Private equity funds are finding pet care is a growing profit center

Dogs and cats have a nasty habit of getting sick on Friday nights. This can be bad for the dog and it can also be disastrous for the pet owners budget. Thats because emergency pet care has always been expensive and critics say the entry of private equity firms could drive costs even higher.

These new, equity-backed pet ERs provide fast service and use the latest technology to test and treat patients and also to download hefty fees from pet owners, who must often pay up before their animal is treated.

An unsuspecting dog or cat fancier who is accustomed to paying $60 to $80 for an ordinary vet visit may be presented with an upfront payment of $2,000 or more to have Buster or Fluffy tested and treated.

Thats what happened to a consumer in suburban Washington, D.C. not long ago. His elderly dog, Billie, had been going downhill for a few months but took a turn for the worse the night before Thanksgiving, just as everything was shutting down for a four-day weekend.

The 24-hour animal ER he normally went to was full and was turning away patients. It recommended a new emergency hospital called VEG, Veterinary Emergency Group, located in a nearby strip mall.

VEG is backed by several private equity firms, including D1 Capital Partners, Fidelity Management & Research Company LLC, Durable Capital Partners LP and Sequoia Heritage, according to public records. VEG has several ERs in the D.C. area and is expanding rapidly across the country, with an estimated 60 facilities now open.

It was a very impressive layout, said Billies owner, a retiree who asked to remain anonymous. A vet saw Billie immediately and sketched out the tests she thought might be necessary, based on the symptoms. The tab was roughly $2,000, to be paid upfront. I was told any test that wasnt needed would be deducted from the credit card tab.

A group of young women who appeared to be college students came in at about the same time. They didnt havecredit to cover the estimate but VEG presented them with a payment plan that would allow their pet to be examined while burdening the students with a hefty debt.

No one doubts the need for emergency care. There are more dogs than ever in the U.S. while the number of veterinarians remains relatively static.

Its estimated that 66% of American households (roughly 87 million) own at least one pet. Meanwhile, researchers say there could be 15,0000 fewer vets than needed by 2030, as high costs and relatively low earnings discourage many would-be vets.

Even with increased investment by private equity, it can be hard to find emergency care when its needed. A Northern Virginia consumer complained recently that he had to take his dog to three different emergency clinics before his dog, who was displaying signs of bloat, a potentially fatal disease, could be seen.

Even after the dog was admitted, we were told it would be 4-5 hours before a doctor would be able to see her because of how swamped they were with other patients, the consumer said on Reddit.

A good profit center

Like VEG, these new pet ERs are modern and welcoming. They tend to be spacious, open-plan facilities, built like a human ER, with patient stations clustered around a central treatment core.

They welcome pet owners who want to stay with their animal. The vets and techs are youngish and enthusiastic and the equipment is the very latest.

VEG describes its approach as one that puts people and pets first, by meeting them at the door, seeing their pets immediately and inviting them into the treatment area. The companys website says its founder, Dr. David Bessler, knew something was wrong with the ER experience. A major piece was missing: the customer's feelings. They were left out in a lobby, kept in the dark about treatment options, and then hit with surprise fees.

But some veterinarians say that, for all its patient-first palaver, VEGs method of extracting payment in advance of treatment just doesnt sit right. They also question the business-is-business approach of private equity firms.

A large number of these funds are seeing veterinary medicine as a good profit center, said Dr. Grant Jacobson, an Iowa veterinarian who serves on the board of the Independent Veterinary Practitioners Association in a recent Stateline article. He said hes seen corporate-owned chains drive up prices, suppress market competition and get around state laws that prohibit veterinary practices from being owned by non-veterinarians.

Quality pet care is expensive

Regardless of where a pet owner goes for treatment, veterinary care is getting more expensive, driven by technology and consumers who increasingly see their pets as members of their family, deserving of the best possible care, as a recent New York Times investigation found.

But while frugal consumers can decline highly expensive treatments, they are less likely to resist treating or at least testing their pet to determine if an apparent emergency calls for extraordinary measures or if treatment can be put off a day or two.

Those expensive tests that pet ERs recommend check for diseases and conditions the sick pet may or may not have and may duplicate tests that the pets regular vet has already conducted. True emergencies can be treated on-site but in many other cases, newly indebted pet owners are sent off into the night and advised to see their regular vet when offices reopen. These regular vets often roll their eyes when they look at the battery of tests the pet has undergone.

Thats what happened to Billies owner. After several hours in the ER and a long list of inconclusive tests, Billie was as sick as ever but didnt have a diagnosis. A few days later, her regular vet examined her and shrugged.

Geez, they tested for everything they could think of. She doesnt have any of this stuff, said the regular vet, who knew Billies history. Shes getting to be an old dog. We could run some more tests but I think she is basically nearing the end and we should probably just keep her comfortable, not subject her to more tests and expensive treatments.

Billie went home with $40 worth of pain-relief and anti-anxiety pills. She lived another few months and was euthanized when her quality of life bottomed out due to multiple organ failure.

In fairness to the emergency clinics, maintaining 24-hour coverage and being ready for any type of emergency is expensive. Its logical that rates need to be higher to cover those costs, but consumers need to know what theyre getting into when they head for the emergency room.

What can pet owners do?

How can you avoid getting stuck with a huge emergency bill for your pet? There are several steps you can take:

• Sign up for pet insurance. If you dont have enough cash to cover unexpected veterinary expenses, pet insurance can help ease the pain. You will, of course, still be footing at least part of the bill but insurance may help you avoid huge spikes. Be sure you understand what is covered and how reimbursement works.

• Find a vet practice that offers emergency care. Small-animal veterinarians dont normally offer house calls but some high-quality practices provide a phone number that will get you an on-call doctor on nights and weekends. Ask your vet about this and, if emergency calls are accepted, keep the number handy.

• Ask your vet in advance what you should do in an emergency. They may recommend a specific emergency clinic or have some other suggestions.

• Stay up to date with regular care. Vet care is expensive but costs can be moderated with regular check-ups, a healthful diet, plenty of exercise and keeping current with vaccines.

• Be a careful consumer. If asked to foot the bill for a long list of tests, think twice. Ask if pain and anti-anxiety medication can keep your pet alive if not totally comfortable for another day, until you can see your regular vet.

• Be realistic. We all love our pets but too many consumers literally bankrupt themselves paying for high-tech treatments that cost a fortune and may do little more than prolong a pets suffering. A pet owners first responsibility is to know when its time to let go.