SUMMER 2019

QUARTERLY NEWSLETTER

PRESIDENT’S STATEMENT CORPORIZATION OF VETERINARY MEDICINE

The market town of Thirsk which is a WHAT IS PRIVATE EQUITY? two and a half hour train ride north of Capital is needed if you want to buy or London (England) is a great attraction for expand a business. The most logical source fans of James Herriot. He is the fictional is a loan which is debt financing. In the past veterinarian based on the life of his creator, the this was the most common source of Dr. Alf Wight. The practice still exists today outside capital. The loan could be a bank, although in 2017 it was sold to Medivet, a family or friend. The money is loaned for chain of more than 260 veterinary practices a period of time and a set interest e.g. a backed by a London private-equity firm, 20-year loan at 7%. The source of the Inflexion. Corporatization of veterinary outside capital does not usually have medicine is not just happening in America; ownership or management interest. it is occurring in UK, Europe and Australia. The number of practices in USA ranges There can also be equity financing as from 28000 to 32000 depending on the opposed to debt financing. In this case, source according to 2017 AVMA report. capital is used to purchase ownership. It is estimated that corporations own The simplest case is the veterinarian uses about 10% of general practices and his own savings to buy the practice which 40 to 50% of specialist practices. makes them the owner. Equity financing could also be from a partner, family or The market for veterinary practice friend who loans money but has a share in acquisition has typically involved 2 ownership and profit rather than interest categories of buyers. At one stage it and principal on a loan. was either individuals purchasing their first practice or other owners looking Private equity is capital from funds and to expand and then later it was large investors who are looking to increase national chains. In recent years, a third wealth by investing or buying companies. player has entered the arena i.e. private The money could be from individuals or equity firms. institutional investors who are looking for

P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net alternatives to stocks, bonds or real estate. The acquisition of VCA was first announced They usually have a 5 to 7-year horizon in January 2017 and received Federal with the goal of improving operations and Trade Commission (FTC) approval in late increasing profit margins and then re- August. The FTC required Mars to divest selling to a larger business. of 12 specialty or off-hours emergency animal hospitals out of its portfolio of more Why is the veterinary market a target than 1,900 in the U.S. and Canada to avoid for private equity investment? A recent being in a monopoly position. article in Forbes (financial magazine) describes “private equity firms drooling Mars is so much more than chocolate. over the veterinary market”. Basically we Apart from , Blue are spending more money on pets. The Pearl, Pet Partners, it also owns , business offers good returns and low Nutro, Pedigree, and Whiskas, risks. There is a lack of strategic buyers among several others. By acquiring VCA, (us) and largely recession proof market. In Mars Petcare also became the owner of the last recession, the veterinary practice Antech Diagnostics, one of the largest management was down 1% whereas veterinary laboratories in the U.S.; and most other industries were down 10 to Sound, a major purveyor of veterinary 50%. The veterinary market is seen as a medical equipment. Banfield also has a cash business with a fragmented market teaching hospital in Mexico City associated (lots of small hospitals) with many owners with the National Autonomous University looking to retire. The increasing debt of the of Mexico (known as UNAM), and four new veterianarians mean that is harder for locations in Puerto Rico. associates to purchase practices which is a gain for the private equity firms. In 2018, Mars bought into both the UK market with the purchase of Linnaeus THE MAIN PLAYER IS MARS and one week later purchased into the Corporate-owned veterinary practices European market with Anicura. England- have been around for about 30 years. In based Linnaeus counts 1,400 staff, the USA, for the longest time the biggest including 77 specialist veterinary surgeons, group buying veterinary hospitals was across 82 sites in urban areas across the VCA (Veterinary Centers of America). U.K. Sweden’s AniCura counts 4,000 Because it was a publicly traded company veterinary professionals and 200 animal there was easily attainable information hospitals operating in Sweden, Norway, about acquisition and growth. VCA sold Denmark, Germany, Austria, Switzerland its 800 hospitals, (in the U.S. and Canada), and The Netherlands. Last year Mars had its animal diagnostic imaging company made 17 pet related deals globally including (Antech) and its doggy day care and China. According to its news release about overnight camp franchise, Camp Bow Wow Linnaeus, Mars Petcare today employs to Mars in 2017 for 9.1 billion dollars. Mars 50000 veterinary professionals and cares is the largest buyer in the market. It is a for more than 10 million pets per year. fourth-generation business and owned by At a Banfield Pet Healthcare Industry the third richest family in America. They Summit last year, Pamela Mars who is one purchased Banfield in 2007, Blue Pearl of the heirs (4 sisters each received 8% in 2015, Pet Partners in 2016 and VCA stake in Mars when the father died in 2016) in 2017. That transaction put more than stated “We got into the business because 2,000 locations under a we love pets”. “If you don’t like us, bummer, single owner. you’re stuck with us for a long time”.

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 2 HOME OF THE DAY speculation that pet food manufacturers According to its news release about such as Nestle and Blue Buffalo may also Linnaeus, Mars Petcare today employs enter into the veterinary practice market. some 50,000 veterinary professionals and WHAT DOES ALL OF THIS MEAN cares for more than 10 million pets a year. FOR THE PROFESSION? Who are the other players and what will The truth is no one really knows and this just they do with their investment? does not apply to the veterinarian. Software manufacturers, practice management However, in the last 4 years, there have companies, and other businesses that been other players in town. I mean this market to the animal health industries all literally. There is a new group called want to know how it will affect their income Curopet based here in San Francisco that and profit margins. Matthew Salois, PhD is beginning to purchase practices with a director of AVMA Veterinary Economics slightly different model and more flexibility. Division states that the profession is behind An approach that is slightly different is that in the understanding of the corporate they are willing to be partners by financing trend because it is happening faster than associates to buy a portion of the practice. anyone anticipated. The division’s creation There is constant change in the market was in 2011 and there is much greater but currently the companies that own the understanding of independently owned most practices are National Veterinary veterinary hospitals since its inception. Associates started in 1996 and now owned He states “the same cannot be said for by PE firms Ares Management and OMERS corporate-owned practices”. Corporate private equity with 500 hospitals. VetCor entities are way more protective of their was also commenced in 1996 and now financial data. owned by Harvest Partners PE firm with There are countless anecdotes about the 2732 hospitals. Other major players are problems with corporate-owned veterinary Pathway Veterinary Alliance, Community practices (I have recanted some of them in Vet Clinics (publicly traded as PETQ), the past). However, there is no evidence PetVet Care Centers, Southern Veterinary that independent owned practices are Partners (PE owned), Compassion First better or worse in terms of remuneration (PE), Veterinary Practice Partners (PE). and benefits or client services than There are about 40 players in the market. corporate owned hospitals. There is some Employee based MedVet Medical and evidence that they function well enough Cancer Centers has only 24 locations because they are surviving and we still are mainly in Ohio but it is one of the biggest seeing more investors. They are not driving players in the higher-margin specialty clients to independent veterinary practices hospital arena and is seen as a premium although we all know of cases where that buy. It is assumed that in the next 5 to may be happening. 6 years that the private equity backed There are going to be lot of changes in the consolidators will be at the end of the ownership of the veterinary space but the expected investment time and have to hope is that we can continue to provide provide a return to investors. They may excellent and affordable veterinary care. merge, sell to Mars or sell to outside buyers. Most people predict that in 6 to 10 years — Philip Watt, BVSc, MANZCVS, FANZCVS there will a mere handful of very large investment groups. There is also some

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 3 UPCOMING MEETING THURSDAY, JUNE 20, 2019 "Integrative Approach to Pain Management in Small Animal Medicine" Dr. Ilana Strubel MA, DVMA, CVSMT, CCRT

APPETIZERS Phyllo Triangles with Spinach and Feta Cheese + Shrimp Tostadas with Avocado Salsa SALAD Shaved Kale Salad MAIN COURSE Maple Leaf Farm Roast Duck Breast -OR- Vegetarian Option -OR- Vegan Option DESSERT Dr. Ilana Strubel is a 1995 graduate of the Tahitian Vanilla Creme Brûlée University of Illinois College of Veterinary Medicine and has been in general veterinary practice in the San Francisco Bay Area for the past 24 years with AGENDA a special interest in Integrative Medicine. 6:30 pm Hors d’oeuvre and No Host Bar 7:15 pm Dinner and Meeting In 2014 she founded A Well Adjusted Pet, 8:00 pm Program Veterinary Rehabilitation and Integrative Wellness Center, located in Pacifica, CA . ALL MEETINGS AT THE CLIFF HOUSE Dr. Ilana Strubel is also a dedicated community 1090 Point Lobos volunteer and currently serves on the board of San Francisco, CA 94121 Paw Fund and is credited with being the founder (415) 386-3330 of Veterinary Street Outreach Services (VET SOS) www.cliffhouse.com where she volunteered as Project Coordinator for 12 years. She has also served for many years on the board of Pets Are Wonderful Support THIS MEETING IS OPEN TO ALL DVMS (PAWS-SF) and is a co-founder of San Francisco Non-members pay $75 Aid for Animals (SFAFA). Annual membership $230

RSVPs required individually via the SFVMA website by Friday, June 14, 2019: www.sfvma.net/rsvp

Remember: The Association pays for uneaten meals. If you have RSVP’d and will not be able to make it, we need you to send in your cancellation no later than Monday, June 17, 2019.

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 4 MEETING CO-SPONSORS

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 5 MEETING CO-SPONSORS

We can help with: Success Story: • Orthopedic & Neurosurgery Recovery Kira is a 14 year • Arthritis Pain Management old senior dog who • Weight Loss Programs had been • Spinal Disease progressively losing • Orthopedic Disease the use of her rear • Soft Tissue Injuries legs. Eventually she • Building Muscle Strength could not walk or stand up on her • Poor Posture / Balancing / Limping own without maximal assistance. • Anxiety / Emotional Health Due to degeneration of spinal nerve function and • Sports Conditioning ongoing arthritis- Kira was not able to sense how • Canine Athlete’s “Pre-hab” best to place her paws as she moved, so she was • Maximizing Quality of Life walking on the tops of her feet, causing painful sores and limiting her ability to get around. After her initial rehab evaluation we fitted her with ‘Toe-Ups’, a device that helped Kira tell which way her feet should be placed before she put weight on them. Very A Well Adjusted Pet quickly, she gained in confidence and was able to Ilana Strubel, MA, DVM, CVSMT, CCRT start taking steps with her feet in the correct position Physical Rehabilitation on her own as well as going up and down the back Holistic & Integrative Medicine porch steps using her rear legs with much less assistance! Once we fitted her with her ‘Toe-Ups’ and we eliminated the pain from her walks, she started fully bearing weight on both of her back legs and was quickly ready to advance in exercises that focused on improving her overall coordination and balance. Her treatment plan included targeted assisted swimming, underwater treadmill walking, and targeted home exercise to help her relearn how to deliberately place her legs when moving in different directions and to help her keep her balance. And as her Contact Us: coordination improved, Kira experienced a 415-967-3861 regaining of muscle mass and strength: she began [email protected] to walk more normally, and no longer needed to be carried or pulled in a doggie wagon, her atrophied Find us online: rear leg muscles became stronger and she began to AWellAdjustedPet.com run and trot to the park again! FaceBook.com/AWellAdjustedPet

A Well Adjusted Pet at The Rex Center: Dr. Strubel and A Well Adjusted Pet are located in the same building as The Rex Center. For Custom Braces and Dr. Strubel’s services, please make your Mobility appointment through our offices at Devices: 415-967-3861 Custom Orthotics (Braces) are a A Well Adjusted Pet Integrative truly viable and highly Veterinary Practice offers: functional alternative to surgery. Orthotics and • Animal Physical Rehabilitation Services Prosthetics are especially useful for helping with • Custom Orthotics and Prosthetics chronic, ongoing conditions such as arthritis, • Holistic Wellness Care traumatic injury, post-operative support, • Acupuncture and Herbal Consultation Why Choose Rehabilitation? cruciate ligament injuries and other tendon or • Chiropractic Care • Maximize Mobility and Quality of Life ligament injuries. From custom-made boots that • Behavioral Consultation • Accelerate healing time protect paws to braces or splints that provide • Nutrition Consultation and Weight Loss • Reduce pain support or even prosthetic limbs or wheelchairs, • Build muscle mass the variety of options is ever increasing. • Facilitate weight loss • Customized exercise programs

Benefits of Hydrotherapy: Hydrotherapy in conjunction with veterinary treatment is an extremely effective method of rehabiliation for dogs. Studies have shown that with hydrotherapy, dogs recovering from surgery or injury heal up to 60% faster that with other therapeutic methods. • It helps decrease inflammation and improves circulation. • Muscle conditioning in water is not only an effective way of buidling up cardiovsscular strength and endurance, but it can also be fun! • Hydrotherapy treatment is conducted using a warm water resistance pool or Aqua PAWS Underwater Treadnmill, located at The Rex Center in Pacifica.

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 6 FELV/FIV TESTING AT SF ACC & SF SPCA

San Francisco Animal Care and Control (weeks to months). Because cats in our (SFACC) and the San Francisco SPCA (SF care leave the shelter within 2-3 weeks SPCA) recently changed their protocols (with kittens staying for significantly less regarding retroviral testing. The following time), a single negative test in shelter is not describes the issues considered in the a meaningful result. decision for the change. FeLV testing results are difficult to Best practices for viral testing cats in interpret given the various stages and shelters has been evolving over time to different forms of infection (progressive vs. reflect the practicality of testing given the regressive) and are therefore only accurate inherent problems with the screening test for a given moment in time. Repeat testing in obtaining meaningful results. Historically, would be recommended for both patients all kittens and cats in our care were tested testing positive or negative which is for FeLV/FIV using an in-house ELISA test; impractical in the shelter setting. however, research has shown that less than 2.5% of the North American feline For the above reasons, SFACC & SF SPCA population test positive for either FeLV or policy moving forward will be to test only FIV. This low seroprevalence also affects at-risk cats including cats with obvious the positive predictive value of our retroviral fight wounds, cats that are intact at time tests (i.e. if the prevalence of a disease is of impound, and cats that show signs of low, then the accuracy of the test decreases illness while in shelter. We will discontinue and more false-positive results may occur). testing for cats under 6 months of age and healthy adult cats. The additional handling required for testing is inherently stressful to the cats and We will provide information on request to creates a high demand for staff. Added all adopters on the pros and cons of testing stress for shelter cats, and the delay in and encouraging them to discuss FeLV/FIV time to processing increases length of with their veterinarian regardless of age, stay, which leads to more cases of shelter previous test results, or lifestyle. acquired illness and/or behavior concerns. We are hopeful that in making these FIV tests can detect antibodies passed in changes, we can move cats through colostrum from an infected or vaccinated the shelter more efficiently and focus mother, which can be mistaken for infection our limited resources on those animals in kittens under 6 months of age. These requiring additional care. kittens may test negative on a subsequent Thank you for your support. Please test 60 days later. Adult cats may test contact us if you have additional questions negative for FIV if tested within the regarding this change. incubation period, which is highly variable

Shari O’Neill Elizabeth Roberts Chief Shelter Veterinarian Director Shelter Medicine [email protected] [email protected]

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 7 RABIES CLINICS SUNDAY, JUNE 9 , 2019 10am – 1pm $6 per Vaccine!

(Dogs Only / Cash Only)

The SFVMA sponsors Rabies Clinics on four Sundays each year. Rabies clinics are held at Animal Care and Control (ACC), 1200 15th Street (at Harrison), in the “Get Acquainted” Room.

THANKS TO OUR VOLUNTEERS!

Thank you to all the volunteers that continually make these clinics a success! Volunteers are still needed for the upcoming 2019 Rabies Clinics. Sign up today! Please email [email protected] with your information to sign up for a clinic. Rabies clinics will be held at Animal Care and Control (ACC), 1200 15th Street (at Harrison) from 10am–1pm. Please contact Anna DeVincenzi if you have any questions or would like to volunteer: [email protected]

SPONSOR A FUTURE MEETING In order to continue to contract with the Cliff House as our meeting venue, support our charitable and scholarship funds, and generally maintain the organization (with keeping dues payments reasonable), the Board will continue to seek sponsorships that help to cover the costs of our programs. If you are interested in sponsoring a future meeting, please contact Philip Watt: [email protected]

SUMMER 2019 P.O. Box 320365, San Francisco, CA 94132 | www.sfvma.net 8 LATEST NEWS FROM SFAfA So far this year we have provided over $150,000 (GIA’s and hospital matches) to help save over 85 pets. Please remember that our fiscal year ends June 30 and any unused GIA funds will be returned to the general fund to be distributed in next year’s GIA program. Let us know before June 15 if you will have any diffic