Private equity is coming for pet care

Make Me Smart May 6, 2024 Transcript

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Kimberly Adams 

Hello everyone, I’m Kimberly Adams. Welcome back to Make Me Smart, where we make today make sense.

Amy Scott 

And I’m Amy Scott in for Kai Ryssdal. Thank you for joining us. It is Monday, May 6.

Kimberly Adams 

Did you watch the derby, Amy?

Amy Scott 

No, we were late. And then I saw the news and like once you see the news, it’s kind of like not really that exciting to watch it anymore. So. How about you?

Kimberly Adams 

True. It was so close. Oh, my goodness. Yes.

Amy Scott 

Well, I saw it was a photo finish. That’s cool.

Kimberly Adams 

Yes. Literally. And it was almost like they, just like the positioning of their bodies is what did it. It wasn’t even like that they were in different places. It was so close. But anyway. Yes, but that was not actually the news today, but we are going to do some news today, and then we’re going to do at least one smile. And so, Amy, let’s start with your news.

Amy Scott 

Okay, so I got a couple of housing stories today. One which I first saw on Inman, which is a real estate news site, is that Redfin became the latest to settle that lawsuit over real estate commissions. You’ve probably heard about the big settlement with the National Association of Realtors and other brokerages. Redfin will pay $9.25 million dollars to resolve all the claims in the lawsuit, which allege that real estate brokerages and the National Association of Realtors conspired to inflate real estate commissions by requiring home sellers to offer a commission to the home buyer’s agent in listings. The NAR reached its deal or a tentative deal last month for $418 million and agreed to make changes to its rules. Some other big brokerages including Douglas Elliman and Compass have made settlements. So, this is just the latest. But it’s, you know, going to mean some pretty big changes for how homes are bought and sold when those settlements are finalized. And those changes are expected to come in the fall. And then one other which was just I thought really interesting, and I hadn’t followed was a New York Times piece about a new Florida law that prohibits Chinese nationals from buying property in the state, especially within a certain distance from airports, military installations, and refineries. Ostensibly due to national security concerns, but real estate agents and longtime residents from China in Florida say that buyers are facing discrimination and anti-Chinese sentiment. And there’s a lot of uncertainty about who is eligible to buy houses and some deals falling through even if the person may actually be allowed to buy a property. So, it’s a really interesting story. This law is being challenged in federal court, but the Times piece says that some three dozen states either have passed or considering passing similar laws preventing Chinese people and businesses from buying property and you know, has echoes of, you know, the Chinese Exclusion Act of the past, and the potential for some really difficult situations for people who have lived here a long time and just want to buy a house. So.

Kimberly Adams 

Yeah, the story about this woman who’s been living in the US for 11 years and was like buying furniture for her new condo before the deal fell apart. And now, they’re saying that she could potentially face prison time. That’s wild.

Amy Scott 

I know. And it was just a sad story. So, she’s remained a renter, and she’s thinking about leaving the state because of that. And one interesting thing is, I mean, just kind of gets at the economic issues that are at stake here. So, Chinese American activists were having trouble making any difference fighting this law, but then lobbyists for this. I’m quoting from the Times story. “Lobbyists for the prominent hedge fund Citadel, which moved to Miami from Chicago in 2022, and employs a large number of Chinese citizens were more effective and managed to secure an exemption for Chinese people on valid work visas to buy one primary residence, as long as the property is smaller than two acres and not within five miles of a military installation.” So, there you go.

Kimberly Adams 

It’s amazing what you can do with money, isn’t it?

Amy Scott 

Indeed. So, how about you?

Kimberly Adams 

Well, mine is also about the things you can and cannot do with money. I’ve been noticing several articles popping up. One in the Atlantic, one in Stateline about sort of private equity moving into the veterinary care industry. And with lots of people buying pets or adopting pets during the pandemic, even though a lot of those have since been surrendered, you know, people will spend money on their pets. And in the Stateline article that we’ll link to in the show notes. It says, “Americans spent a record $147 billion on pet products and services last year.” From last year alone. “From 2017 to 2022, private equity spent $45 billion on deals in the veterinary sector, according to PitchBook, which tracks investment data. The vet industry is attractive because it’s made up of mostly small, privately owned businesses that corporations can buy and consolidate into larger chains. And it’s mainly a cash-based business: Unlike in human health care, veterinary customers typically pay out of pocket, rather than rely on third party payers such as insurance companies.” And in the Atlantic article, they really get into how that combined with technological developments in veterinary care has really driven up prices. So, a portion of that article. “Pet owners used to have an easier time accepting the short lives of domestic animals. Few people were taking the barnyard cat or junkyard dog in for chemotherapy or ACL surgery, to say nothing of post-op aquatic physical therapy. ‘When we started out 20 years ago, you had to live near a veterinary teaching hospital to have access to something like an MRI,’ Karen Leslie, the executive director of Pet Fund, a charity that aids people with their vet bills, told me.’” Obviously, the writer. “‘Now it’s the standard of care. It’s available basically everywhere — but that starts at $2,000.’” And this has become very personal to me because I have a 14 year old cat who is very sick. And like, his vet bills have become so expensive, and you really have to start deciding, like, at what point is it about you versus about the pet? And like, how many more rounds of testing? How many more rounds of medicines or treatments or whatever. So yeah.

Amy Scott

Oh, Jasper.

Kimberly Adams

I know. Like last Friday, right before the show, they were like, right before the live show. They were like, “Oh, Jasper needs to go to the ER and stay in the ER all weekend.” And I was just like, hmm. Like A, he hates being outside in general. And he’s scared of people. And so, it was a question of am I going to drop like probably three to five grand to put him up in the ER all weekend with tubes and more testing and stuff like that. And I decided not to. And so, long story short, Jasper’s not going to be here much longer, friends of the show. So, let me go grab him and put them on camera, so you guys can see him.

Amy Scott 

Yeah. Oh, buddy.

Kimberly Adams 

He’s lost a lot of weight. He’s pretty skinny now. But there’s Jasper. He’s pretty sick.

Amy Scott 

I’m so sorry. Look at that guy. Jasper, we love you.

Kimberly Adams 

Awe, yeah. But you know, it’s funny because it’s not funny. But who would have thought of like, he needed like a CT scan, and potentially like, to be put under sedation for a biopsy and then maybe treated for diabetes and all these other things. And in some ways, it’s almost worse when you can potentially afford it because then you’re like trying to figure out. You’re putting a monetary value on something that’s so important to you. Bless you, Jasper. Anyway.

Amy Scott 

Yeah. And that’s a really hard choice to make, and then you wonder by prolonging life are you prolonging suffering. Yeah, I guess it was about five years ago, we had to make that decision when our cat Ulli who was 12, I believe. No, she was older. But she developed cancer. And one thing that I found the veterinary care industry does really well is end of life care, at least where we took her to have the procedure. I wished that they could impart some of their wisdom to people’s healthcare. It was very humane and compassionate and really lovely.

Kimberly Adams 

Yeah. I mean, nobody can sort of make the decision for you about sort of when that right moment is. We’re talking about pets here, not people. But when you know that there is literally a monetary value attached to keeping your pet alive, it’s a really weird dynamic because could I keep him alive for another few months? Who knows, maybe another couple of years. Probably. But he also can’t tell me how much he’s suffering, you know, unlike a human being or something like that. Anyway, both of these articles are really interesting sort of looking at how, because people are so emotionally attached to their pets, they will go into debt for these procedures that may not translate into a better quality of life. They will spend out of pocket in a way that they may not even for their own health care. And I used to serve on the board of a charity that had a homeless shelter. And one of the big initiatives they were doing was they were trying to set up a new shelter that had a pet boarding facility because there were literally people who would not come in off of the street if they had to leave their pets outside. And so, in order to get people into the spaces, they needed to have accommodations for their pets. And so, now you have an industry that has already gone into human health care, so we know what this looks like, when private equity steps into these spaces that’s now entering the pet care industry. And some of the stories in these articles are talking about veterinarians feeling pressure to upsell people or to get people to do procedures that are not necessary, or that won’t really make a difference in the long term.

Amy Scott 

Opening Medi spas for pets?

Kimberly Adams 

Or getting, you know, really old pets with not much chance of recovery, very expensive procedures to prolong their lives. And I have to say, I felt zero pressure from my own vet on these things. And when I said I didn’t want to do, you know, fill in the blank, there was no pushback whatsoever. It’s like, you know, whatever you feel comfortable doing. But, you know, I also happen to have been through a version of this with my last cat who had cancer. And I tried to treat it, you know, at great expense and only made the poor thing miserable. And so, I was like, I’m not doing that again. Anyway, all of this to say, Jasper is not going to be around for too much longer. So, this is the official Jasper goodbye for Make Me Smart. And now I’m so ready for your smile. Desperately.

Amy Scott 

We could all use a smile.

Kimberly Adams

All right. What you got?

Amy Scott

Well, it’s a very funny piece by Matt Alston that I saw on Business Insider, and it’s about Workday, which is the cloud based HR and financial management software that many of our listeners are probably familiar with. Companies use it to manage recruiting and job applications and payroll and expense reimbursement and budgeting and then colleges and universities use it for student administration. So, it’s out there. More than half of Fortune 500 companies use it. But I am not personally familiar with it. So, I was surprised to read that apparently, pretty much everybody hates this software. And this you know, I’m not going to debate the merits of Workday or not, but they’re just some really great lines in this story. One person said, “Getting someone onboarded using Workday is like trying to get water from your sink to your stove using a colander.” Another person said or no I guess the author said it’s “the intractable nepo baby of HR software,” nothing because it was co-founded by someone from PeopleSoft which is another big HR software company. I just have this echo of my husband complaining about Workday, so I just texted him after I read this article and his response was, “I just threw up a little in my mouth when I read the word.” So, you know, if any Workday users out there, we’d love to hear from you, including defenders of this company. The Business Insider piece did talk to the company, so they do defend themselves, but I just didn’t realize it was so universally apparently universally loathed.

Kimberly Adams

I’m going to ask Ana, our HR hero here at Marketplace and see what she has to say about it.

Amy Scott 

Oh, yeah. I would love to know.

Kimberly Adams

I needed that chuckle. Oh, I don’t have one.

Amy Scott 

Oh, it’s on me today. No worries.

Kimberly Adams 

Yeah, it was all on you. My smile is the wonderful times I have had with Jasper over the last four years. I got him as a senior cat, and he’s been great. And I will always have my Jasper wine tumbler, I guess.

Amy Scott 

I know. I need to get one. They’re even more valuable now.

Kimberly Adams

It’s going to be a collector’s item.

Amy Scott

Absolutely.

Kimberly Adams

Well, anyway.

Amy Scott 

We’ll cheers to Jasper. We’ll toast him on Friday.

Kimberly Adams 

Cheers to Jasper. That’s going to be it for us today. You can join us tomorrow for our weekly deep dive. It’s going to be about the pro-Palestinian student protesters across the country who have been calling for their universities to divest from Israel’s war in Gaza. And this whole thing has put a spotlight on college endowments, and how they’re managed because this is what they’re calling to divest from. So anyway, we’re going to dig into how these endowments work, how some endowments at private colleges got to be so big as in massive, and why divestment may or may not be such a simple thing for some universities.

Amy Scott 

Yeah, stay tuned for that. Make Me Smart is produced by Courtney Bergsieker. Today’s program was engineered by Charlton Thorp. Ellen Rolfes writes our newsletter. Our intern is Thalia Menchaca.

Kimberly Adams 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital.

Amy Scott 

Alright, Kimberly, wishing you the best.

Kimberly Adams 

I made it through without a full breakdown.