Vet care in the UK appears to be reaching a tipping point. Spiralling fees, insurance that is unattractive or unaffordable, and profoundly unhappy pet owners may well be the future without concerted action.
The (hopefully) short-term disruption created by Covid-19 is not the main cause for concern. Rather, it is two longer-term trends, namely increasingly sophisticated animal medicine and the rapid consolidation of much of the industry into a small number of large vet practice groups, that have the potential to adversely impact on pet owners.
This may seem counterintuitive. Advances in animal medicine are helping pets lead longer, healthier lives, and of course this is of huge benefit to not only the animals, but also to their owners who enjoy their companionship.
However, more sophisticated treatment is also more expensive treatment. To give a sense of some of the costs involved, an MRI scan for a dog will cost around £2,000. Its owner could get a scan for themselves at a private hospital for around £200.
There is nothing wrong with more expensive treatment where pet owners are willing to pay to secure their pet’s health. But if the way in which pet owners are provided with access to this treatment is itself leading to higher costs, then this is a problem.
Specialist care and emergency care are two areas that stand out as needing to be addressed by the industry. The opportunity is for the industry to address these challenges by building on the existing self-regulatory framework and providing pet owners with more choice and stronger competition for their business.
Vet care, for those not familiar with the sector, has a similar structure to healthcare. Local vets are like GPs. They are the first point of call when your pet is unwell, and many have advanced skills, but if your animal is really ill, then your vet is likely to refer your pet to a more specialist clinic. Dermatology, oncology, cardiology, ophthalmology, MRI scans, stem cell treatment, wearable devices, acupuncture: it’s all available at specialist clinics (aka referral centres).
Many of the UK’s referral centres are owned by the same corporate groups that have hoovered up local vet practices. As a result, there is an incentive to encourage referrals to specialist clinics within the same vet care group. Even where a local vet is not part of a corporate group, specialist clinics may be paying them for referrals.
Pet owners’ reliance on their vets’ advice can make it hard to reject a referral recommendation. Referral centres know this and can price their services accordingly. (Moreover, changing vet is more difficult when choices are limited by the same organisations owning many of the local vet practices.) Vets’ professionalism and ethics provides some protection against unwarranted referrals, but there is a question of whether this is enough. Responses to the Royal College of Veterinary Surgeons (RCVS) survey of the vet profession in 2019 raise concerns about industry regulation, with one respondent saying “the corporates encourage internal referrals at great cost and younger vets become button pushers steering clients to other senior vets”.
Emergency care, like specialist care, is another area where pet owners are particularly vulnerable. A pet owner with a sick or injured animal which requires emergency treatment has little ability to spend time investigating different care options and their cost. They can, in most cases, be expected to go straight to the out of hours provider recommended by their local vet practice. This lack of competitive constraint is no doubt one of the factors that contributes to what can be a very painful bill at the end of any emergency treatment.
The RCVS Code of Professional Conduct requires that local vet practices provide their customers with details of emergency care arrangements, including likely costs, when a pet is registered and periodically thereafter. However, it seems doubtful whether this is effective in constraining the fees of out of hours providers. Moreover, as we have previously written, out-of-hours vet care has itself been subject to considerable consolidation among the providers active in this part of the market.
Strengthening self-regulation or else?
In most markets, competition between suppliers provides the best protection against unreasonable prices, but vet care is one of those markets where this is not enough.
Pet owners’ reliance on their vets’ advice leaves them vulnerable to exploitation. Vets’ professionalism and ethics are critical to their protection, and the RCVS backs this up with its Code of Professional Conduct.
This may have been sufficient when all vet practices had to be owned by a vet, and there was little need to distinguish between professional regulation and industry regulation. Now, however, corporate vets and their business practices largely sit outside the RCVS framework for professional regulation.
The industry should recognise these shortcomings and adopt a code of conduct for vet businesses, alongside the code for vet professionals, that strengthens competition and choice for pet owners. It should ensure that:
- pet owners are provided with a meaningful choice of clinic when referred to a specialist centre;
- corporate vets are prohibited from incentivising their employed vets to make internal referrals;
- referral centres are banned from paying referral fees to local vets; and
- vet practices provide details to their customers of at least two out-of-hours clinics, operated by different providers, in their locality.
Of course, it may be difficult for the rapidly growing corporates in the vet sector to recognise that such a code is needed. Private equity owners, however, may be mindful of the ‘social’ part of their emerging ESG commitments.
The risk of failing to act is that the government or the Competition & Markets Authority will, and with much more severe consequences.