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Well think this through. There are 10 vet practices in your city. 7-8 get rolled up into one uber practice by a PE firm. They now have far less overhead per

Well think this through. There are 10 vet practices in your city. 7-8 get rolled up into one uber practice by a PE firm. They now have far less overhead per patient. Billing, equipment and even vets can be amortized over far more patients. You, the hold out clinic, are now more expensive, or have a far smaller profit ratio, thus you are operating at a big disadvantage to the other clinics in your city. You can hold out but what is your edge in this case where your competitor is now bigger and can handle things like a vet quitting as they have a bunch that roam from practice to practice. Or they can handle buying a new machine for millions while the bank won't lend to you due to your shrinking margins. Economies of scale are a thing and can be a very real competitive differentiator. You the hold out are now getting crushed by your competitors while you look around and see your fellow vets taking weekends off to take their new boat to the lake because they sold their practice and you're working your 11th weekend in a row because your other vet quit to work for your competitor that can now pay more than you. I've had friends live this and its not fun.

1980phipsi 3y ago
If the government increases regulations, then it tends to place a bigger burden on small businesses than big businesses for the same reasons you highlighted about overhead.
Joker_vD 3y ago
Ah, so the overall economic efficiency improves and then everyone's better off. Wait, what's wrong with that?
- deleted 3y ago
  [deleted]
- gmd63 3y ago
  Think of Comcast but for puppies' health
- jprete 3y ago
  The actual problem is that the unmonetizable value gets tossed out by PE. E.g. customer service will take a massive dive because everyone working for the clinic or whatever else will be time-pressured out of good service. Generally the problem with treating everything via pure financial models is that some things are valuable but hard to measure financially and those are inevitably destroyed by PE and other entropy-maximizers.
- ToucanLoucan 3y ago
  You're shifting goalposts. Your first comment was about how small businesses could just refuse to sell, then a commenter described the (very real) consequences of that decision: a person has to work harder, for less money, to compete with entities that can outspend them by a few factors. Now you're saying that's more efficient overall which is a completely different point. And, that's true, it is more efficient. But those veternarians, despite now having their weekends off, are paid barely market rate for their skills (if that) and more importantly, no longer running their business: A PE firm is. That means they have zero recourse if the PE firm starts doing PE firm shit: keeping bare minimum stock at their clinic of every last consumable, to avoid taxation; keeping bare minimum staff at all times to avoid paying workers; abusing staff and causing high turnover; basically every stupid ass "why would they do that" type decision you've heard of a large business making in the last 30 years, PE's LOVE those decisions. And that's not even going into the fact that the profits of that business are no longer going to the community in which it operates, they're going to far away shareholders.
- Libcat99 3y ago
  More efficient for the mega-vet, sure. Once you've consumed all the competition, there's no need to compete on price anymore. Prices can go up quite a bit before it becomes economical for a new entrant to take a risk in the market. Except maybe another mega-vet. See what Walmart did to communities and small business. Efficiency is not all roses.
lapcat 3y ago
Another issue is that doctors are coming out of school with more student loan debt than ever before, so when it comes time for the older doctors to retire, the younger doctors haven't built up enough personal equity to take over the clinics. Nobody seems to care about the student loan debt of doctors, because doctors can make a good salary, but student loan debt still has negative consequences down the road such as this.
- FireBeyond 3y ago
  Dentistry is different. I've seen multiple comments from fresh DDS graduates being able to take out 7 digit loans to acquire/start/buy in to a practice, because it's seen as a low risk license to print money.
bondarchuk 3y ago
The edge is far better service and less scammy practices (pushing unneeded treatments/medications etc..), at least from what I heard locally about Dutch vets. Incidentally in Belgium they just passed a law requiring each veterinary practice be owned by a veterinarian. Life could be simple...
chii 3y ago
Taking the emotion out of the analysis, all i am hearing is that the PE uses more capital, but produces a cheaper, more efficient service. If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business (or fund one as a VC themselves). I don't see how PE is stifling anything, but to produce a more intensely competitive environment.
- lapcat 3y ago
  > produces a cheaper, more efficient service. More profitable perhaps, but not cheaper. In fact, usually more expensive, because the PE firms buy up all the clinics in a city, eliminating competition, and then they can set the rates to whatever they want. Needless to say, any "savings" are passed along to the investors, not to the consumers. > If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business They're usually selling because of retirement, so they're not going to start another business. The issue here is that the business is not passed along to another new small business owner, it's passed along to a giant PE firm. > produce a more intensely competitive environment. In reality, to reproduce an environment with less competition and more consolidation, as mentioned above.
  - ghufran_syed 3y ago
    Great, that "less competition" means higher prices... Which means someone setting up a new clinic can benefit from those higher prices - oh look, now you have competition again.
- harperlee 3y ago
  Sure, until they have no competition anymore, and raise the prices to whatever they want them to be, extracting 99% of value from what they offer with a huge moat that eliminates all competition. Then the consumer is left with no pricing negotiation and the experience is objectively worse for most of the society. The escape hatch for that is taxes to the powerful market entities, that revert value back to the less powerful market entities, but that's not popular in the U.S.
- 3y ago
_ahxg 3y ago
Vet is probably a very good example of economies of scale. I remember a vet in my town in Brazil complaining how hard it is if he get ill (or take vacations i presume), that he will lose his customers and how much he regretted not becoming a state employee.
QuarterReptile 3y ago
>what is your edge in this case where your competitor is now bigger and can handle things like a vet quitting as they have a bunch that roam from practice to practice. Or they can handle buying a new machine for millions while the bank won't lend to you due to your shrinking margins. To answer your rhetorical question: 1. People would rather deal with neighbors than with PE or megacorps, and will do so to the extent that the difference in price is tolerable (and to the extent that they even know their neighbors.) 2. Management layers and performance based incentives are huge costs that small enterprises should be mostly able to avoid. 3. Owning a business can have a really compelling advantage at tax time in the ranges of professional incomes we're discussing. 4. Owner-operated businesses should be able to integrate with family life, allowing dads to spend time closer to their kids, which should be another advantage in favor of professionals going it on their own. 5. Owner-operated businesses can also operate with much more efficient facilities (housing over top of business) when not forbidden by zoning or other regulations. On the other hand, people like steady salaries and set working hours. They like leaving work at work. And, especially as these professions increasingly see their schools dominated by women, many of these professionals really like stepping away from work or going part time for 5-10 years around their 30s.
- TeMPOraL 3y ago
  RE 1: Customers have zero influence on this. If you have a pet, you'll need a vet, and if the owner of the owner-operated clinic next to you gets an offer they can't refuse... I can't imagine you'll find some other owner-operated clinic to visit out of spite, where the now-corporate one next to you is open, and perhaps even cheaper. RE 2-5: These are all rounding errors compared to economies of scale the PE-backed companies have. Also, those PE roll-ups target businesses whose owners are at the stage of life when they're just happy to take a big payout and retire. Tax time advantages and spending some time with kids (which is arguably less than salaried employees of the corpo-clinic will have) can't possibly beat being able to not work at all anymore, live comfortably, and have all the time you want for kids.
  - JumpCrisscross 3y ago
    > I can't imagine you'll find some other owner-operated clinic to visit out of spite No, but I did organise a few patients to grant our vet a loan to open a new facility. (It wound up creating some Michael Scott Paper Company drama between the vet and her former colleagues, which was interesting.)
gosub100 3y ago
I haven't thought about it this way, I hope youre right. Here's what comes to my mind after PE buys vet clinic: - Analyze all the employees using a "system" to gauge "productivity metrics" - Pressure management to get rid of an employee or two to increase profits, making everyone else work harder. - Seek additional income streams from dubious "insurance" products that may or may not pay. Help market their products by spreading false information that insurance gives them "peace of mind". - Increase costs to see what the market will bear - Put all employees on a unified HR system that has a strict 1-size policy, little gotchas like "no health insurance for the first 60 days", limited PTO, etc. Ignore anyone who speaks badly because "this is company policy ". Give the business director a bonus when he finds new and creative ways to "maximize profits" at the cost of denigrating staff and making them work harder under more constrained policies. - Lock all dr's salaries and staff pay to the same scale because "policy". Work harder? Why try? I get paid the same amount either way. Employees game the system to work the minimum to avoid termination. Not because they love animals, those people quit in the first 60 days (which is why our health coverage doesn't kick in before then). - remove as much of their agency as possible, helping a poor persons injured dog is no longer acceptable, pay-as-you-go and sliding-scale billing are so 1990's, we have a business to run, the policy is "put the animal down and move on to the next paying customer". House calls are a liability and take valuable time away from the business, effective next year they are no longer allowed. - appeal to emotion to upsell wealthy customers to services that promise to prolong the animal's life (but increase suffering and are medically unethical). - Fewer people go to the vet now because they can't afford it, more animals suffer so that rich men can have more profit.
- smabie 3y ago
  Where did this list come from?
  - gosub100 3y ago
    inference, based on how corporations are run vs small business
mortify 3y ago
It's not enough that large corporations use economy of scale to undercut smaller businesses. That would generally be a good thing for consumers. Instead, we're seeing larger companies use their influence to increase regulation: a cost they can absorb that smaller businesses cannot. We've seen this in medicine in the last 10 years. I know of no independent doctor's offices in my area. They looked at the cost to comply with electronic medical records requirements and joined a local health network.
Sohcahtoa82 3y ago
My wife works in a lab for a regional medical company. They just sold out their labs to a national medical lab company, effective January. She's only heard bad things about this other company. Her wage is basically guaranteed to stagnate, they're not as generous about PTO, and they contribute surprisingly little to health insurance plans. Oh, but I'm sure the management is flying away on a golden parachute.

1980phipsi 3y ago

If the government increases regulations, then it tends to place a bigger burden on small businesses than big businesses for the same reasons you highlighted about overhead.

Joker_vD 3y ago

Ah, so the overall economic efficiency improves and then everyone's better off. Wait, what's wrong with that?

deleted 3y ago
[deleted]
gmd63 3y ago
Think of Comcast but for puppies' health
jprete 3y ago
The actual problem is that the unmonetizable value gets tossed out by PE. E.g. customer service will take a massive dive because everyone working for the clinic or whatever else will be time-pressured out of good service. Generally the problem with treating everything via pure financial models is that some things are valuable but hard to measure financially and those are inevitably destroyed by PE and other entropy-maximizers.
ToucanLoucan 3y ago
You're shifting goalposts. Your first comment was about how small businesses could just refuse to sell, then a commenter described the (very real) consequences of that decision: a person has to work harder, for less money, to compete with entities that can outspend them by a few factors. Now you're saying that's more efficient overall which is a completely different point. And, that's true, it is more efficient. But those veternarians, despite now having their weekends off, are paid barely market rate for their skills (if that) and more importantly, no longer running their business: A PE firm is. That means they have zero recourse if the PE firm starts doing PE firm shit: keeping bare minimum stock at their clinic of every last consumable, to avoid taxation; keeping bare minimum staff at all times to avoid paying workers; abusing staff and causing high turnover; basically every stupid ass "why would they do that" type decision you've heard of a large business making in the last 30 years, PE's LOVE those decisions. And that's not even going into the fact that the profits of that business are no longer going to the community in which it operates, they're going to far away shareholders.
Libcat99 3y ago
More efficient for the mega-vet, sure. Once you've consumed all the competition, there's no need to compete on price anymore. Prices can go up quite a bit before it becomes economical for a new entrant to take a risk in the market. Except maybe another mega-vet. See what Walmart did to communities and small business. Efficiency is not all roses.

lapcat 3y ago

Another issue is that doctors are coming out of school with more student loan debt than ever before, so when it comes time for the older doctors to retire, the younger doctors haven't built up enough personal equity to take over the clinics. Nobody seems to care about the student loan debt of doctors, because doctors can make a good salary, but student loan debt still has negative consequences down the road such as this.

FireBeyond 3y ago
Dentistry is different. I've seen multiple comments from fresh DDS graduates being able to take out 7 digit loans to acquire/start/buy in to a practice, because it's seen as a low risk license to print money.

bondarchuk 3y ago

The edge is far better service and less scammy practices (pushing unneeded treatments/medications etc..), at least from what I heard locally about Dutch vets. Incidentally in Belgium they just passed a law requiring each veterinary practice be owned by a veterinarian. Life could be simple...

chii 3y ago

Taking the emotion out of the analysis, all i am hearing is that the PE uses more capital, but produces a cheaper, more efficient service. If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business (or fund one as a VC themselves). I don't see how PE is stifling anything, but to produce a more intensely competitive environment.

lapcat 3y ago
> produces a cheaper, more efficient service. More profitable perhaps, but not cheaper. In fact, usually more expensive, because the PE firms buy up all the clinics in a city, eliminating competition, and then they can set the rates to whatever they want. Needless to say, any "savings" are passed along to the investors, not to the consumers. > If the original small business owner sold, the money they got paid isn't gone - they could've used it to start another small business They're usually selling because of retirement, so they're not going to start another business. The issue here is that the business is not passed along to another new small business owner, it's passed along to a giant PE firm. > produce a more intensely competitive environment. In reality, to reproduce an environment with less competition and more consolidation, as mentioned above.
- ghufran_syed 3y ago
  Great, that "less competition" means higher prices... Which means someone setting up a new clinic can benefit from those higher prices - oh look, now you have competition again.
harperlee 3y ago
Sure, until they have no competition anymore, and raise the prices to whatever they want them to be, extracting 99% of value from what they offer with a huge moat that eliminates all competition. Then the consumer is left with no pricing negotiation and the experience is objectively worse for most of the society. The escape hatch for that is taxes to the powerful market entities, that revert value back to the less powerful market entities, but that's not popular in the U.S.
3y ago

_ahxg 3y ago

Vet is probably a very good example of economies of scale. I remember a vet in my town in Brazil complaining how hard it is if he get ill (or take vacations i presume), that he will lose his customers and how much he regretted not becoming a state employee.

QuarterReptile 3y ago

>what is your edge in this case where your competitor is now bigger and can handle things like a vet quitting as they have a bunch that roam from practice to practice. Or they can handle buying a new machine for millions while the bank won't lend to you due to your shrinking margins. To answer your rhetorical question: 1. People would rather deal with neighbors than with PE or megacorps, and will do so to the extent that the difference in price is tolerable (and to the extent that they even know their neighbors.) 2. Management layers and performance based incentives are huge costs that small enterprises should be mostly able to avoid. 3. Owning a business can have a really compelling advantage at tax time in the ranges of professional incomes we're discussing. 4. Owner-operated businesses should be able to integrate with family life, allowing dads to spend time closer to their kids, which should be another advantage in favor of professionals going it on their own. 5. Owner-operated businesses can also operate with much more efficient facilities (housing over top of business) when not forbidden by zoning or other regulations. On the other hand, people like steady salaries and set working hours. They like leaving work at work. And, especially as these professions increasingly see their schools dominated by women, many of these professionals really like stepping away from work or going part time for 5-10 years around their 30s.

TeMPOraL 3y ago
RE 1: Customers have zero influence on this. If you have a pet, you'll need a vet, and if the owner of the owner-operated clinic next to you gets an offer they can't refuse... I can't imagine you'll find some other owner-operated clinic to visit out of spite, where the now-corporate one next to you is open, and perhaps even cheaper. RE 2-5: These are all rounding errors compared to economies of scale the PE-backed companies have. Also, those PE roll-ups target businesses whose owners are at the stage of life when they're just happy to take a big payout and retire. Tax time advantages and spending some time with kids (which is arguably less than salaried employees of the corpo-clinic will have) can't possibly beat being able to not work at all anymore, live comfortably, and have all the time you want for kids.
- JumpCrisscross 3y ago
  > I can't imagine you'll find some other owner-operated clinic to visit out of spite No, but I did organise a few patients to grant our vet a loan to open a new facility. (It wound up creating some Michael Scott Paper Company drama between the vet and her former colleagues, which was interesting.)

gosub100 3y ago

I haven't thought about it this way, I hope youre right. Here's what comes to my mind after PE buys vet clinic: - Analyze all the employees using a "system" to gauge "productivity metrics" - Pressure management to get rid of an employee or two to increase profits, making everyone else work harder. - Seek additional income streams from dubious "insurance" products that may or may not pay. Help market their products by spreading false information that insurance gives them "peace of mind". - Increase costs to see what the market will bear - Put all employees on a unified HR system that has a strict 1-size policy, little gotchas like "no health insurance for the first 60 days", limited PTO, etc. Ignore anyone who speaks badly because "this is company policy ". Give the business director a bonus when he finds new and creative ways to "maximize profits" at the cost of denigrating staff and making them work harder under more constrained policies. - Lock all dr's salaries and staff pay to the same scale because "policy". Work harder? Why try? I get paid the same amount either way. Employees game the system to work the minimum to avoid termination. Not because they love animals, those people quit in the first 60 days (which is why our health coverage doesn't kick in before then). - remove as much of their agency as possible, helping a poor persons injured dog is no longer acceptable, pay-as-you-go and sliding-scale billing are so 1990's, we have a business to run, the policy is "put the animal down and move on to the next paying customer". House calls are a liability and take valuable time away from the business, effective next year they are no longer allowed. - appeal to emotion to upsell wealthy customers to services that promise to prolong the animal's life (but increase suffering and are medically unethical). - Fewer people go to the vet now because they can't afford it, more animals suffer so that rich men can have more profit.

smabie 3y ago
Where did this list come from?
- gosub100 3y ago
  inference, based on how corporations are run vs small business

mortify 3y ago

It's not enough that large corporations use economy of scale to undercut smaller businesses. That would generally be a good thing for consumers. Instead, we're seeing larger companies use their influence to increase regulation: a cost they can absorb that smaller businesses cannot. We've seen this in medicine in the last 10 years. I know of no independent doctor's offices in my area. They looked at the cost to comply with electronic medical records requirements and joined a local health network.

Sohcahtoa82 3y ago

My wife works in a lab for a regional medical company. They just sold out their labs to a national medical lab company, effective January. She's only heard bad things about this other company. Her wage is basically guaranteed to stagnate, they're not as generous about PTO, and they contribute surprisingly little to health insurance plans. Oh, but I'm sure the management is flying away on a golden parachute.