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Inflated pricing: Biting the hand that feeds you

Vets are overcharging pet owners as private equity takeovers have spiked prices. (FT link below in comments.)

For the eagle-eyed reader of The Executive Summary, you will have seen I flagged this a few weeks ago.

I had to take my dog, Bee, to the vet. She had an infection of the womb called Pyometra.

The vet looked at me and said: “This is very serious. We need to operate on your dog now to remove her womb or she could die. Pyometra kills a lot of dogs very quickly.”

She very quickly went on to explain the prices:

– Blood test – £200
– Scan – £600
– Operation – £1200

Emergency pricing.

Four hours later and £2k down, I was relieved we’d caught it early but astounded at the price of pet care.

UK prices have gone up all round, but that was punchy.

I thought about it. The vet’s surgery looked nicer than it did last time. The logo had changed. And the really awful receptionist had been replaced by a friendly, efficient and sympathetic one.

I googled the surgery and sure enough, it had been bought, rebranded and partnered with a number of other vets in London.

Private equity was at play. It turns out, a number of PE firms have been buying up vet practices all over the world, creating cost savings and driving prices up.

I went back to the vet a week later.

“May I ask why it has become so expensive?” I said.

“Well I’m new, but a lot of things have been changing here lately. The vets don’t see much of it though. But your dog’s surgery was classed as ‘emergency’ so it would have been more expensive.”

I tried to close my mouth.

There hasn’t been much press on it, but the UK government’s Competition and Markets Authority (CMA) has four open cases on M&A activity veterinary acquisitions to investigate pricing, service and transparency of information for pet owners.

Sarah Cardell, CEO of the CMA, said: “There has been a lot of consolidation in the vet industry in recent years, so now is the right time to take a look at how the market is working.

“When a pet is unwell, they often need urgent treatment, which means that pet owners may not shop around for the best deal, like they do with other services. This means they may not have the relevant information to make informed decisions at what can be a distressing time.”

The move caused publicly listed petcare firm share prices to crash last year.

Like many others who have been in this position, I had no choice but to pay the money. But misfortune-based pricing is a poor business strategy – any unfair pricing is.

Investors might get short-term, hockey-stick growth profiles from these types of investment, but are unlikely to see long-term, steady, sustainable top-line growth. It’s a ticking time bomb to stronger market forces or sterner regulators.

Either way, customers will walk or call for more protection as soon as they’re empowered.

What do you think?

(Bee is fine now.)

Dan


Dan is an expert in global technology brand marketing and sales. He has advised IBM, Google, LinkedIn, Microsoft, Samsung and Cisco on brand position, go-to-market strategy and sales performance. He has launched businesses in Fintech, Cleantech, SaaS and marketing platforms. Dan is an award-winning tech journalist who wrote for the Financial Times and Economist Group.

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