The Private Equity Veterinary Scam Making You Poorer and Killing Your Pets

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0:34Joe, thank you for doing this. I don't think I've ever, I probably have, I don't remember, I don't think I've ever interviewed an advertiser. And so I just want to be clear about why I'm doing this interview. So I called you several months ago to ask you if you wanted to advertise on our show because you have a pet related company. I love dogs. I've got a dog right there. And we had this conversation that was like so unbelievably interesting. so interesting that I haven't stopped thinking about it. So that's, I just want to be fully transparent about why I asked you to come. Thank you for doing it.

1:06So here's my real question. Veterinary care, anyone who owns a dog or cat knows a lot about it. There's no backstop, there's no health insurance, whatever. And you'll pay anything because - It's your pet. Right, it's a member of your family. and it's getting really, really expensive. So can you just give us the overview? Why is it so expensive to say, bring your dog in for his shots? Like how does this system work? Yep. Just to put a pin on that, veterinary care has grown 2X the rate of inflation. So we talk about inflation. The cost of? Yeah. So the inflation is already high. Yeah. Veterinary inflation is double.

1:49It's like 2X. That's how crazy it is. So something that was$50 is literally$100 a year later. Why? There's a number of factors. One, there's been a lot of private equity consolidation in this space. I could have guessed that. Follow the money. So, you know, that just means less supply and the demand's only growing. That's one big factor. The other factor is because it's a cash pay industry, there's really no insurance. Right. veterinarians, and you'll read this in trade magazines, they build their business on production, which is basically selling you more stuff. So a third of their revenue is dependent on you getting a blood exam, getting x-ray, etc.

2:41And I think to be clear, the rank and file veterinarians are doing this only because they love pets. I think what's happening is it's the few business owners and ultimately, like I said, private equity that are simply raising prices for something that you're gonna pay for no matter what. And it's scaring people. So at Dutch, my company, 50 % of our customers say they haven't been to a vet in three years or more. Oh, I bet that's right. scared that the moment they enter a vet's office, they have a$500 bill or more. Literally. So let's just back up and go through these one by one. So the first is private equity.

3:25So private equity buys the model in general, buys small businesses, independent businesses, links them together for efficiencies, for cost savings, right? This is the idea. This is what they tell you yes so how many do you have any sense of how many vets are owned by private equity now i think it's like almost it's like a third to a half probably wow okay so they've been scooping them up oh massively in fact this there's been there's like two major companies that are doing it that there was a lawsuit uh that they're creating a monopoly uh that that's that's that was going around so they'll go to owners of of brick and more mom and pop yeah mom and pops and they'll just they'll and they're doing this with dentists as well and hvac and like basically every small business in america and and they'll buy just a whole bunch of them exactly yeah and then become like regional yep and then they'll just raise the prices does the care get better no the care gets worse because you're no longer bringing the they're doing nothing i don't want to like say nothing but there's really no like modernization of equipment or faster care it's the same thing they just literally raise the price huh um and when it sucks it's like super unfair i know well i mean i you know i'm willing to believe there are examples of private equity doing what it says it does, which is, you know, to come in and make the business better, better for its customers, better for its owners, better for its employees.

5:06I've never seen that ever in any sector, but I believe there must be some time where that happened. My old veterinarian, I switched to, and I asked for my, which is owned by Private Gooding, I asked for my medical records. it was 50 pages of pdf with scribble notes i mean there's no way that there's anything that you could ever find what's there so i don't believe i've not seen any sort of better care for pets as a result at all yeah um but greater returns for the investors in private for the yep yeah totally so um okay so how do they can you be specific about how they raise the prices. You suggested there's an incentive for veterinary offices to hike the price of annual exams and shots.

5:59Annual exams, but they'll sell you more stuff too. So they'll say, you know what, your dog needs teeth cleaning. And so we need to put them under anesthesia. And that's going to be like a$5 ,000 bill for teeth cleaning. $5 ,000? Yes. I've had a lot of dogs, dozens and dozens of dogs. I've got five at my house right now. And I don't think I've ever had a dog's teeth cleaned. Yeah, exactly. And my dogs live a long time, like 14. Exactly. And the thing is, you're there and you feel horrible because you only want to do what's best for your pet. But what happens is they have a list of all the services they want to sell to you.

6:37And that's going to be one of them. And you feel horrible that you even have to think about the decision of course but you're and but it's like that's a lot of money and not i mean most people don't have five thousand dollars lying around the house putting your dog under anesthesia is not a small thing i mean dogs die people die under anesthesia you're suspending life in a living thing totally yeah so i think what happens is it's the list of services that they'll try to sell you and make you feel horrible that you don't care about your dog if you don't buy from this menu. There's so much emotional leverage.

7:17People are so intense about their animals. Yes. Not in my house. We have, you know, critical distance. You know, you'd do anything. You'd sell your car. I mean, I would. And so they have a lot of power when they're upselling. Yes, totally. do you it seems like the incentives would produce like actually bad outcomes where your dog or cat is getting treatments they don't need and that might be counterproductive well i think what happens is people just stop going to the vet at all that i mean that's what we've seen is that there's just a whole there's tens of millions of dogs that never go to the veterinarian.

8:01At Dutch, 50 % don't go to the vet, haven't been to the vet in years. And it's because they don't want to feel bad for not buying extra services for their dog. That's amazing. What about all the shots? There are a lot of shots and they're very expensive. Definitely there's vaccines, but even vaccines, like you should, I mean, as we have at Dutch, So telemedicine can do vaccines, but there's definitely lower cost clinics that will do vaccines for$50, whereas in person, it'll cost you$150 to$200 for the same thing. For a shot? Yes. Why would it cost$200 for a shot? Well, they'll say, well, I have to pay for rent and I have to pay for staff.

8:50I mean, they'll say there's like all this upkeep that the shot, you know, includes. But it's baloney. It's obvious that goes back to private equity raising prices and knowing the people there's some people who will still pay for it. So the profile of the vets that I've dealt with in the past 20 years, it really, really changed. It's a female industry now. Yes. Which I think is good, just to be honest. I feel like they're really a lot of dog lovers. Not all you get hard cases among vets, but most vets I know just really love animals. Yes. Christmas is here. That means you're eating a lot. We are.

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11:53Stop by and pick up a couple of bags before somebody else does. And so what do they think of all of this? So what's interesting is that when it comes to just Dutch and telemedicine, telemedicine, we get hundreds of applications from people who want to do telemedicine. And actually, to this point that it's female, telemedicine allows them to have a work-from-home flexible schedule, which they love. The main industry association, the AVMA, has basically made these vets feel that if they do telemedicine, the FBI will show up at their house what it has scared them to death from doing telemedicine to death and it's because it's again it's comprised of these self-serving financially interested individuals who run the organization but um they have completely scared veterinarians from doing telemedicine whatsoever why would the fbi show up at a vet's house what they'll say and and again like i think this is why i want your listeners to know this it's just so insane they will say that the federal law requires it requires you to have a physical exam no matter what like no matter if it's an opinion it's a rash it's a quick question they'll um say that the FDA website requires a physical exam, which it doesn't.

13:25But in every conference, in every newsletter, they'll say, oh, well, we asked the FDA and they said that you need a physical exam. So if you violate this, you might go to jail. That's what they'll say at every conference for years now. And they'll vilify me and Dutch. And they'll say, this guy is going to hurt your dog. If there's telemedicine, millions of dogs will die is the headline. I'm starting to laugh. I mean, that's like obviously not true. Emotional blackmail. Yeah. So one of the main... Buy this book or we'll shoot this dog. I mean, it really... Yeah. Millions of dogs will die. Did they really say that?

14:12Yeah. Well, again, so this is what they'll say at a conference. what I've been doing now is I've been working with the ASPCA and a huge coalition of shelter organizations because they're the ones that get the brunt of it because now millions of dogs actually also get surrendered because their owners can't care for them. Because they can't afford veterinary care? Because they can't afford veterinary care, yes. Come on. I'm telling you, it fucking sucks. People abandon their dog? Yes. oh man it i know it gives me chills it fucking sucks yeah um so the only way this can change is at the state level and we've been working so in florida it took us four legislative sessions to allow telemedicine and and all it does is all the law will say is that the veterinarian can use their judgment to make a decision but may i just ask you a foundational question why is the state involved in what kind of medical care you give your dog just because health care is regulated at the state level this is veterinary care and that i mean and then but you have dominion over your dog i mean right it's so weird that they feel like some state legislator feels like he has more power over your dog who sleeps in your bed, who's your dog, than you do.

15:38Like, what is that? That's the system we live in. But actually, I will tell you this. Most legislators, once we tell them that this is a law that you need to help us with, most of them are completely on board. They're like, we have human health care, and this is like a lot of them will say i didn't even know this wasn't it like you said i didn't know this was an issue this is dumb so where it doesn't work is when the avma or a lot of these state uh lobby groups who have hundreds of millions of dollars in annual budgets if they've lined a politician's pocket then that's where we will have trouble in those states Taking money from the veterinary lobby.

16:28Yeah. There are a lot of dark lobbies. We only pay attention to a couple of them, but there are so many. Yeah. So can you just quickly tell me how that works? So the AVMA is the American Veterinary Medicine Association. Yeah, Medical Association. Medical Association. And why do they have an interest in preventing telehealth for animals? There's one reason that they'll say, and then there's one reason that they'll say behind closed doors. So what they'll say in public is that they'll say telemedicine is going to harm dogs, lead to millions of dogs dying. But what they'll say at the hearing behind closed doors, it's purely financial.

17:11They think that it's an either or choice that if you have telemedicine, people will no longer go to the vet and their brick and mortar business is going to die. That's not true. Oh, so they're just preserving the monopoly. Yeah, they preserve the monopoly. It's just like always. Most regulation exists to preserve existing monopolies. Yes, exactly. That's true in tech. It's true in manufacturing. It's true in the nicotine business. It's true in veterinary care. Wow. I should have known that. Duh. Oh, you're right. Millions of dogs will die. Like who has died? No one. Well, so if people aren't even bringing their dogs to the vet because it's too expensive, how is that good?

17:52Exactly. Dogs are getting zero care. And you will have these people say that they will prefer that than, they'll prefer the status quo, the industry association will say they'll prefer the status quo than allow telemedicine. And by the way, it's not an either or choice. It's not like, oh, I have a video call and now I no longer get vaccines at the vet. You know, like we have, again, human health care. We still go to our brick and mortar annual checkup, whatever. And then if we have an issue at night, we don't have to go to emergency. Yeah, if you've got porcupine quills in your dog's throat or, you know, cuts his leg on barbed wire, you have to go to a surgeon.

18:41That's right. But if he has a rash and you just want to know, like, what is this? Why do you have to go to urgent care when you can just show, again, the dogs in the comfort of their home and you use your phone and show a video of their paw? Right. Like, why do you have to drag that animal in? And that's right. And, for example, we get porcupine quills on our dogs all the time, a lot. And I wish I could say my dogs are smart enough not to try and eat porcupines, but they're not. and every year I have to take the quills out, which takes like four hours. But I do it myself because, well, because I know how, but also because my dogs don't like to go to the vet at all.

19:23And it smells like death and they can smell it. Yeah, mine do too. Dogs are euthanized there. They know that. And so we do everything we can to prevent physical visits because the dogs are panicked. And I think most people with dogs know this. Yes. And I think cats feel the same way. Cats are even worse. Yes. Because to corral a cat. Difficult. Difficult. Difficult. So anything as someone, if you love animals, you want to, you want care for them, of course, but you want to keep them out of the physical space if you can. Yep. They're in the comfort of their home. Exactly. One of the things we see a lot is behavior and anxiety cases.

20:03And that's even more so why they should be treated from home, because the dog is in their natural environment. You're only making their situation worse by forcing them to this place they don't like. And then a lot of the behavior modification that happens, telemedicine is perfect for that, because you can have these regular conversations and for a fraction of the price. Just to give you context, by the way, so Dutch, it's less than$100 for a year of care. If you went every month, you'd pay$100 a month. You'd pay like over$1 ,000 to treat your dog. And oftentimes when you have anxiety, you kind of need to have those regular check-ins.

20:53and we had a story recently of of this guy who had an aggressive dog he's been on dutch for two years and the dog went from crazy aggressive to now he has two buddies like his life has changed yes and there's no way in the world this uh owner could have had the money or the time if Dutch wasn't around to change this dog's life. Amazing. Yeah, and if you have a dog who bites, I've had a few. It's very disruptive. And, you know, the dog can get killed, by the way. You know, dogs like that either get put down by the state or can be killed in a fight, whatever. You don't want that at all. It's a big problem.

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23:16So how does it work exactly? I don't understand the term. So it's a hundred bucks. Tell me how it works. What's the alternative? So with Dutch, you go to Dutch.com. You sign up. It's a membership service. It's$100 for a year of care. So for a year, you can call a vet for up to five pets. and we have vets available same day. So, you know, most appointments, by the way, are happening at night. Even if you have a vet, the vet's closed. Yeah. And so you have a video call. Most calls happen on people's phones. You talk to a local vet in your state and they'll, you know, you're talking to a professional and so they'll die.

24:04You're talking to a veterinarian. Yeah, you're talking to a veterinarian. You always talk to a veterinarian, a human being. And 90 % of the time, and we've been doing this now for five years, 90 % of the time they're able to address the issue over video. Amazing. And so does that include vaccines or what does that include? It includes the cost. So vaccines you have to do in person and we'll recommend a local clinic if that's what you need. but if you need medication, we have pharmacy partners who can ship that to you. You can also go to a pharmacy of your choice. You don't care. But it includes kind of any of the follow-up messages, chats with a vet, so you don't feel like you're nickel and dimed if I have another question or if I have to follow up a week later.

24:57The other thing that's cool about digital first is that everything is documented. So we know automatically when we should follow up for each condition. Or we know that a veterinary needs to respond. Like we have goals. A veterinary needs to respond within a matter of hours back to the patient if there's a message during the business day. So we can also like really monitor quality metrics to make sure that customers are having a good experience. Is this nationwide? It's nationwide, but there are about 20 states that don't allow telemedicine. For animals? For animals, yeah. What? Really? Yep. Because of lobbying by written order?

25:46Because of law, exactly. So that's why I - Any big states? Any of the big states. Some of the biggest ones like Texas, which is crazy because California allows it, but Texas does not. And we actually had a huge bill this year that literally got killed by the AVMA. And it's all because of money. That's wild. Yep. So it's you are not allowed to do. So is there like an underground telehealth? Like, why don't you just ignore the law and do it anyway? sorry kind of well so there's actually on in texas there's a court case that is now at the supreme court where the veterinarian said well i'm it's freedom of speech yeah i'm just like telling people what like how their pets you know um this is my freedom of speech so the fifth circuit which is texas louisiana missouri has ruled in his favor but the attorney general it has filed this um as an appeal at the supreme court currently seriously yeah what's his name craig forget his name that's so interesting for senate so right now it is illegal for anyone in Texas to call a vet on the phone and just get healthcare on the phone.

27:16Yep. According to them, now there's always, so there's two paths in Texas. There's any state allows has an emergency provision if it's a life or death situation. And then in Texas, again, there's this Fifth Circuit decision that's currently, so there's like, there's sort of this competing situation in Texas where on the one hand, the Fifth Circuit says telemedicine is allowed, but the state regulations still say that it's not allowed. I'm pretty sure I could just call up and get like very serious drugs prescribed through telehealth as an adult, like very serious, fully addictive benzodiazepines, for example, you can die from going off them.

28:02I mean, this is like way more, way more addictive than heroin. You can't die going off heroin. You can die going off Xanax. so it's all about the money but that's totally fine to get that from telehealth yes or amphetamines no problem it's like tijuana you know you get whatever you want now but your dog can't get treatment yeah that's not it's it's definitely unfair well it's deranged um is that changing are you making progress we're making good progress so we've changed the laws in florida Arizona, Ohio, in a number of states. And this upcoming legislative session, we're lobbying in 12 different states.

28:43But definitely, there's a lot of states, I'm sure your listeners live in a lot of those states. And one of the things we did is we launched this website called SavePuppies.com.

28:59And if you go to SavePuppies.com... I love your marketing suit. I mean, if they're saying millions of dogs will die, you're fighting back with SavePuppies.com. That wasn't taken? I know, right? Yeah, it wasn't taken. And so you can go there and send a letter to your local legislator. That's the only way that things will change is at the grassroots level because we don't have the crazy budget that these trade groups have. Can I ask you, what is the AVMA think of private equity scooping up all the independent businesses? They're associated. I think they're associated with it. They've got no problem with that.

29:40I don't think so. Prices going up, care declining that they're totally fine with that. What are against options? What? So I think again, there's two things what they'll say publicly versus what happens behind closed doors. and i've read art i mean it's like we live in two different worlds because what they'll say is like for example one reason prices are going up is there's also massive vet shortages because the veterinary profession has one of the biggest dropout rates oh yeah of anyone and they'll say and this is just it's this is just factually like true if you follow uh bls by Bureau of Labor Statistics, but they'll say there's no shortage.

30:30Or you'll say, you know, prices are going up and there's like data that shows that. They'll say, no, prices are not going up. So a lot of times when you talk to them, the surveys they put out are completely nonsensical. Right, and there's this bottleneck in veterinary school. Totally. So that's another thing. The AVMA, it's really weird in this industry. And I think I just, again, I'm here because like you shine a light on things. And I think a lot of people - Well, I care about this topic because I think the relationship between people and animals is just so essential. I know. It sucks what they're doing.