Dr. Matt Salois joins the podcast to discuss the currently perfect conditions for an influx of new independent practice owners. In this episode of the Cone of Shame Podcast, he and Dr. Andy Roark explore how the slowdown in corporate consolidation combined with the availability of technology and services could spark a renaissance in veterinary practice ownership. They also touch on the future of independent practice ownership and the changing demographics within the field. Tune in to understand the evolving landscape and what it means for aspiring veterinary practice owners.
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LINKS
Matt Salois LinkedIn: https://www.linkedin.com/in/msalois/
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All Links: linktr.ee/DrAndyRoark
ABOUT OUR GUEST
Matthew Salois, PhD is currently the President of the Veterinary Management Groups (VMG), where he is responsible for enhancing the economic and cultural success of more than 2,000 veterinary member practices. Most recently, Matt was the chief economist and head of the veterinary economics division at the AVMA between 2018 and 2022, where he applied his skills in economics, business, and communication to support the daily lives of veterinarians. From 2014 to 2018, he served as senior director of global scientific affairs and policy at Elanco Animal Health. Matt is also an adjunct professor of applied economics at the University of Florida, where he previously taught and advised graduate and undergraduate students. He earned his Ph.D. in Applied Economics from the University of Florida and holds an M.A. in Economics and a B.S. in Health Services Administration from the University of Central Florida.
EPISODE TRANSCRIPT
Dr. Andy Roark: Welcome everybody to the Cone of Shame Veterinary Podcast. I am your host, Dr. Andy Roark. Guys, I got a fun business nerdy episode today. It’s me and Dr. Matt Salois. Matt is the president of VMG, the Veterinary Management Group, and we are talking about the possible resurgence of the independent practice owner.
We went through a period where corporate consolidation was happening and we were seeing corporate groups buying and buying and buying practices. And that has slowed dramatically. Are we seeing the independent owners coming back now? Has the landscape changed enough that it is favorable?
Are there people who want to own their practices independently? Matt says there are, and I want to believe him. And so we get into that and kind of what the demographics look like for practice going forward. We talk about, we talk about what practice might look like in the future. He talks about three big drivers that are sort of driving an independent practice resurgence.
And then we talk a little bit about the future and what the next five years might look like. And so anyway, it’s a good, honest conversation with some good stuff and maybe some stuff that’ll keep you awake at night if you’re a practice owner, but it’s all mixed in there. So anyway, I love having that on.
So insightful, such a wealth of knowledge. Let’s get into this episode
Kelsey Beth Carpenter: This is your show. We’re glad you’re here. We want to help you in your veterinary career. Welcome to the Cone of Shame with Dr. Andy Roark.
Dr. Andy Roark: Welcome to the podcast. Dr. Matt Salois how are you?
Matt Salois: I’m doing great. Good to see you again, Andy.
Dr. Andy Roark: You as well. I always love having you on the podcast. I was at VMG and I was hanging out with a couple of my friends. We were, I think I don’t remember looking at the program or what but your name came up and someone that I respect said You know, I would go wherever that guy was to hear what he had to say And it was just very complimentary statement about how insightful some people that I respect find your commentary.
So anyway, I just I was like, I gotta get, I gotta get Matt back on the podcast.
Matt Salois: That was a plant. That was the person that I put in there to do that. Yeah. No, just kidding.
Dr. Andy Roark: There was money, traded hands and, here.
Matt Salois: Yeah. No, appreciate that. It’s always great to be on here. I always feel like I’m on the premiere daytime talk show for veterinary medicine. When I come to talk to you, I love it.
Dr. Andy Roark: Well, thank you for saying that. I just, I genuinely am always interested in kind of what your thoughts are. You pay a lot of attention to the industry and which way it’s sort of going. And especially trends around practice ownership and independent practice ownership.
You are the president of the VMG, Veteran Management Groups, and you just generally have your finger on the pulse of, kind of, independent practice ownership in a significant way. And so, I’ve had this idea for a long time, and I, think independent practice ownership is a just, important. It’s a vital part of our culture in vet medicine and I just, I always want to support independent practices.
I mean, I don’t have any problem with corporate practices as well. I think that there’s a good mixture and there’s a lot of benefits for a mixed model like we have, but I still want to, I don’t want independent practice to go away. go away. And there for a while, there was so much consolidation and private practices were being bought at such a high rate of speed.
A lot of people were like, how far is this going to go? And we’ve seen a slowdown in that regard. It’s probably over, you know, increased interest rates and, money is more expensive to borrow now than it was. But, I just anecdotally, Matt, I had this feeling that we’re starting to see possibly an upswing in independent ownership.
We’re starting to see some consolidation has slowed down. We’re starting to see maybe some people who sold their practices, three, five, years ago are now sort of circling back around and saying, I think I’d like to make another pass at this. And boy, I’ve learned a lot of lessons. And now I’ve also got a nice chunk of change that I could play with to get something started.
It reminds me of, you know, if you’ve ever built something. And then you look back at it and you’re like, I love it, but boy, I could build this in one third of the time now that I know what I’m doing. And I hear that sentiment a lot from people who have sold practices. So let me sort of stop talking here for a second.
I just want to put it to you and sort of say, Do you share my optimism in the idea that maybe there’s a pendulum swing? And maybe we saw independent owners sort of exiting the field and maybe now they’re starting to come back in? Or do you think that’s maybe wishful thinking on my part? Yeah.
Matt Salois: No, I don’t think it’s just wishful thinking. It’s like this conversation was meant to happen, Andy, because you’re not alone in this. In fact Martin Traub Warner and I gave a talk at the PSI Symposium just this last past October on this very topic, you know, our title was Independence Day.
Why the conditions are right for a Renaissance of independent veterinary practice ownership. And it’s just on this entire thesis of what you’re talking about. And our genesis for this talk was, A year long experience that Martin and I were having what you just shared was owners who had sold to corporate coming back and reopening new independently owned practices because they could do it like you say, to the third of the time they could do it twice as well as they did it before, as well as some of the promises that I think that the corporate buyout just never, revealed themselves.
You know, and I think this is a Time tested story. You might’ve heard, Martin and I have heard it around, you know, I sold to corporate, they said nothing would change the culture, remained the same. They promised the practice to grow and some of the promises just didn’t happen and things did change. The culture of the practice wasn’t the same.
And they didn’t like the way things were left. And so it wasn’t just a do over for them. It was, Maybe amending the sins of the past and doing something again that they wanted to create this practice and how they felt a practice should be run and what a culture of that practice should look like.
Dr. Andy Roark: Well, so do you think that so I’ve heard this story before as well And I believe that there’s truth to it a lot of cases. How much do you think it is that? People who sold their practices again when you talk about corporates, that’s like talking about independent practices as if they’re all uniform And so just wild differences and so We’re, it’s, a big stereotype here, but, people have this have, you know, have that sort of story that they tell, but I gotta tell you, Matt, when I look at it, you know, having run businesses.
I don’t have clarity of what the next year is going to bring. And you know, and when you’re building a business and you’re putting things together, I do think that you could have the best intentions to say, we want to maintain what’s here. We want to maintain this culture, but none of us have the foresight to get in and you look and, who knows what’s going to happen in the world or who’s going to leave or, who’s going to come in or be brought in to run a region or a group of hospitals.
And there’s just so many moving parts. I have a hard time. In some cases, you wonder if that was ever really the plan. In most cases, I think it probably was the plan, but it just doesn’t shake out that way. And so, how much of that, if you own a practice and you sell it, how much of feeling that way is unavoidable?
Because it’s never going to stay the same as it was. Like, even if you ran it, it still wouldn’t be the same as it was. But, how much is that? How much it is, oftentimes, A lot of people and I go through this too, I a hundred percent, so I still work in practice. I was in the vet clinic today seeing appointments as an associate and I romanticize being an associate.
I’m like, Oh man, I could just go back and I could just roll in and see appointments and go home at the end of the day. But the truth is I can’t, I could never give up the control that I have. Like I just, I couldn’t do it, but I tell myself I could. And how much of it is that, you know, We, you sell your business and then only then do you really realize how much you enjoyed being the one who got to make decisions or you got to be the final decision maker.
Matt Salois: I mean, that has to be a part of it, right? Because, and we see this carry out in the data, AVMA and others have shown, they look at some of the wellbeing metrics around compassion fatigue and those sorts of measures compassion satisfaction, and they’re higher for, Practice owners and they are associates.
And while it may sound contrived in a way, but it’s true owning your own destiny, choosing the path that you’d want to walk. There’s value in that. There’s reward in that. And, you know, to your point around corporates and totally not meant not meaning to use the word pejoratively. I don’t think we should or should do that at all.
But they’re wildly different. And I think promises are made with always the best intentions, but this is part of the challenge with corporate ownership. You have to look at who owns that business, who owns that organization. And for the most part, there are plenty of exceptions, but for the most part, most of the corporate practices are owned by private equity groups in veterinary medicine.
And their whole fundamental purpose is, revenue return, to buy something, invest in it, and then sell it for a return. And so these practices change ownership hands, you see it time and again with NVA and others who are emerging the equity owners change, they’re selling to one another, and the priorities of those equity owners may be different, or how they strategize and build a strategy on practice growth could be wildly different than the previous owners.
And so it’s hard to have that consistency over time when the ownership of that business or that practice is changing hands too.
Dr. Andy Roark: That totally makes sense. Shifting gears a little bit. Talk to me about this conditions are favorable for independent practice ownership. Start to talk to me about what that looks like in your eyes.
Matt Salois: So I think it’s a number of things. The first thing and you alluded to it is just the economics of things. The fact that interest rates have reversed themselves definitely changed changes the tide in terms of what’s happening with consolidation. So the pace of consolidation has slowed way down.
The cost of capital is a lot different than what it used to be. Like you said before, money’s, money was really cheap and now it’s more expensive. Interest rates are coming down a bit from the highs of the last year or so, but we’re still amongst, you know, 20 year high interest rates for our economy, so it’s a lot more expensive to invest to gobble up practices, whereas before, particularly post covid immediately when interest rates were actually negative for a period of time because of some of the actions by the Federal Reserve and fiscal policy from the government, it made interest rates effectively negative, which is just odd.
We do have occasions of that in our economic history, but they’re generally pretty rare. So the incentive to sell a practice, I think, first and foremost, is a lot less than what once was. And so I think that’s slowing things down and creates a incentive motivation for a lot of independent practices just to focus on their practice and their growth rather than sell.
And on the flip side of that, From the corporate perspective, now the business isn’t investing in, in, in practices and growing through number of practices. Now they have to be business managers here. Now they have to be the owner and an operator of a veterinary practice. That’s how they, need to grow.
That’s a very different mindset. So I think that’s why we see a lot of corporate struggling right now. The other piece of this, the second piece I’ll say is technology access and affordability of technology has never been more accessible. Never been more affordable. And so the things that corporates could have done on their own because they had the capital, they had the cash the most expensive equipment, the best systems, the most cutting edge.
That’s not in the domain of the corporates anymore that I think independent small business in general. can access those types of technologies to incorporate into their practices. I mean, chat GPT is, it’s cheap, right? And so just the ability of AI and other types of technology to use that in your practice, no longer the domain for large businesses.
And the third and the final thing I’ll say is the level of support. And services available within veterinary medicine has matured greatly. And so, what that means for an independent veterinary practice is they no longer have to have their own tech department. They no longer have to have their own marketing department.
They don’t need their own bookkeeping. There are all these organizations and companies and services that can come in and support a veterinary practice in so many ways, allowing them just to focus more. On the delivery of the medicine and the patient care. So I think those are the big three ways that Renaissance is happening.
Dr. Andy Roark: Yeah. I like this a lot. I really, it’s funny, as I sit and think a little bit about the level of support and services, I think you’re, I think you’re spot on.
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They’re all broken up into five minute modules to make it super easy for you to use what you want and skip over what you don’t want. Tag them onto the end of staff meetings, or just make a whole staff meeting out of the trainings. Anyway, super flexible. It’s DrAndyRoark.com/teamtraining Gang, let’s get back into this episode.
Dr. Andy Roark: You know, it was funny for a long time, the narrative was that you were going to see vet practices getting bigger and bigger. Yeah. because there was an economy of scale and you could have this technology if you had five, six, ten veterinarians using it.
So just imagine, you know, that we were all going to get CT scans. Well, one vet could never support a CT scanner, but if you had 20 vets, then they could, between them, they would have enough cases that would justify the cost and you could have this equipment. But that’s not really the way that medical technology has gone.
It has really shifted more and more towards being more and more portable, affordable, you know, sort of a subscription service type model. Um, And that, yeah, that’s, I think you’re spot on. I think that’s really powerful. I think the ability to outsource a lot of the services is really exciting in a lot of ways.
You really, you don’t have to wear all the hats because all of those things are readily available. I think that’s, I think that’s. I think that’s interesting. Can you speak a little bit about what the real estate market looks like for veterinary practices? It used to be that, you know, vets tended to own the real estate, or they tended to have standalone buildings.
And then there was definitely a shift in the, you know, late 2020 or early 2010s. We started to see a shift towards these buildouts in sort of strip malls, you know, kind of, startup spaces and things like that. Do you see or foresee build outs of those clinics in those types of rental spaces going forward?
Is that making practices more accessible if you wanted to get one set up or is it having a, you know, a sort of a net neutral effect?
Matt Salois: Yeah, that was a good one. And there’s a lot in there. I think,
Dr. Andy Roark: Yeah, I kind of threw a lot, I kind of threw a lot at you around around where do we put vet practices?
Matt Salois: I think there’s a lot of opportunity in real estate. I mean, the real estate is one of those goat rodeos right now. I mean, it’s coming back, but it was a hot mess the last couple of years. In particular, you look at office real estate and commercial real estate, like there’s huge vacancies there as a lot of work from home, hybrid, remote, conditions evolved and are sticking for the most part. You still have some employers pulling back on that, but that’s another conversation. There’s a lot of vacancies, and so I think there’s a lot of opportunities for small businesses to take advantage of what a lot of real estate owners are doing, which is, you know, reducing their rents.
Or reducing some of their prices in order to have that real estate move. And the housing market, that’s a completely different story. And that’s a completely different market. But when you look at the available real estate for a veterinary practice, I mean, there, the availability is out there and many are building standalones.
And we’re having that within VMG. And I will say. I don’t know enough to know which one is dominating, but within our member practices, we’ve got members who are probably all over the place in terms of, you know, are they in a strip mall or in a, you know, organized commercial real estate venue versus are they standalone practices?
And we know, I know that there are plenty of members who are opening and expanding their own standalone veterinary practices too. I think there’s a lot of potential, a lot of opportunity there.
Dr. Andy Roark: Where do you think the new sort of wave of practice owners will come from? I mean, if it sort of shapes up this way, are these people who are later in their career who are circling back around? Is there a new wave of sort of entrepreneurs coming in who are maybe veterinarians? Who have come into vet school with this sort of dream or, I mean, give me an idea of what is, what demographics do you see sort of driving a potential resurgence in independent ownership?
Matt Salois: Yeah, all over. Quite honestly, which is a good thing. I’ll say again, bring up my VMG perspective as we’re seeing the membership get younger. And we have for the first time tipped majority female in terms of our members. And I’d have to look at the AVMA trends to see how that squares more generally with practice owners in the profession.
But it’s growing amongst that, that demographic makeup of being younger, being women. And you know, it sort of has to in a way because we’re more and more, you know, women dominated the profession and we are getting younger. We’re seeing this in the workforce, not just the veterinary workforce, but in our general workforce as you know, 11, 000 plus boomers are retiring every day.
So they will exit. Now, I’ve seen this in veterinary space more than in other industries and professions. The retirement age seems to be a lot, further out than, the typical you know, 62, 65, particularly when you look at some things like equine and food medicine, food animal medicine.
But we’re seeing that too. We are seeing owners step in who were previous owners, like we talked about, sold their practice, took some time off, decided that wasn’t for them. They were too early to too young to retire. And so now they’re opening new, businesses, new, veterinary practices, and they bring a lot to the table.
So I think we’re going to see a very strong mishmash who those owners are and what their demographic makeup is. Yeah.
Dr. Andy Roark: Do you think these people are going to be cranking out practices that are your standard companion animal practices like we’ve seen for the last 20 or 30 years? Or do you see a different sort of iteration coming down the pipes?
Matt Salois: It has to evolve. I think there’s no question about it. In terms of the business model, in terms of, you know, how you run a veterinary practice, what you focus on and what you don’t, I think the specialization of veterinary medicine is going to continue that we’re going to see more and more
specialized, targeted veterinary practices, whether that’s at a, you know, specific specialization or even just focusing on, a specific species. You know, exotic pets, cats only, dogs only, those types of veterinary practices. We’re seeing that again within VMG that specialization, we’re, actually starting for the first time an urgent care group within our membership because they’re just growing number of urgent care, specifically veterinary practices. They’re not er, but they’re not general, right? they’re, urgent care. And so I think that caters to almost the consumer trend we see in the economy as a whole is people want the product or service designed for them.
And so you have this ability now to go onto a website and get almost anything Customized to what you’re looking for now. There are limits within health care, which is what veterinary medicine is. But as someone like Peter Weinstein keeps pointing out, it’s consumer health care. You know, so we’re at this hybridization of healthcare and almost, you know, retail in a sense that yes, it’s healthcare and it’s complicated.
And it’s also a consumer market in the sense that you have consumers who want things on their terms and they want it their way and veterinary medicine is going to have to adapt to that. And we are, it’s not easy, but we will, we have to.
Dr. Andy Roark: I do agree with that. I saw a lady today that was very well informed, and had very strong opinions about what she wanted for her pet and what she did not want for her pet. And, you know, it was not worth wrestling to the ground and her opinions were not, they were not detrimental in any way, but she was just, it was, I laugh not because she was wrong, but just because she was very particular and very certain about what she wanted and, you know, that’s not entirely new.
It’s definitely not going away. I think the age of sort of self education in pet owners is here to stay. I think I think we’re probably gonna be dealing with even a more educated level of pet owner than we have in the past going forward. Just accessibility, it’s easy to ask Chat GPT, what might be wrong with your pet and come in with a list of five things that are fairly well thought out.
Matt Salois: Yeah, exactly. Right. You know, gone are the days where you’re happy going into Target or Walmart and you’re pleased with the variety of what’s being offered to you now. And so I think, you know, again, you go to the Amazonification of everything where there’s thousands of options for that one product that you’re looking for.
Yeah. But people are wanting that. People are wanting to know that what they’re doing, what’s being provided to them, has been provided to them as an individual, this increasing individualization that seems to be occurring, you know, in our demography and in our markets.
Dr. Andy Roark: Yeah, when you look into your crystal ball five years from now, what do you see? I mean, do you see a steady steady march of sort of independent practices coming back in different niches? Do you see a specific type of practice really kind of jumping out ahead? What are you most optimistic about in the next five years?
Matt Salois: Oh, that’s a good one. I think most optimistic is that, you know, veterinarians are going to be in need of veterinary professionals in general, and it’s not just for the companion side. It’s all these things that veterinarians provide their skills and their talents towards on food safety, public zoonotic diseases, anything related to the one health arena.
Veterinarians are so important to our society. And I think the continued renaissance of the human animal bond. will grow. I mean, we’ve seen that. We saw that through COVID. Yes. I think that’s going to continue and sustain itself. I do think from a business and economic perspective, we’ve got volatile times ahead.
And so veterinary practices are going to have to, like any business, rise up to that challenge. They can’t just be about the veterinary medicine. I think gone are those days where you can be a practice owner and just be focused in your head, buried in the medicine. That is first and foremost, always the most important that you’re delivering the best care possible to patients.
The challenge now is that you’re going to have to be an astute, savvy business owner manager in order to survive. I think those volatile times because we’ve been through them, we’re going to, we’re going to see more of that and every business is going to need that fortitude.
Dr. Andy Roark: Yeah. Talk to me a little bit more about this volatility that you say. You say there’s volatility coming to tell me a little bit more about that so I can lose sleep at night.
Matt Salois: Yeah, so you could lose sleep at night. So I mean, I think, well, first of all, there’s always a business cycle and we’re going, we’re approaching the downside of our cycle. You see that with the softening of visits, yeah, there’s revenue growth, but it’s by far and large, you know, price driven.
Dr. Andy Roark: Price increases.
Matt Salois: Right. And so there will be a market correction. That’s always the case. There is always a next recession. And we shouldn’t be afraid of it. It’s just part of the natural cycle. It’s hard not to talk about what’s going to happen next and leave out all of the complicated things that’s happening in our economy, in our society, the increased polarization, the inability of monetary policy and fiscal policy, excuse me.
To get us through some of those difficult times. We bought our way out of the oh, eight recession. We bought our way out of COVID. You see this when you look at aggregate debt levels in our country. And so there is a ceiling here in Japan hit it and we saw. The stagflation that Japan experienced for quite literally decades and only now, you know, since the eighties, only now, really, are they coming out of it and potentially seeing a new era in their economy and that’s my worry for, our, economy as well.
We’re also, we talked about the demographic change, that’s going to be hard. We’re going to see the non working population explode relative to the working population. And so what that means for services like social security and medicare, there’s going to be a funding problem. And, you have the confluence of these forces.
Excuse me, the doorbell rang and the puppy, the little puppy that we got for Christmas is, uh, barking up a storm. She was napping so peacefully next to me and now she’s on guard dog alert. That was sweet little Molly. She’s actually quite sweet. So those are the issues that we’re facing and they’re all going to be kind of at a confluence in the next five to 10 years as these forces are coming together all at once.
Dr. Andy Roark: Well, I think that’s no, I think you’re spot on. I appreciate you sort of sharing that. I think it makes sense. I I, love owning my own business. It’s not easy. I am surprised by how not easy it is sometimes but it’s rewarding and it’s something that I really have enjoyed. So anyway, Matt, thank you so much for being here. Where can people find you? Where can they learn more about VMG?
Matt Salois: Yeah, that’s great. A joy to be here. Talk to you Andy. I always get so much out of our conversations. I’m available LinkedIn. I’m active on there. Message me really to reach out to me. And you can learn more about VMG at our website, myvmg.com.
Dr. Andy Roark: Great. Well, I’ll put links in the show notes, guys. Thanks for tuning in, everybody. Thanks, Matt. Take care of yourselves, everybody.
Matt Salois: You too. Take care. Thank you.
Dr. Andy Roark: And that’s it. That’s what I got for you guys. Thanks so much for being here. Thanks to Matt for being here I’ll put a link to his LinkedIn and the VMG website down in the show notes And that’ll be that gang. Take care of yourselves everybody.
I’ll talk to you later. Bye
