"Pay Up or Your Cat Dies"

Venture capitalists have captured the veterinary business and now you’re all but guaranteed to have insanely high vet bills whenever your pet is sick. If you’re an American you already know how this goes with ordinary healthcare–every time you go to the hospital you’re forced to weigh getting better against the looming threat of bankruptcy. If you’re lucky enough to have insurance, you have no control as your monthly premiums click northward every year–ever more aware that there is a non-zero chance that the hospital will deny your claim and stick you with the full cost. You pay because there’s no legitimate alternative–it’s literally your money or your life. We all know this is wrong, but money and power have us all trapped.

Now a very similar dystopian reality is unfolding for our pets, too. Over the last decade venture capital firms have targeted the veterinary industry for its “growth potential” and quietly absorbed private veterinary practices all over America. Most small veterinarian shops have been driven out of business by ever-larger VC-backed firms. That’s because Big Pet knows the perfect business model when they see it: where a veterinary emergency means you must weigh your bank balance against your love for an animal.

And it’s freaking diabolical.

If you’ve been following my work, you might be familiar with my cat Ichabod. He’s the furry black void whose valiant defense against an aggressive dog somehow got me taken to court on criminal charges by the city of Denver. I prepared an OJ Simpson-level defense and won the case. (That video series is my finest work).

Now Ichabod has exposed another injustice.

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Last Saturday morning we noticed he wasn’t feeling good and our ordinary vet didn't have any available appointments so we had to take him to a newish emergency vet clinic–which turned out to be a new venture capital-backed clinic called Veterinary Emergency Group or, VEG for short. And this place was shiny, it has an open floor plan, prides itself on customer service and the doctors really seem to care. I was impressed.

The vet there quickly and efficiently diagnosed Ichabod with a urinary obstruction–a very common problem with male cats that can be life threatening without prompt treatment. I’d actually been through this before with him–about four years ago he spent three nights in a different hospital that has since been shuttered with the same problem. Back then it cost $2500–which I thought was pretty expensive, but I was willing to pay to save his life.

The doctor left the room and I got this text message on my phone an estimate.

It would cost $5536 to save Ichabod’s life.

And this was the moment that venture capital firms love more than anything else in the world. How much was Ichabod really worth to me? For that matter, how much is your pet’s worth to you? The estimate gave a link to a payment plan option that had an annual APR of up to 36%. All I needed to do to save his life was enter my credit card right then and the hospital staff were ready to perform the treatment.

You can view the bills yourself (page 1 page 2) if you want to go over it. But in general when I’ve compared what they charged me to what is on the market on Google everything was 2 or three times what comes up on search. They told me that they charged me a full $1000 extra because Ichabod struggled when getting a catheter in his arm and they failed to hit the vein properly on their first attempt. Which, I don’t know, sort of seems like it should have been on them for not getting it right instead of charging me repeatedly.

In a functioning capitalist market people have the ability to shop around for services that they want, but we all know that hospital visits don’t offer that opportunity. It wasn’t exactly like putting a gun to Ichabod’s head, but it wasn’t that far off either. There was no place else for me to go.

So how did the vet business get to this place?

According to Pitchbook, between 2017 and 2022 venture capital firms invested $45 billion in veterinary care. The pet industry as a whole is projected to reach half a trillion by 2030. This is partially because people treat their pets like kids now. Venture capital has driven small independent practices and hospitals out of business and reformed the sector into a profit making juggernaut. Prices have spiked more than 60% in the last decade. Right now, veterinary costs are moving up at two and a half times the rate of inflation at 7.9%.

The Federal Trade Commission knew that this was a problem back in 2017 when the Mars company–yeah the one that you probably know from its candy empire–acquired the bulk of the veterinary clinic market. If you’ve ever seen AniCura, Banfield, BluePearl, Linnaeus, or VCA : they’re all owned by Mars. In 2017 the FTC declared Mars had a veterinary monopoly and forced them to give up a handful of clinics. Even so they still control the vast majority of the market. The FTC’s action looked more like a slap on the wrist than something that might help everyday Americans.

Meanwhile VEG where I was with Ichabod is a relatively new outfit which probably only exists because Mars can’t legally expand anymore. Backed by a $150 million investment by the venture firm Sequoia Heritage, VEG now rakes in an annual $500 million in revenue from its 53 locations. It plans to have 500 clinics up and running in short order and may soon go public.

In a recent podcast, the founders of VEG were asked why saving an animal’s life is so expensive.

Dr. David Bessler: honestly, I really I know that veterinary emergency medicine is expensive relative to what people are expecting. But in the grand scheme of things, I actually think that a lot of times we undervalue our services. I think veterinary medicine in general undervalues its services when you think about what you get.

David Glattstein: When someone walks into our hospital, we're oftentimes the only folks available to save that pet's life. And your pet is like your child. And more and more people are treating their pets like their child. So, we're there when people need us the most. And we don't talk about cheap or expensive. We just talk about our job is to create visible value to the customer.

While it’s obvious that they won’t want to explicitly ask what a pet’s life is worth to an owner, it’s hard not to believe that these conversations aren’t happening at venture capital pitches, board meetings and corporate retreats where finances are the centerpiece. Instead, the founders only allude to the fact that your pet’s life is akin to a child’s life. The implication is that you are going to pay whatever they ask.

I’ve done other videos on how venture capital has done similar things to other industries. Like how the firm that backed Honey coupons ruins just about everything that they touch. VC firms like Sequoia aren’t public services–they invest for the sole purpose of reaping outrageous profits–typically at least 10x their seed money–in whatever they back.

This inevitably leads to price gouging and enshittification of the services have cornered a market.

I will say that VEG does do some things better than other vets I’ve gone to. I really appreciated that they let me be with Ichabod for the entire time of the procedures and have an open visitation policy just like a human ER. Going there felt a little like being on set at HBO’s The Pitt. It was clear that I was in good hands with professionals. But none of the customer experience makes up for the predatory business model.

The fact is that several years ago I had options for emergency vets in Denver that were much more affordable, and now I don’t. The old clinics were put out of business–and I don’t completely understand why that happened, but it seems reasonable to assume that the flood of venture capital money into the industry artificially spiked costs across the board. Some vets retires out of the business, while others were lured away by higher salaries at VC backed firms.

Incidentally, vets at VEG make between 800-1100 per shift and directors upwards of $250,000 a year. No small clinic can keep up with that–and VC effectively stole all the talent.

If any vets are watching this, perhaps you can get in touch with me and let me know what I’m missing.

The entire profit model is based on an unfair negotiating tactic. By the time you get the bill, there isn’t any real room to haggles on price. With VEG charging twice as much for the same procedure that I had before, I don’t see anything stopping companies like this from choosing any price point they want. There’s no pressure to stop rampant inflation. I can see a future where it costs $10,000 or $30,000 for the same service.

I hate the fact that a venture capital firm’s entire business model is predicated on trying to figure out what I’d be willing to pay to let Ichabod die. I think it’s worth remembering that just because something makes money doesn’t mean that it’s moral or right.

Which makes this an important sector for government regulation. There should be guard rails in place to stop uncontrolled price gouging. Unfortunately it seems that we are in a world where the government is abandoning regulation, and leaving citizens to the abuses of capitalism.

This means that like me, if you are a pet owner, you are going to need to insure your pet. Right now I’m paying about $75.month for each of my cats for emergencies like this. Even then, insurance doesn’t fully cover the costs. AFTER insurance I still ended up paying more than $1000 to treat Ichabod. And pretty soon I’ll meet my yearly limit and be completely exposed to whatever the market offers.

Just like in the medical industry, insurance is the key driver of an ever-upwards spiral in costs. And the available money from insurance companies increased, hospitals found ways to charge ever more. Now human health care is the leading cost of bankruptcy in America. This vicious cycle is not likely to stop unless people like you, me, and maybe Luigi Mangione get together and start demanding change.

Thanks so much for watching this video. I’ve done a ton of related content on venture capital, as well as the adventures of Ichabod the cat that I would love you to check out.

I’d also like to remind you that premium members here on substack get early access to my videos as well as a chat function where you can talk directly to me and a community of awesome people throughout the day. I’d love to have you on board because your support is really the only thing keeping this ship sailing.

Thanks so much for watching and until next time.

From Pokey Bear LLC in Denver Co this was Scott Carney investigates his insane vet bills.