from their employers good working conditions and good wages. It sounds quite similar to what we’ve seen in the pharmacy industry over the last 50 to 60 years, where the pharmacies used to be dominated by small, mom-and-pop shops and are now dominated by just a handful of large national chains. And one of the things that’s disappeared with that is the very high degree of flexibility in working hours that pharmacy work used to provide. 

By the way, flexibility in working hours isn’t just a nice thing to have; an increase in flexibility has also been a major driver in shrinking the gender pay gap, since women tend to make more money when their work hours are flexible. So we might expect that a decline in flexibility could lead to the gap getting wider again. Prager says there’s one more reason to be leery of big consolidations from the labor side of the equation. And this has to do with how much the government cares about workers.

PRAGER: So in principle, on paper, the Sherman Act applies equally to both output markets, meaning markets in which you sell stuff to consumers, and input markets, meaning markets in which you buy supplies or labor.

The Sherman Act was the first major anti-trust law in the U.S.; it was first passed in 1890, and it’s enforced by the Department of Justice.   

PRAGER: In practice, almost all the cases that have been brought historically have focused on harm to consumers. But in principle, there’s no, like, theoretical economic difference between market harms that are caused by monopoly power — so, consumer-facing stuff — and harms that are caused by monopsony power — so, for example, labor-facing stuff.

But Prager says that may be changing.

PRAGER: About a year ago, I want to say, the Department of Justice moved to block a proposed merger between Penguin Random House and Simon & Schuster, which are two of the five largest book publishers in the U.S. And the D.O.J. is making a pretty novel argument in this case. They are alleging that the Penguin-Simon & Schuster merger will harm the competition in the market for authors. This is, as far as I know, the first time that either of the antitrust agencies has moved to block a merger primarily on the grounds of harms to labor-market competition. 

Since we spoke with Prager, the Department of Justice won that case, and the merger was blocked. Now, the publishing industry and the pet-care industry are different animals. For starters, book publishing has already undergone massive consolidation; the corporate consolidation of pet care is still relatively fresh — fresh enough that we don’t have a lot of information about how wages and working conditions will be affected. The economist Josh Lerner, at the Harvard Business School, is one of several authors of a wide-ranging research paper called “The Economic Effects of Private-Equity Buyouts.” We heard from him in our first episode on the corporate rollup of the pet-care industry. He says the evidence from other industries is mixed. Critics like Senator Elizabeth Warren have portrayed the private-equity industry as a ruthless band of profiteers who exploit workers and consumers and don’t pay their fair share of taxes. Josh Lerner says the reality is more nuanced.

LERNER: For instance, there was one study of fast-food restaurants, some of which were owned by private-equity groups and some of which were owned by franchisees. And it found that when you looked at things like inspection ratings or cases of food poisoning and so forth, that the private-equity backed firms were far more effective in terms of less people getting sick.

DUBNER: So you found that employment will fall at the takeover of public companies. But what about wages in that case? When private equity comes in, are they perhaps employing fewer people but may be paying them more? Or fewer people and paying them less? 

LERNER: Well, I think this is one where the results are definitely in the Elizabeth Warren side of the ledger. When you look at the typical private-equity-backed company at the time of the transaction, there actually is a wage premium of one or two percent that the workers enjoy, relative to similar companies in the same industries. When you look a couple of years later, that wage premium has disappeared — they’re now being paid the industry standard. But where that becomes most disturbing is when you combine that with the productivity results. The pie is growing, but instead of sharing that pie, what instead seems to be happening is the workers are getting a smaller slice of it.

DUBNER: And what about the other, non-financial terms for those employees who do stay, or the new employees? What about work environment? What about terms, like non-compete clauses and things like that?

LERNER: Well, the area which has probably gotten the most attention has been around worker safety. And here, most of the findings have been more consistent with the fast-food story that I mentioned earlier, it seems that the incidents of accidents does seem to fall, which might be consistent with the notion that there is some degree of more discipline or systemization, or process management being provided.  

DUBNER: So it’s going to depend a lot on the task that we’re talking about, right? Because you can imagine how systemizing a safety procedure — you could really benefit from having that economy of scale. On the other hand, one of the veterinarians we spoke with for this episode was at a firm that was taken over by a private-equity company. And she described just the general work environment from the pace, communication, etc., as degrading to the point where pretty much everybody left. Is that something that you and your fellow economists have attempted to measure or successfully measured, or is that just too hard?

LERNER: Well, for instance, people who have done work using information like from Glassdoor, where people are posting their satisfaction at working at the company post-buyout. And you do see some consistent evidence there that there is a decline of worker satisfaction in general post-buyout.

DUBNER: Do you have a pet, Josh? 

LERNER: We’ve got a portfolio. A large portfolio of cats, chickens, donkeys, and a dog, and horses.

DUBNER: Where do you live? 

LERNER: Around 20 miles north of a city. So it’s a little easier to do that kind of thing. 

DUBNER: All right. So let’s take your donkey. Has your donkey been sick or needing veterinary attention any time in the last few years? 

LERNER: Oh, our pets have Obamacare writ large. 

DUBNER: What does that mean? 

LERNER: It means to say that they — it’s not Obamacare. They have the Mayo Clinic executive level of care, where they’re like, “You’ve got a bump on your whisker? Let’s go and look at it and make sure it’s okay.”

DUBNER: Do you have multiple vets for these different types of animals? 

LERNER: Yes. There’s both large-animal and small-animal, I’m afraid. 

DUBNER: Wow. So how much do you think you spend a year on pet care? 

LERNER: I would not even like to think about what that number is. 

DUBNER: How happy are you with your veterinary care? 

LERNER: Well, I think our last donkey lived to around 45 years old, which suggests that they did pretty well. 

DUBNER: Wow. Were they doping? How typical is that lifespan for a donkey?

LERNER: I think that’s probably in the third standard deviation above the mean.

DUBNER: So do you know anything about the ownership of your large- and small-pet-care providers?

LERNER: Well, the large provider is essentially an entrepreneur who founded the business himself. It was a friend. So there I guess I’ve got a pretty good sense of it. 

DUBNER: And the other one? 

LERNER: The small vet one I think is also family-owned. 

DUBNER: Now, I’m just curious how your thinking might change if you heard, even if you heard a couple of years after the fact, if there’s private-equity purchase of either of these vet shops, I’m curious how you’re thinking would change. 

LERNER: Well, I guess I should begin by saying I’m not really the key decision-maker here. But I suspect that a lot of it would be, depending on who the individual veterinarian was and what the experiences were. 

DUBNER: Given your research on private-equity ownership and how outcomes for the various parties can be better or worse, depending on many circumstances, would you be anxious or concerned for the care of your pets, or would you be pretty sanguine about it? 

LERNER: Well, I’d certainly want to due-diligence it more, right? You’d really want to keep a close eye on it and just sort of understand what the changes are and whether they’re for the better or for the worse.

*      *      *

Last week, in our first episode about how private-equity investors are buying up pet-care facilities, we met Greg Hartmann.

HARTMANN: I’m C.E.O. of National Veterinary Associates, otherwise known as N.V.A.

N.V.A. is the second-biggest consolidator of veterinary facilities in the U.S., with around 1,100 sites; their owner is a German private-equity firm called J.A.B. Investors. So let’s get back to Hartmann now.

DUBNER: So Greg, even in human healthcare, medical outcomes can be hard to measure for a variety of reasons — including the fact that a physician often will simply not get good follow-up feedback from the patient, right? So the feedback loop just isn’t great. With pet care, what does N.V.A. do to make sure that the quality of care remains as high as when the practice was independent, or maybe even higher? 

HARTMANN: Yeah, I mean, I think you said it right. Medical quality is very hard to measure in veterinary medicine for a number of reasons. What our approach has been is, number one, make sure that we’re acquiring practices that have a reputation for very high-quality medicine. Keep those practitioners in place. Enable them to do more medicine by investing in their hospitals, and that might mean adding exam rooms, which is typically a gateway to a hospital. We’re very active in adding dental suites to our practices. Dentistry is an area that’s been historically underinvested in in vet medicine. And then providing the tools and the training for veterinarians to activate these new services and medical skills.

DUBNER: Now, in some cases and some sectors, private-equity owned firms tend to pay employees less. Private equity will come in. They look for efficiencies. One efficiency can be in cutting labor costs or cutting labor generally. Tell me what N.V.A.’s position is on that?

HARTMANN: I’d say labor is and has been in the veterinary marketplace a highly scarce resource, and it’s a very competitive labor environment for the best veterinarians, the best technicians. We’ve had an approach over many, many years of making sure that we’re paying salaries and wages that are highly, highly competitive within the marketplace and benefits to go along with it. We just don’t view veterinary medicine as a space where we can win — or anybody can win, for that matter — by cutting costs. It’s a growth market, and I think the best companies are the ones that have found ways to invest in their teams, invest in their hospitals, invest in their medical capability and their technology in ways that have enabled them to absorb more of the growth and latent demand that exists in the markets. 

DUBNER: We spoke with one vet who left her practice after it was acquired by a private-equity firm — not associated at all with N.V.A. or J.A.B. — and she told us that a lot of staff left there — a lot of the vets, the techs. And it was for a variety of reasons. But one of them was that the vets particularly didn’t like the new upper management. They felt that they weren’t addressing the problems that these vets used to be able to solve on their own, or at least knew how to solve. I’m curious, when N.V.A. acquires a practice, what you do about that issue?

HARTMANN: I have to go back to how we approach partnering with veterinary hospitals in the first place. We’re very focused on identifying hospitals that have very long track records of success in their local communities. And that typically comes from stability within the practice, retention of high-quality veterinarians, technicians, front-office folks. And we even ask them if they’ll stick around for as long as they can see forward — at least three or five years. And our track record is very good. Veterinarians are really special people. They’re very smart. They’re very well-educated. They’re incredibly passionate about what they do. They could have certainly chosen multiple, different careers in life. And yet they chose to dedicate a huge amount of their life’s energy towards the care of pets and the people who love those pets. There’s so much trust and goodwill between pet owners and their local veterinarian that it’s important that people who are investing the space, in my opinion, understand that to infringe on that trust would be the wrong direction to take the profession. And instead of seeing this as an opportunity to replace a small business with a big business, instead it’s an opportunity to create a larger business that ultimately protects, preserves, and enhances these small businesses that we’ve partnered with.

DUBNER: I know that in June, the Federal Trade Commission ordered N.V.A. to divest 11 new locations after you acquired a couple smaller pet-hospital chains, Sage and Ethos. And F.T.C. chair Lina Khan said, “Serial acquisitions can be used by private-equity firms and other corporations to roll up sectors, enabling them to accrue market power and reduce incentives to compete, potentially leading to increased prices and degraded quality.” Give me your response to that forced divestment. And I’m curious to know whether you think Chairwoman Khan is right to say that market power will lead to higher prices.

HARTMANN: Well, in our situation, we were working through the addition of a number of specialty and emergency hospitals, which are the larger format with much broader marketplaces, if you will. And in the end, we’re very pleased with the outcome and the process that we worked through with the F.T.C. to ensure that consumers’ rights were upheld. In the end, we settled with the F.T.C. in a way that I think we very much intended when we went into the possibility of making these additions to N.V.A.

DUBNER: So was the issue here size or market concentration? In other words, 11 is not very many in the scheme of things. Was it about market concentration then?

HARTMANN: Yeah, it’s really even more specific than that. And by the way, again, general-practice medicine, highly, highly fragmented. In specialty and emergency medicine, there can be certain specialties that only exist in a few locations in a region or a state or even more broadly. And so I think it was important in that process for us, and certainly for the F.T.C., to ensure that those specific areas of specialized medicine remained competitive across multiple sites. 

DUBNER: So before you were at N.V.A., you were with DaVita, is that right? 

HARTMANN: That’s correct. I was there for about a decade, and I had a variety of roles.

DUBNER: So we did an episode maybe two years ago about the kidney dialysis industry, and DaVita is one of really just two big players in that industry now. And in that episode, we talked about research by economists, including Ryan McDevitt at Duke, who found that there were three major changes after a for-profit chain like DaVita or its big rival, Fresenius, would acquire a dialysis clinic from an independent operator, many of which had been run as non-profits. They found that there were much higher drug doses, that there were more patients per employee, more patients per dialysis machine, and more infections. And also that there was a big drop in the chance of a patient getting on a waitlist for a kidney transplant. So from the customer side, those sound like not very good outcomes after the acquisition. Let me hear your side of that, from the DaVita side. 

HARTMANN: Well, that would be going back 15 years for me. I’m not sure I can speak to the DaVita or the kidney-dialysis space with, so many, so many years later. What I can say is in veterinary medicine — N.V.A., as a support organization and an operating company, doesn’t have medical protocols for veterinarians. We have a volunteer group of leading practitioners that takes the form of a medical advisory board that will be available to consult on cases if asked to when needed by local veterinarians. With our model, we very much leave the practice of medicine in the hands of the veterinarian. And so I wouldn’t expect people should be writing or worried about some of those types of stories that you hear coming out of, unfortunately, coming out of human healthcare. 

DUBNER: Now, why would DaVita not have taken a similar approach? And I don’t mean to single out just DaVita, there are a lot of takeovers. Why does N.V.A. take that approach while many other rollups take the opposite? 

HARTMANN: Yeah, I think it’s the difference in the nature of veterinary medicine versus human medicine, where human medicine and medical outcomes are much more readily quantified, perhaps because a third-party-payer system has a way of bundling them into reimbursable segments — plus, in human medicine, you’ve got people as patients.

DUBNER: And they can talk.  

HARTMANN: And they will. Now our patients can bite, I guess — 

DUBNER: You know, so pets aren’t humans, but a lot of people do treat their pets like a part of the family. So what would you, Greg, say to someone who’s concerned that their veterinary practice that has perhaps just been acquired by N.V.A. is going to follow the path of a DaVita? 

HARTMANN: Oh, I’d say, first of all, before you join us, talk to a dozen, talk to 20, talk to 50 other folks, human beings, that have owned hospitals and partnered with N.V.A.

DUBNER: All right, I have a crazy theory I want to just run it past you. 


DUBNER: The fertility rate — human fertility rate — in the U.S. has been falling pretty substantially for quite a while, and that fall was accelerated during the beginning of Covid, although it seems to have recovered somewhat. There are many, many factors that go into any one country’s fertility rate. But I do wonder: do you think that for some young people today, that pet ownership or pet parenting is a substitute for having kids?

HARTMANN: Oh, I think it’s certainly possible. I mean, with younger people holding off later in life to either get married or have children, I think pets are filling a gap there, no doubt. And we’re seeing now the younger generation, millennial and Gen Z, own nearly half of the pets in the U.S., and their spending behaviors seem to be outpacing the preceding generations. 

Before we go today, I want to tell you one more story. It’s the story that made me want to do these episodes in the first place. So, my family has a little dog, beloved member of the family and all that. And for years, we took her to a local veterinary practice and everything was good. That’s where she had her regular exams, she got her vaccinations, etc., etc. And then we had a hiccup a couple summers ago — when we were going to the beach, the vet prescribed a tick collar, to prevent Lyme Disease. But a couple hours after we put the collar on, our little dog got lethargic, and then wobbly, and then she pretty much passed out. So we took the collar off, and we called the vet to ask them about it. They said we were right to remove the collar, but they didn’t seem very concerned — which surprised us. I did some Googling and saw that a lot of other families with little dogs had had the same problem with this very collar; some even said their dogs had died. So I called the vet back, I was at least hoping to dissuade them from prescribing the same collar to other dogs. Once again, they didn’t seem very concerned. This time I was even more surprised.

Now fast forward to this past summer. Our little dog came down with something really bad — she was in obvious distress; she couldn’t walk, she wouldn’t eat. So I called the vet to describe the symptoms and make an appointment. And they said that they were short-staffed, but that they could see her in ten days. Ten days?! So I asked them what was going on. We’d been bringing our dog there for seven years; they had all her records; and now we had an urgent situation. And I asked if something in their practice had changed recently, if there was new ownership or management; and the person on the phone kinda dodged the question. And she recommended I take my dog to a local pet hospital. So I called them, and I learned I’d have to buy a membership to get an appointment.

Now fortunately, I have a friend who recommended her vet, a small practice. They saw our dog the next day, figured out the problem — it was a really bad infection — they gave her the right treatment, she recovered in a couple days, and everything was fine. So I called my old vet practice, and I asked them to transfer all our records to the new vet. And later on, I looked up the old vet online and found out they were now part of Thrive Pet Healthcare, the same corporate consolidator that bought the veterinary hospital in Florida where Rose Peters used to work. And I looked up my old vet’s recent reviews on Yelp. They were astonishingly bad. So, I guess I wasn’t the only one who noticed the change. For now, I’m grateful I found a good alternative. But I feel bad for all the other pet families that use my old vet. And even though we’ve heard a lot these past two episodes about how a private-equity owner can improve a pet business, or a fast-food restaurant, or a hospital, my own experience in this case made me skeptical. Now, again, that’s just my experience; it’s hardly scientific. But as the consolidation of veterinary pet care continues apace, maybe it’s worth your paying a little bit more attention to your vet. And I’ll be honest: I’m hoping my new vet practice doesn’t get gobbled up any time soon. If they do, I’ll be back to let you know what happens. By the way, we’d love to hear from you if you have any relevant experience with this new world of veterinary care; we’re at

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Freakonomics Radio is produced by Stitcher and Renbud Radio. This episode was produced by Ryan Kelley and mixed by Greg Rippin, with help from Jeremy Johnston. Our staff also includes Zack LapinskiMorgan Levey, Katherine Moncure, Alina Kulman, Rebecca Lee Douglas, Julie Kanfer, Eleanor Osborne, Jasmin Klinger, Daria Klenert, Emma Tyrrell, Lyric Bowditch, and Elsa Hernandez. The Freakonomics Radio Network’s executive team is Neal CarruthGabriel Roth, and Stephen Dubner. Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by Luis Guerra.

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  • Eileen Appelbaum, co-director at the Center for Economic and Policy Research.
  • Greg Hartmann, C.E.O. of National Veterinary Associates.
  • Josh Lerner, professor of investment banking at Harvard Business School.
  • Rose Peters, professor of veterinary clinical medicine at the University of Illinois.
  • Elena Prager, professor of economics at the University of Rochester.



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