Is consolidation good or bad for small veterinary practices?

It’s an old question, and a new report on the state of the veterinary industry doesn’t shed much new light on the subject—according to the report, the answer is . . . it’s both.

The report says consolidation can be good for hospitals because it creates new opportunities for smaller practices to stand out from the competition. But it also says consolidation can be not-so-good because it brings greater purchasing power and cost savings to larger, chain veterinary practices, leaving out the little guy.

The aging demographic of the veterinary profession as well as the heavy debt load of recent veterinary school graduates are also having an impact on consolidation. When you factor in the money that consolidators like Mars Incorporated are willing to pay to acquire independent practices, “the consolidation wave will continue,” the report concludes.

Specifically, the report cites Mars’ acquisition of big animal hospital chains like Banfield, BluePearl, Pet Partners, and, most recently, VCA.

But the report says consolidation is just one of the reasons that the veterinary industry is being transformed.

The report also cites shifts in consumer spending habits as another harbinger of change to the profession, as well as increased competition from big-box pet superstores: PetSmart, Petco, and Walmart have all added or are looking to add additional veterinary service offerings to their stores.

(Not mentioned in the report but worth noting: Amazon jumped into online pet food sales last month with the launch of their private label dog food line, Wag.)

“It’s all about customer loyalty,” said David Sprinkle, research director for Rockville, Maryland–based market research firm Packaged Facts, which published the report. “As choices increase and customers can get their veterinary services and pet products in many places, customer loyalty spanning in-store and online will be key to retaining business and driving growth across the pet market.”

According to the report, veterinary services represent the second-largest segment of the pet industry (following pet food), growing more than 6% in 2017 to reach $26.9 billion in sales.

That’s because changing pet owner attitudes, expectations, and spending patterns, along with the large population of senior pet dogs and cats in the US, are creating an “increased demand for a wider range of veterinary services and pet care guidance.”

And that’s good news for all practices.

“The main challenge for independent practices,” the authors of the report state, “is to establish how their personalized service differentiates them from the growing field of chain veterinarians.”

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