0:02 Over the last 20 years or so, private
0:04 equity has ruined a lot of things. From
0:06 the countless restaurants and retail
0:08 chains they've bankrupted to the housing
0:10 markets they've manipulated and mobile
0:12 home parks they've infiltrated, all the
0:13 way down to the film and entertainment
0:15 companies that they now control. You'd
0:17 be hardressed to find a single industry
0:19 that isn't actively having the life
0:20 choked out of it by private equity firms
0:23 as we speak. But there's one industry in
0:25 particular where the meddling of private
0:27 equity firms is particularly egregious
0:29 and evil, and that's healthcare. But to
0:32 understand why this is a problem, we
0:33 first have to understand how private
0:35 equity works. Private equity firms are
0:37 known for something called leveraged
0:39 buyouts. A leveraged buyout or an LBO is
0:41 a type of investment where firms take
0:43 out a loan to acquire a company with a
0:45 specific goal to pump up the company's
0:47 valuation so it can flip it for a profit
0:49 within a few years time. It's basically
0:51 the exact same idea as taking out a
0:53 mortgage to buy a home, renovating that
0:55 home, and then flipping it for a profit.
0:57 And much like a house flipper who
0:58 doesn't really care that much about the
1:00 quality of the finishings in the home as
1:01 long as they can make it look good from
1:03 afar and sell it for top dollar, private
1:05 equity firms don't care about the
1:06 sustainability or the integrity of the
1:08 businesses they buy. They don't care if
1:10 they offer quality products and
1:12 services. They don't care if the
1:13 employees are treated well and well
1:15 compensated. They don't even care if the
1:17 business completely collapses in the
1:19 long run as long as they can squeeze
1:20 every possible dollar out of it before
1:23 that happens. And in truth, I think that
1:24 you could make the argument that the
1:26 world is better off without a TGI
1:29 Fridays on every corner. Good riddance.
1:31 But when it comes to healthcare, this is
1:33 a very dangerous game to play. For the
1:35 last number of years, private equity
1:36 firms have been aggressively buying up
1:38 hospitals, dental and optometry
1:41 practices, and even veterinary clinics.
1:42 And while these are all hugely
1:44 problematic in various ways, in this
1:46 video, I want to focus particularly on
1:49 that last one, vet clinics. And because
1:50 I can already hear you all getting your
1:52 knickers in a knot and whining, why
1:53 would you focus on best instead of
1:54 hospitals? Do you care more about
1:56 animals than people or something? The
1:58 answer is yes, I absolutely do. But
2:00 beyond that, the real reason I'm
2:02 focusing here is because of the speed of
2:04 these particular acquisitions. As of
2:07 2024, private equity firms are estimated
2:09 to own between 30 and 50% of all US
2:12 veterinary practices and 75% of the
2:14 emergency and specialist clinics. In
2:16 Canada, 40% of practicing veterinarians
2:18 now work for a corporately owned clinic.
2:20 The result of this is that in many
2:22 areas, it's now next to impossible to
2:24 find a vet clinic that is owned and
2:26 operated by an actual veterinarian. And
2:27 it's only going to get worse as these
2:30 finance firms continue their roll-ups,
2:32 as they call them. But why is this
2:34 happening? The answer is a lot more
2:36 complex than you might assume. Now,
2:38 while this video is focusing mainly on
2:40 veterary medicine, the truth is that the
2:41 healthare system in general can be
2:43 really complicated to navigate. Just
2:45 finding a doctor you click with can feel
2:47 impossible, let alone being able to
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2:50 need one. It's no wonder so many of us
2:51 turn to the internet when we have a
2:53 problem. We've all been there, but uh
2:56 it's not a great strategy. Like one time
2:57 I woke up with a weird pain under my
2:59 tongue and I ignored it for days
3:01 thinking it would go away on its own,
3:03 but it didn't. It just got worse and
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4:14 for sponsoring this video. The
4:16 veterinary industry is in shambles right
4:18 now. All across North America, we're
4:20 seeing massive shortages of veterinary
4:22 care. The American Association of
4:24 Veterinary Medical Colleges estimates
4:26 that the US will need more than 70,000
4:28 new vets by 2032 to keep up with demand,
4:30 but less than 53,000 are currently
4:32 projected to graduate between now and
4:34 then. This was already a huge problem,
4:36 but it was made 10 times worse when over
4:38 the pandemic, seemingly everyone in
4:40 their neighbor decided to go get a dog
4:42 all at once. It got so bad that during
4:44 CO there were actually points where
4:46 emergency vet hospitals were actively
4:47 turning away animals that were in
4:49 critical condition simply because they
4:51 didn't have the capacity to treat them.
4:52 Like people would show up at the door
4:54 carrying their dog or cat who had been
4:56 hit by a car or was having a seizure or
4:58 choking to death or whatever other
4:59 terrible thing and they were told,
5:01 "We're so sorry, but we literally don't
5:03 have the ability to help you. We can't."
5:05 And to a slightly lesser extent, it's
5:08 still kind of happening now. But if
5:10 there's so much demand, then why don't
5:12 more people want to become vets? Oh
5:15 gosh, where do we begin with this one?
5:17 Just like human MDs, vets typically
5:19 graduate university with six figures of
5:22 student debt. But unlike human MDs, most
5:24 will never dream of making 300 or $400
5:27 or $800,000 a year. The median salary
5:31 for a human doctor in the US is $375,000
5:32 a year, where the median salary for a
5:35 veterinarian is just $125,000.
5:37 I'd make the argument that veterinarians
5:39 are generally far more educated than a
5:41 typical doctor, considering that they
5:43 have to be knowledgeable about multiple
5:45 species and to act not only as a GP, but
5:48 as a dentist, an optometrist, a surgeon,
5:50 a pharmacist, and so much more. They're
5:51 also at so much higher risk of being
5:54 bitten or [ __ ] on. Yet, they make
5:55 one-third the income and get notably
5:57 less respect. And let's talk about
6:00 respect. Here's a not so fun fact.
6:02 Veterinarians have the highest rate of
6:04 any profession. Between the trauma of
6:06 constantly seeing animals in distress
6:08 and performing euthanas and then being
6:10 routinely berated by resentful pet
6:12 owners who accuse you of being
6:14 moneyhungry or uncaring or who blame you
6:16 or accuse you of malpractice when their
6:19 pet passes. Yeah, I can see why people
6:21 aren't clamoring to that job. But we
6:24 need vets. So, it's a problem. So, now
6:26 here's where we're at. We have a massive
6:28 influx of aging vets looking to retire
6:30 and sell their practices. And not only
6:31 is there a shortage of new veterinary
6:33 graduates, but even those who are
6:35 entering the field don't have the
6:37 financial means to buy these clinics.
6:39 Between the obscene student debt and the
6:42 skyrocketing cost of well, really all
6:43 property, but especially commercial real
6:45 estate, it's completely unfeasible for
6:47 most young vets to buy a six or seven
6:50 figure business. But despite this,
6:52 veterinary services are in higher demand
6:54 than ever. So what happens? private
6:56 equity sees an opportunity. With
6:58 basically bottomless pockets, private
7:00 equity firms can make seasoned
7:02 veterinarians an offer they can't refuse
7:04 on their business. An offer so high that
7:05 even if the vet was previously
7:07 considering working something out
7:08 somehow and finding a way to help a
7:11 young doctor buy them out, that idea
7:13 goes completely out the window. Like
7:15 usually when a business is sold, its
7:17 valuation is calculated at 2 to three
7:19 times its annual revenue. Meaning that a
7:20 practice that brings in, let's say, a
7:22 million dollars a year would be worth2
7:25 to3 million if it was being sold. But
7:26 during the pandemic, private equity
7:28 firms were offering veterinarians a
7:30 valuation of up to 10 times their annual
7:32 revenue. And I mean, what would you do
7:35 in that situation? Would you endure all
7:36 the stress and aggravation of trying to
7:38 figure out how to sell your practice to
7:40 someone who can't even really afford it?
7:41 Or would you take your big ass check and
7:43 ride off into the sunset with millions
7:46 of dollars? I know what I would do. So
7:48 now many veterinary clinics are owned by
7:50 private equity firms. These firms have
7:52 way overpaid on paper, but you can bet
7:53 that they're not only going to make
7:54 their money back, they're going to make
7:56 a huge profit, too. After all, that's
7:59 their only goal. If they paid $10
8:00 million for a clinic that was
8:02 technically only worth 2 to 3 million,
8:04 now they need to find a way to make it
8:06 seem like it's worth 15 or 20 million so
8:08 they can flip it and make their money.
8:10 And they will. The basic laws of supply
8:12 and demand dictate that when supply is
8:14 low and demand is high, prices need to
8:16 increase. So, with a shortage of
8:17 available veterinarians, the
8:19 corporations immediately reach for that
8:21 low-hanging fruit and raise the prices.
8:22 The other unique thing about the
8:24 veterinary industry is that there's a
8:26 massive emotional component to the way
8:27 that people spend their money, which is
8:29 also a big reason why these investment
8:31 firms are so eager to get involved. And
8:33 listen, I'm guilty as charged in this
8:35 regard. As some of you know, Levi's been
8:37 really sick since September. And in the
8:40 span of 2 months, I spent over $7,000 on
8:42 his vet bills. He's my boy and when he's
8:44 sick, I'm willing to pay anything to
8:45 make him better. And well, private
8:47 equity firms love people like me and
8:49 they know that I'm not an anomaly. So
8:51 based on that, they raise their prices
8:53 again knowing that most of us will just
8:55 suck it up and find a way to pay them.
8:57 So all in all, the cost of veterinary
8:59 care has increased an average of around
9:01 60% in the last decade. And because
9:03 corporations are buying up the clinics
9:05 at such a rapid rate, there's little
9:07 opportunity for competition. So yeah, if
9:09 you've noticed your vet bills getting
9:11 higher and higher every year, well,
9:13 there's your reason why. And then of
9:15 course, the other triedand-true way to
9:16 increase profits in a business over and
9:19 above raising prices is to cut expenses.
9:21 So they do that, too. Where previously
9:23 the veterinarian who owned the practice
9:25 would make the employees schedules and
9:26 determine the policies and procedures
9:28 based on their expertise and what they
9:29 believe to be in the best interest of
9:32 their patients. Now these decisions are
9:34 being made by corporate. The corporation
9:35 may cut hours, leaving clinics
9:37 perpetually understaffed and the
9:39 employees overworked. They may eliminate
9:41 raises and discounts and benefits for
9:43 the staff. They may set time limits to
9:45 how long a vet is allowed to spend in an
9:46 appointment or implement charges for
9:48 things that were previously free, like
9:50 follow-up calls or medication dispensing
9:53 or nail trims. They may even set sales
9:54 targets that the doctors are required to
9:56 hit in order to earn bonuses or avoid
9:58 being reprimanded. Essentially forcing
10:00 them to upsell things that they
10:02 otherwise may not. The way the clinic is
10:04 run is no longer decided by a qualified
10:07 vet, but instead by an investment firm
10:10 who only cares about one thing, money.
10:12 And the result of this, like with most
10:13 businesses that get acquired by private
10:15 equity, is that many of the employees
10:18 get fed up and they quit. So in addition
10:19 to everything else, there ends up being
10:21 a rotating door of staff that are
10:23 unfamiliar with the office, unfamiliar
10:24 with the patients, and maybe even
10:26 inexperienced in general. And the
10:28 sediest part of this entire scheme is
10:30 that the veterinarians get blamed for it
10:32 all. They get accused of being money
10:34 hungry or uncaring when in reality
10:36 they're just employees and the
10:37 corporation is the one pulling the
10:39 strings behind the scenes. They don't
10:40 get to set the prices. They don't get to
10:42 make the calls, but they get to take all
10:44 the blame. And these [ __ ] finance
10:46 bros get richer and richer while animals
10:48 receive shittier care. People are price
10:50 gouged and vets lose their lives to
10:52 compassion fatigue and burnout. Earlier
10:54 this year, the CBC here in Canada aired
10:56 an in-depth investigative piece on the
10:58 corporatization of the vet industry and
10:59 the effects that private equity is
11:01 having on it. And to my surprise, it
11:03 brought forward a ton of defensive
11:05 backlash from veterinarians everywhere,
11:06 accusing the media outlet of slandering
11:08 the veterinary profession and
11:09 contributing to the public perception
11:11 that vets are putting money ahead of
11:13 animal welfare. But as someone who
11:15 watched the segment, that's not what was
11:17 said at all. Or at least that's not what
11:19 I took from it. I believe with 100%
11:21 conviction that the vast majority of
11:23 veterinarians genuinely have the animals
11:25 best interest in mind with everything
11:27 they do. I think that being a vet is
11:30 often a thankless job. And honestly, I'm
11:31 hardressed to believe that anyone in
11:33 their right mind would spend the time
11:35 and the effort and the money pursuing
11:37 this career and enduring all of the
11:39 trauma and chaos that goes along with it
11:41 if they didn't care about animals.
11:48 >> But I believe with equal conviction that
11:50 private equity firms don't give a flying
11:52 [ __ ] about anything other than their
11:54 bottom line. And so having them involved
11:56 in vet care or human health care or
11:58 housing or really anything else of that
12:00 nature is a massive conflict of
12:02 interest. And that's why this is a
12:04 problem. No matter how good and honest
12:06 the veterinarian is, private equity
12:08 firms don't care if animals are getting
12:09 proper care. They don't care if the
12:11 staff is overworked and underpaid. They
12:13 surely don't care if clients are being
12:15 extorted financially. In fact, they love
12:17 that. And when they own the clinics,
12:18 they make the rules. So the vets are
12:20 left with their hands tied. Here in
12:21 Canada, there are three main
12:23 corporations buying up all the vet
12:25 clinics. There's Vet Strategy, which is
12:26 majority owned by a Swedish private
12:29 equity firm called EQT Partners. There's
12:31 VCA Canada, which actually is not owned
12:33 by private equity, but by the Mars
12:36 Corporation, like as in Mars Candy Bars.
12:38 Surprisingly, the Mars Corporation is
12:40 still owned by the Mars family over a
12:41 century after it was founded, but
12:43 they're worth more than hundred billion.
12:44 So, don't think for a minute that that's
12:47 somehow better. Oh, and then there's NVA
12:48 Canada, which is owned by a German
12:50 private equity firm called Jab Holding
12:52 Company. Collectively, these three
12:54 corporations own more than 600 vet
12:56 clinics across the country. In the US,
12:58 the biggest players are Banfield and
13:00 VCA, which are also owned by Mars, along
13:02 with NVA, Vetcore, and several others
13:04 that are controlled by private equity.
13:06 And let me just say this, throughout
13:07 this most recent ordeal with Levi, we
13:09 went to a couple corporly owned clinics.
13:11 Our regular vet that he's been going to
13:12 his entire life is actually one of the
13:14 many vets that was bought out during CO.
13:16 And the emergency clinic where he was
13:18 hospitalized is one of the ones owned by
13:20 the chocolate company, which is actually
13:21 kind of messed up when you think about
13:23 it. But regardless, he received
13:25 tremendous care by almost everyone who
13:27 saw him. The doctors at our normal
13:28 clinic are phenomenal. I mean, they
13:30 always have been, but they really
13:31 rallied together to help him during this
13:33 particular time. The doctor in the ER
13:34 was excellent, too. I was really
13:36 impressed. But that's kind of my point.
13:38 The vets themselves are still doing
13:40 their best. A good doctor will always be
13:42 a good doctor no matter who signs their
13:45 paycheck, but they're still only human,
13:46 which means that they're still subject
13:48 to making mistakes or cutting corners
13:50 when they're tired and overworked.
13:52 They're only so many hours in a day. So
13:53 the bigger the workload, the less
13:54 attention each patient is going to get,
13:56 regardless of good intentions. That's
13:58 just math. And most pressingly, they
14:00 still have to follow policies that they
14:01 may not agree with if they want to keep
14:04 their jobs. 5 or 6 years ago, Levi's
14:05 bills probably would have been in like
14:08 the $4 to $5,000 range instead of over
14:10 seven. But wait, there's one more layer
14:12 to this onion, because of course there
14:14 is. Not only do private equity firms own
14:16 the vet clinics, but they also happen to
14:18 own nearly half of the pet insurance
14:20 companies. That means that if you pay
14:22 out of pocket, they can price gouge you
14:23 in the office. And if you have
14:25 insurance, they can still price gouge
14:27 you on premiums and deductibles. And
14:29 when you do pay with insurance, private
14:30 equity firms are technically just
14:32 funneling funds into other private
14:35 equity firms. Isn't that cool? Private
14:37 equity kills everything it touches. And
14:38 healthcare is probably the most
14:40 egregious example of this. Everything I
14:42 mentioned in this video is happening
14:44 equally in human hospitals and nursing
14:46 homes across the US. Healthare workers
14:48 get forced to work harder for less pay.
14:50 They get denied the right to make the
14:51 decisions for their patients that
14:54 they're qualified to make. They get iced
14:55 out of the opportunity to own their own
14:57 businesses and potentially make a better
14:59 living for themselves. The public gets
15:01 charged more money for a lower standard
15:03 of care. Vulnerability gets exploited on
15:05 both sides. And the only winner here is
15:07 the investors. It's literal blood money
15:10 in the purest sense, but blood money is
15:12 legal tender in North America, so no one
15:14 does anything to stop it. My intention
15:16 with making these videos is mainly to
15:18 educate and inspire discussion. There is
15:20 so much corruption in every corner of
15:22 the world that I think really will take
15:24 centuries to undo, and I, of all people,
15:26 don't have all the answers. But whenever
15:28 possible, I do like to try to end these
15:30 videos offering some sort of advice or
15:32 solutions if possible. So, here's what I
15:35 got. Before adopting an animal, make
15:36 sure that you've really run the numbers
15:38 on what it will cost to care for them
15:39 for their entire life. Think about
15:41 whether or not you can afford medical
15:43 emergencies, which can cost tens of
15:44 thousands of dollars, and have an
15:46 interesting way of always happening at
15:47 the worst possible times, like in the
15:48 middle of the night or on a long weekend
15:51 or whatever. I personally am not a fan
15:52 of insurance in general, and I don't
15:54 have pet insurance. But that's because I
15:57 keep a fully funded emergency fund. And
15:59 even still, I'm very aware that it's
16:00 possible that a single vet bill could
16:02 theoretically wipe out or even exceed my
16:05 savings. Insurance is a for-profit
16:06 industry, which, like I just mentioned,
16:08 is also often controlled by private
16:10 equity. That means that they are betting
16:12 on the fact that you will pay them more
16:13 over the course of your pet's life than
16:15 they will ever pay back out to you.
16:17 That's literally how they function. But
16:19 if you are someone who couldn't just
16:21 drop $10,000 all of a sudden to cover an
16:23 emergency, or if doing so would cause
16:25 you to miss your rent payment, or you'd
16:26 have to have your animal euthanized
16:28 because you can't afford the bills, or
16:30 even if you're just comforted by the
16:31 idea of not having to make that decision
16:34 on the spot during a time of crisis, get
16:36 insurance. Sometimes it's not about
16:38 optimizing every dollar. It's about
16:41 peace of mind. And that's priceless. And
16:43 considering the fact that more than 60%
16:44 of Americans feel that they're living
16:46 paycheck to paycheck and can't even
16:49 cover a $1,000 emergency, really, most
16:51 people should have pet insurance. If
16:52 you're on the search for a new vet, look
16:54 for one that's privately owned. The name
16:56 of the clinic and the branding generally
16:57 won't give you that information. So,
16:58 you'll have to either ask the staff or
17:00 do a bit of digging. But, in a lot of
17:02 cases, a privately owned clinic will be
17:04 a little bit less expensive, maybe a
17:06 little bit less busy, and the vet who
17:07 owns it will have more discretion about
17:09 how things are done. I've stayed at our
17:11 old clinic despite the buyout because I
17:13 have a good long-term relationship with
17:14 the doctors who work there. I like them.
17:16 They know Levi well and at his age and
17:18 with his health history, I really don't
17:20 want to start all over somewhere new.
17:22 But I am very aware that I'm paying a
17:23 premium there thanks to their corporate
17:25 overlords. The prices have definitely
17:26 increased significantly since the
17:29 acquisition. Most importantly, be kind
17:31 to your vet. Show appreciation for the
17:33 work they do. Treat them like a human.
17:35 If they don't own the clinic, they don't
17:36 set the prices, so don't give them grief
17:38 about the things they can't control. If
17:40 you have the right to take issue with
17:41 anyone, it's the private equity firms
17:43 and the rich [ __ ] investors who
17:45 profit massively from your pet being
17:46 sick and you being heartbroken and
17:48 vulnerable. Really, I think that the
17:50 only way out of this mess is to revamp
17:52 the entire veterinary industry. Vet
17:54 school needs to be more affordable. Vet
17:56 salaries need to be higher for the work
17:58 they do. And oh my god, vet techs barely
17:59 make above minimum wage, which is
18:01 criminal if you ask me. There needs to
18:03 be more incentive for people to get into
18:04 the industry so there's more competition
18:06 and more supply which will solve the
18:08 shortage issue and hopefully make vet
18:09 care a little bit more affordable. There
18:11 are some states and provinces that
18:13 require vet clinics to be owned by vets
18:14 and dental offices to be owned by
18:16 dentists and doctor's offices to be
18:18 owned by doctors, etc., etc. And I think
18:19 that that should be the case everywhere.
18:22 I think that's common sense. But as we
18:24 all know by now, common sense isn't very
18:28 common. And money talks, but it don't
18:30 sing and dance and it don't walk. And as
18:32 long as I can have you here with me, I'd
18:34 much rather be forever in blue jeans.
