The building at 30 Main St. in Farmington is small and looks nondescript as you drive by, if you even see it.
Alan Thompson’s name isn’t anywhere on the marquee. The parking lot has been repaved, but the 2,089-SF building itself looks basically the same as it did when Thompson hung his veterinarian shingle 30-plus years ago.
The Farmington Veterinary Clinic isn’t Thompson’s anymore, though. Thompson, 62, sold the practice he spent most of his adult life building on the day before Thanksgiving 2017.
“I have been looking at exit strategies since [age] 55,” Thompson said from one of the two small examination rooms.
The new owner of the Farmington Vet Clinic is Pathway Vet Alliance of Austin, Texas. Pathway has acquired approximately 150 vet clinics in the United States, including four in Arkansas.
Thompson said he originally tried to sell his practice to his colleague Ali Pilkington, who joined the clinic in 2004. He said a friend who knew of his plans to sell “sicced on me” a veterinarian who had an association with Pathway.
A year later, the deal gave Thompson all he had hoped for. Thompson is still in charge of the clinic as medical director and he leases the property to Pathway.
“They came in and bought me completely out,” Thompson said. “They gave me a contract. I’m an employee for the first time in 30 years. With the debt burden these kids are coming out [of veterinary school] with, and millennials not wanting the responsibility of ownership, I couldn’t find anybody interested.”
Thompson said he plans to work three more years, and corporate ownership was the perfect exit strategy for him. One of Pathway’s co-founders is a licensed veterinarian, and Thompson said he runs his clinic the same way he always has.
“I’m still the workhorse,” Thompson said. “Last night, I came up here to check up on a dog because I know the client. This is still my baby. They don’t want my business changing.”
Veterinary Dinosaurs
Thompson called himself a veterinary dinosaur, a term also used by Jack Herring of Wedington Animal Hospital in Fayetteville. Herring has owned a clinic in Fayetteville since 1992 and has been at his current location at 4363 W. Wedington Drive since 2002.
Eighteen months ago, Herring sold a majority stake in his clinic to Alliance Animal Health of New York City. Herring’s situation is different from Thompson’s in that Herring retained partial ownership in the clinic. Alliance was founded by three Harvard Business School graduates and has its veterinarian partners retain ownership stakes of varying percentages.
“Part of the attractiveness to partnering with them, even if I’m not working I don’t have to completely sell my shares in the clinic,” said Herring, 60. “It is a source of income for me even after I retire. I gave up as little as I had to.”
Thompson said he and the other two vets at Farmington Veterinary Clinic are paid a salary and he also receives rent from the property lease. Herring said the Wedington vets get a salary and, four times a year, he gets a share of the profits as a part-owner.
Both Thompson and Herring said business and their income have been about the same as before the ownership changes.
In May 2017, Herring sold the Wedington Animal Hospital property — a 9,800-SF facility on 1.48 acres — for $1 million to ZBS Capital, which is Alliance Animal Health’s financial arm. ZBS then executed a sale-leaseback of the hospital to Stonebriar Commercial Financial of Princeton, New Jersey, for $2.75 million in December.
Alliance is relatively new to the veterinary industry with 26 clinics nationwide, including seven in Arkansas.
“Dr. Herring was one of our firsts,” said Matt Sussman, who co-founded Alliance with Harvard colleagues Jake Sloane and Frank Zhang.
Herring said it took six months of study and a lot of phone calls before he decided to sell a majority stake to Alliance. Unlike Farmington Vet Clinic, Wedington is a large practice with eight veterinarians on staff; Herring said he lost one associate after the partnership because that vet had hoped to one day buy the hospital.
“They offered me a very handsome buy-in for their partnership,” said Herring, whose official title is chief of staff. “Losing control was my No. 1 concern. I didn’t want them to take away what I had built. They kept reassuring me — I keep remembering the words that [Sloane] used — that I would still have the power.
“I still have the power.”
Power in Numbers
Sussman said Alliance has no intention of advising its vets or dictating how animals should be treated in the clinics, and Pathway has been the same way. Neither Thompson nor Herring, the pet dinosaurs, would have accepted that sort of interference anyway.
Herring said aligning with a corporation helps take tasks such as accounting, marketing and staffing off his plate and that of office manager Cindy Stewart. Herring said he and Stewart used to have to make time weekly to meet with vendors about purchasing supplies; now Alliance does that nitty-gritty work so Herring can be a vet and Stewart can run the office.
“We’re a profession that is not really trained in business,” Herring said.
Sussman said he and his partners are in the same boat when it comes to practicing veterinary medicine — “We don’t really know anything about it,” Sussman said — but they do know business modeling and how to use the power of the group to lower costs. Sussman said when Alliance generates quotes for medicine or other inventory items, the vet still has final say in any purchase.
“Dr. Herring went to school for this,” Sussman said. “He should be spending his time with the patients.”
Corporate ownership isn’t new in the veterinary world. Mars Inc. (best known for M&Ms candies) owns Banfield and Veterinary Centers of America, accounting for about 2,000 clinics in the U.S. Even so, reports put corporate ownership at just 6 percent of veterinary clinics nationwide.
There is good money to be made in veterinary medicine, but it is also expensive to earn a veterinary degree and open and run a clinic. Sussman said he became familiar with corporate veterinary practices while working for PetVet Care of Westport, Connecticut, which owns more than 150 clinics, and understood the potential.
“We saw that it is a phenomenal industry and [saw] a lot of great people to partner with who were interested in growing their practice,” Sussman said. “We realized it was an amazing business. We saw there was a ton of potential and the willingness for true partnership.
“It comes down to the fact that people love their animals, and they are willing to do whatever it takes for their animals across all types of situations. That love and willingness to put the animal first is what makes the industry incredibly appealing.”
Thompson said Pathway insisted that he stay on because of the importance of client loyalty. Neither Farmington Vet Clinic nor Wedington Animal Hospital has any signage or outward notice of their corporate ownership.
“The clients don’t ever feel we are partners now with the veterinarian because nothing really changes,” Sussman said. “We prefer no one knows about us other than the veterinarians and the practice managers.”
Editor’s Note: Alan Thompson has been the veterinarian for Assistant Editor Marty Cook’s pets since 1998, which is how he became aware of this trend in veterinary practice management.
Sign up for Daily E-news
