Spring Parker Accelerating Health Care Performance

Featured Guest: Mark Cushing

What he does: Mark is the Founder & CEO of Animal Policy Group and a long-time political strategist, government regulatory advisor, corporate executive and former litigator.  Mark focuses his advocacy practice on providing high-level strategic advice and services to clients with needs at any level of government, and key trade/industry associations in the U.S., Canada, and Mexico. Mark specializes in animal health, animal welfare, veterinary and veterinary educational issues and accreditation, developing a cutting-edge practice across these sectors. He currently leads several industry coalitions and initiatives, and has guided successful accreditations for a growing list of veterinary colleges, and is co-founder of the Veterinary Virtual Care Association.  Mark is also a published author and frequent speaker at veterinary medicine and other animal policy-related conferences.

 On risk: "There's an acute issue with access to care that affects pet owners in terms of the risks they have with their pets, that they can't get medical advice. But it affects practices themselves and individual veterinarians because most clinics are severely understaffed … Risk plays out often in terms of not doing enough rather than making a mistake and doing something you're not allowed to do. But that's critical, that's just kind of table stakes. If you own a clinic, if you hire people, if you hold yourself out to the public, you can care for their pets you need to know what you're legally able to do and not do … You can play an invaluable service and minimize risk and attack this [access to care, workforce shortage] problem if you can provide care by video, phone, and audio at home. And you now provide potential clients with resources. 70% of all calls to telemedicine veterinarians or telemedicine veterinary nurses solve the problem.  And you're not required to go into a clinic which means you don't add to the burden on an overstressed, understaffed veterinary team. That's another way of managing risk."


Scott Nelson  0:01  
Welcome to The Risky Health Care Business Podcast, where we help you prepare for the future by sharing stories, insights, and skills from expert voices in and around the United States health care world with a mission to inform, educate, and help health care organizations and individuals, ranging from one doctor practices to large integrated systems and organizations throughout the dental, medical, and veterinary health care industry with risk, while hopefully having some fun along the way. I'm your host, Scott Nelson, a guy that grew up in Ohio and has been working all over the United States during my 20 plus year and counting career in the health care industry, with a commitment to accelerating health care performance through creativity, not just productivity. Let's dive in.

Risk doesn't come just from negatives.  Risk can also be an unintended consequence from positives.  For example, consider the rapid growth - both recent and projected - in the animal health industry. 

Morgan Stanley published a note that projected the pet care industry will reach $275 billion in 2030, reflecting an 8% topline compounded annual growth rate driven by tailwinds from pandemic-era purchasing and pet ownership trends.
Roughly 10% of pet owners who participated in the American Pet Product Association’s COVID-19 Pulse Studies indicated they purchased a new pet during the pandemic, which equates to approximately 11 million pets. Morgan Stanley estimates the cost to care for a pet per year is at least $1,000, leading the firm to believe annual pet care spending will increase incrementally by $11 billion or more.  Morgan Stanley expects pet ownership to increase by 14% by 2030
Pet spending continued relatively undeterred by the COVID-19 pandemic. Morgan Stanley shared that in an October 2020 study, it found 72% of pet owners in the United States had no plans to alter their pet spending regardless of their financial situation. Total industry spending could increase more than 130% by 2030. Morgan Stanley expects pet product spending to increase 115% from $70 billion in 2019 to $151 billion in 2030 and stated that pet spending is becoming “less discretionary and more necessary” among US consumers. Between 2014 and 2019, income inelasticity for pet care purchases declined from historical inelasticity rates, indicating pet owners are increasingly unwilling to cut pet spending even if their level of disposable income decreases.   
Morgan Stanley also predicted the animal health category will outpace the food and treat category over the next 10 years, as more and more owners seek to improve quality of life for their pets not only through nutrition, but also through veterinary care and health care products.
Take all of that demand and add it to an industry with noted supply constraints which are felt as issues like provider and staff shortages, access limitations, consumer affordability and ability to pay.  Those items have potential to create unintended risk from positive growth.

Today I'm speaking with Mark Cushing about risk in veterinary care, including those issues and more.  Mark is the Founder & CEO of the Animal Policy Group and a long-time political strategist, government regulatory advisor, corporate executive, and former litigator.  Mark focuses his advocacy practice on providing high-level strategic advice and services to clients with needs at any level of government, and key trade/industry associations in the U.S., Canada, and Mexico. 
Mark specializes in animal health, animal welfare, veterinary and veterinary educational issues and accreditation, developing a cutting-edge practice across these sectors. He currently leads several industry coalitions and initiatives, and has guided successful accreditations for a growing list of veterinary colleges, and is co-founder of the Veterinary Virtual Care Association. Mark is also a published author and frequent speaker at veterinary medicine and other animal policy-related conferences.
Let's talk with Mark about risk in veterinary health care.
Mark, welcome to the show. 

Mark Cushing  3:59  
Thanks, Scott. 

Scott Nelson  4:01  
Before we begin talking about risk in veterinary care, let's go back to the beginning. How did you get into veterinary care and where you are today?

Mark Cushing  4:06  
Well, I'm an attorney. I grew up outside Portland, Oregon and went to Stanford, came back, practiced and tried a lot of business cases and ended up getting involved and was the lead in someone being elected Governor of the state which pulled me more into politics. Flash forward about 10 years I was a partner now in a major national and international law firm in Washington DC, and got a call to help a coalition very broad for-profit, nonprofit, everything in between, in the veterinary, particularly the pet veterinary health care space, related to microchipping of pets which are the small chips that you place in the shoulder of a cat or dog that allow you to use a scanner to find out who the pet belongs to, and help them get reunited with their parents have lost. Became a national issue. And I solved the problem through Congress and never planned to do one more thing. I enjoyed it. But I didn't know there was a market in that field. And now 18 years later, I have a team of 13 that work with me with, I have and own what's called the animal policy group, and we handle political, legal, regulatory, strategic issues across the veterinary space, across the pet health care as well as pet retail, the veterinary school. I get schools started and accredited. I'm working on starting six new vet schools as we speak today. So I'm about, nobody else quite does what I do, so our team works across that space in all 50 states, and many towns and cities. Veterinary medicine, like most professions, is regulated at the state level. The anything related to the animal welfare of pets or health care of pets is regulated mainly at the state level. We do some federal work and I have a federal partner that I work with. Most of our focus is on state related issues. And I represent the biggest practices in the country, on the veterinary care side as well as pharma, pet food, pet retail, diagnostics, and the like. So I have a good feel. And I wrote a book that Penguin Random House published right in the middle of COVID, just accidentally during COVID, called "Pet Nation", which is the story if your concern with pet health care, namely the total transformation of pets in American society, homes, the culture, and economy of the US in the last 25 years, which has everything to do frankly with the issues you're concerned about with your podcast.

Scott Nelson  6:52  
Since 2004, you've specialized in animal health and animal welfare, veterinary and veterinary educational issues and accreditation, like you'd mentioned, developing a cutting edge practice across these sectors. You currently lead several industry coalition's and initiatives and have guided successful accreditations for a growing list of veterinary colleges and co-founder of the Veterinary Virtual Care Association. So I don't imagine there's a typical work day for you, so I'll ask what does your work look like? And where do you spend most of your time from your work time and your work efforts?

Mark Cushing  7:19  
You're right in that it's not typical, but our group has always been virtual. I live in Paradise Valley, right next to Scottsdale in Arizona. My wife chairs anatomy, histology, and the curriculum at Mayo Clinic School of Medicine here in in Arizona. Mayo, of course, is headquartered up in Minnesota. So I, just for your sake, I've got a pretty good window into human health care, which is driven a lot of the work I've done in veterinary care, which is to look at systems, procedures, models, care delivery systems on the human side and ask a simple question, is there any reason it couldn't work in the care of pets. And that's driven a lot of the reforms of trade associations I've started. I spend my day on Zooms, and I do a lot of writing, a lot of analytical writing for clients specific to particular issues. I manage a team now of 13. So I'm communicating with that team, a lot. I advocate, but increasingly, I manage the players that advocate directly with legislatures and state veterinary medical boards and the like. And I've got my hand really and just about everything, at least people tell me that, it seems like that's the case. But I start my day, importantly, on the health care side, with a five mile walk every morning, quite early here in Arizona, which is walking in the desert, which is which is beautiful and kind of gets my mindset, make a lot of phone calls on these walks East Coast clients. And that's a typical day. So talking and writing and thinking, I guess that's what I spend my time doing.

Scott Nelson  8:58  
I'm imagining that during the summertime that walk, having spent a lot of time out in Arizona myself, I imagine in the summertime, that walk does begin early in the morning.

Mark Cushing  9:05  
It is very early. You want to be off, you want to be off the road by eight o'clock, if you can, if you can be which I make sure I am. Yes, it's a little toasty out here for a couple of months, that's right.

Scott Nelson  9:16  
Well transitioning to risk, I'm interested to know how you view and approach risk in your work and at Animal Policy Group.

Mark Cushing  9:22  
We have two very separate lenses or prisms within the look at risk. I'm an attorney and I give advice daily across the sector, as to what a company or practitioner or an individual or a clinic can and can't do or shouldn't do or must do to be in compliance with the veterinary practice acts that govern veterinary medicine, not just veterinarians, but veterinary nurses or technicians, and anybody delivering that care and state veterinary medical board and state pharmacy board regulations that affect or govern. So I do a lot of legal risk analysis of compliance or not. So I get a typical phone call would be from a major client. This just happened in North Carolina. Can you help us? Are we at risk? Should, did we step over the line? Is there some compliance concern or not? We're also advocates, so I don't just, you know, I kind of eat the food that I cook, meaning, if I give advice, we often are the one that deals directly with a legislator, which, with a veterinary or pharmacy board, to make the case that our client is hasn't violated any law or compliance issues and therefore shouldn't be at risk for anything. So that's kind of half of what we do in the risk equation. The other half is much more macro in terms of major trends that affect the operation of a veterinary clinic, the selling of products or services within the veterinary or pet health care space, and that has to do with sort of two large sources of risk. One is the acute, and I believe permanent shortage of veterinarians, which means there's an acute issue with access to care. That affects pet owners in terms of the risks they have with their pets, that they can't get medical advice. But it affects practices themselves and individual veterinarians, because most clinics are severely understaffed. As you know from your broad work across health care, when a clinic of any sort is understaffed, and assuming you're still seeing patients, which is what you went to school to do and what your heart and your head tells you to do, the more you're understaffed, the more pressure on the individual practice, the individual practitioner, not just the doctor, but the team member to you're now in a higher state of risk of what of being stressed, overworked, tired, burned out. And you can miss something right? You could miss diagnose, you could you could just just due to all those factors not be as effective as you want to be. Or you turn down someone's need for care that leads to often in some some cases a fatal outcome for the pet. So there's the dynamic in the industry of shortages, access to care, protectionism of trade associations, that that, frankly, wants to deny that there's any shortage and therefore any implications or problems. I mentioned in my introduction to you, you know, I'm currently the lead consultant to start six new vet schools, no one's ever tried to do that before, but the need is so great. One more school won't get the job done. Six won't cure it. But it'll make a big difference. So those are the broader risks of being legal within the regulatory framework and practicing veterinary medicine, and dealing with the human reality of not enough care to go around. And as you know, human medicine hasn't decided how to parcel out care if it's limited. And and I can assure you veterinary medicine is years, if not decades behind even medicine.

Scott Nelson  13:11  
Before we dive into each one of those areas, because there's some specifics and some themes and topics that you have published about written about spoke about, and we'll get into, I want to talk about looking at why do you believe it's important to plan and be prepared for risk first. So taking a look at this kind of, I guess, with the outcome in mind at the start, if people don't factor in risk, and don't consider that in their day to day operations or their long term planning, and there's a negative, why do they need to be why is it important for them to be planned and be prepared for those?

Mark Cushing  13:41  
I'll take both of the two halves of risk we we just discussed. So veterinarians or companies that own clinics and employ veterinarians and veterinary nurses or technicians and teams, they absolutely need to be comfortable that their practitioners, their veterinary professionals that are holding themselves out to the public, that they know what they're doing, and that they're doing it within the boundaries of the law that governs veterinary health care, just like law governs, you know, human health care. They absolutely need to ensure that their team knows what they're doing. And I find that practices often they're not ignoring it because they're reckless. They just think they understand it. And in many cases, Scott, what they do is unduly restrict what their professionals who are board certified, are trained to do and capable of doing. So interestingly, the risk plays out often in terms of not doing enough, rather than making a mistake and doing something you're not allowed to do. But that's critical. That's just kind of table stakes. If you own a clinic, if you hire people, if you hold yourself out to the public, you can care for their pets you need to know what you're legally able to do and not do. That's over here. On the other side, the risk is important because if you've got a staff shortage, you have demand, this is something I hadn't mentioned earlier, but you need to bear this in mind with pets, and it was, you know, I've covered it in my book "Pet Nation" at some length. Over half the pets now are owned by Millennials and Gen Zs in America. And they want the same quality and scale of health care for their pet as they get for themselves. That's never been the case before. Gen Xers, Baby Boomers, the generations before that, pets were kind of an accessory. And you now have the largest cohort, well cohorts, that are pet parents or own pets in America, and they want a lot more from the health care system. So think about that. You're understaffed, you've got demand increasing every day for the number of people that can take care of pets to what they individually can get done visiting a clinic, and that should lead you to what? To rather than just putting up the white flag and saying sorry we're overburdened, we can't see anybody, good luck down the road if you can find a vet, is looking at risk a little different saying, what do I need to do to enhance the volume of care we provide while not shrinking or reducing or affecting the quality of care to meet the demand. And that's a not a difficult decision, but it's one that I think most veterinarians struggle with and don't have a solution for. One of the solutions is what human health care's done in all 50 states and two organizations I started with with with others, but I was one of the co-founders addressed head on which is called telemedicine, where you either take a staff of yours that want to work remotely and say, you can play an invaluable service and minimize our risk and attack this problem if you can provide care by video, phone, and audio at home, or you outsource it to a third party that you integrate into your network. And you've seen this done I'm sure in human practices. And you now provide potential clients with resources. And guess what the news is, this won't surprise you, 70% of all calls to telemedicine veterinarians or telemedicine veterinary nurses solve the problem, and you're not required to go into a clinic, which means you don't add to the burden on an overstressed, understaffed veterinary team. You give the pet owner great relief and comfort who wants good care and doesn't know what to do with the pet because they're not a veterinarian and you, the whole system works better. That's another way of managing risk. Rather than just saying damn, we just don't have enough vets and I'm just gonna have to tell people we can't help them. But often, Scott, it's that practice owner that says I'm working 11 hours a day, I go home, I'm exhausted, I don't have time to figure out telemedicine and how it works. There are plenty of tools to do that for that doctor. But I'd say most don't take advantage of it yet. That probably was the same way on the human health care side until they really figured it out at scale.

Scott Nelson  18:25  
Let's take some time to dive into some of those and from your writing. During the American Veterinary Medical Association Veterinary Business and Economic Forum held last fall there was a session that identified headwinds for veterinary practices such as macroeconomic uncertainty, labor costs, population migration and demographic shifts, and technology, including artificial intelligence, which you just mentioned. The AVMA also broadly includes government and education issues. Thinking about the where and the how in terms of risk for you, I've read a lot and you've written about three areas that I think can be touched on in terms of access and education, technology, and then government regulation. I'd also like to add in a fourth of affordability and I don't necessarily read a lot about that or come across that and I'd like your thoughts on that. Are those three areas that you think organizations should be managing on a regular basis? Or are there other things that if they're going to prioritize they need to be addressing as well?

Mark Cushing  19:21  
They're not the only issues but they're all major issues. And unfortunately, the AVMA the American Veterinary Medical Association, has taken the policy position that we don't have a shortage. So we don't need to do things to fix the shortage that they claim doesn't exist. And all the different tools to increase access to care, telemedicine, developing mid-level professionals, a range of things, they oppose. And I'm often in legislatures and regulatory boards, and in public forums, debating or being challenged by or me challenging the establishment trade association that it may it may mention those items, but their view is they're not problems and they don't need to be solved. Now this is not unique to veterinary medicine. Trade associations for professionals, plumbers, doctors, lawyers like myself, veterinarians, architects, their number one job is to protect existing members. And they don't say this publicly, but their number one job in protecting existing members, quite frankly, is to reduce or restrict the numbers of people entering that profession. Because in theory, anybody entering poses an economic risk to somebody who practices nearby. Now, it's not a zero sum game in America, as you know, and I know, but that mindset has, let me tell you this, there's one med school, I'm treating MDs and DOs together, there's one med school for every 1.4/1.5 million Americans, there's one veterinary for every 6 million American pets. So there's been a chronic understaffing, but there's been this fear of Oh, my god, if you start a new vet school, we're going to be out of a job. I used to debate people 10 years ago, when the position officially at national conferences was we have an oversupply of vets, we should reduce the number of schools, we should reduce the class sizes, and don't open any more new schools. That mentality, when you have that mentality in place, Scott, I know you've seen this, you see the impact of that for decades, in many cases. And that's why human medicine for 60 years we've had DO, we've had nurse practitioners, we've had physician assistants or PAs, right, because of shortages. What do we still have in human medicine? Shortages. Every generation of Americans, at least if not everywhere in the world, every generation of Americans has always wanted more of one thing, health care, including health care for their pets, because they read about it, they learn about it, and go I could do this, I didn't know I could do that, I could have this benefit if I try this treatment. I didn't realize that was available to me. And veterinary medicine was the last one to kind of figure that out. So you never totally catch up. But if you continue to take the position, no, no, no, we're fine. Our labor force is fine. We don't need to do anything there. Therefore all these access to care solutions are superfluous or unnecessary. What they're really saying is they pose an economic threat because they don't see the pie ever growing. Well, what's happened as my book laid out in great detail is the American pet economy has exploded year after year, way above the national pace for at a minimum the last 10 years, you know, it was 75 billion of a total spend in America on pets about six, seven years ago. It's 150 to 175 billion today. And you know what? Morgan Stanley says it's close to 300 billion in 2030, which as you know, is only six years away. So I, your question is ironic, not you are ironic, but the question is ironic because it cites the AVMA is pointing out of certain features. But their response to them has been actually to say we don't really have the problems. But those are important. Government regulation in veterinary medicine, it's a tricky topic.

Scott Nelson  23:31  
Well, before we get to that, I'd like to get into the access and education a little bit further. In your most recent writing in "Today's Veterinary Business" you've gone through some questions that talked about whether or not they're answered yes or no, going back to access to veterinary care, regulations, students, are there enough staff, looking at that from the perspective of if those are answered, yes, I always take both sides or think about this both ways to say these are answering yes so that's reducing risk. But do those areas also introduce or influence risk in some of these, that if you are having these these schools that are or these technicians, technologists that are coming into the workforce, how are we managing addressing risks from that perspective? Yes, we're handling the risk perspective from we're getting more people in those positions. But are the qualifications are the requirements are those changing at all to make the system smooth so that we're bringing in risk to that?

Mark Cushing  24:31  
There's there's a lot of hyperbole and hand wringing, in some cases self serving speculation about oh my god, we add another the vet school, we won't have qualified students, the doctors are going to come out uneducated, unlicensed, they're going to harm or kill pets right and left. Doesn't happen. Literally doesn't happen. The standards haven't changed. We have right now every year at least 3,000 qualified students by any comparative metric to those who got into vet school who didn't get in because there wasn't room. So it's not like you want to dip way down and get those D students and say, well, you'll just try a little bit harder come to this new vet school that's limited to people that have a D average, a one point average, and we'll, we'll see if you can't maybe turn into a good veterinarian. That's never the case. That's not what med schools did, DO, PA, nurse practitioner. And vet schools don't do that. To open a new school you have to comply with the same standards that govern schools that have been around for 150 years, number one, so the the qualification issue is a completely phony issue. I'll take telemedicine as a good example. What critics like to say, Scott, is oh my god, you're going to have unqualified doctors, you're going to get bad advice, you're going to have pets harmed left and right. Ontario, Canada has 15 million people. Toronto is a major, sophisticated city. Toronto or Ontario would be the fifth largest state in America if it were in the US. They've had full on telemedicine for over seven years. There's not been one single, I mean, not one complaint filed with the governing body in Ontario of any injury or death or harm to a pet because of telemedicine. So for someone to stand up on a on a podium and say there's a great health risk, and the 19 states waived any objections to telemedicine during COVID and there were no complaints filed, the simple fact is, the scientific fact is, pets aren't being harmed by telemedicine. A good veterinarian on Tuesday in her clinic doesn't turn into a malpractice machine on Wednesday if she offers advice through telemedicine. But that's a good example where we say the student body is going to be unqualified, my first point, the second point is, is there are going to be bad vets out harming people. And those risks, back to the theme of your podcast, those risks are artificial and they're exaggerated to create a barrier to access to care because they believe it's in the self interest of their members to have fewer competitors. I'm sorry to be so blunt. And if you wanted me to be soft pedal you probably picked the wrong person to interview. But I've been involved in this too long to have any illusions of what's really going on. So with schools, here's what the change is. What did we learn during COVID? We learned that virtual didactic lectures, radiology is looking at slides and having a board certified professor tell you what those slides mean. Anatomy in many ways is the same thing, which my wife teaches at Mayo Clinic. My wife, by the way, is the only full time faculty member at Mayo Clinic's medical school in Scottsdale, one person. How's that possible? You tap others, doctors in the system, that come in for a day and work on one aspect, deliver one lecture virtually on one aspect. What do you think the cost structure is of a school that does that? I'm able to tell you that I at the same time one school got accredited, has spend $195 million building a campus, and another school spent under 20. No difference in performance, graduation rate. The school that spent the least amount of money now has every year the highest starting salaries for their graduates of any veterinary school in America, all right, because you can teach in ways that are less expensive, that are different than the old ways, but have an outcome that's as good or better. That's where technology is. You know it, it's all across human health care. Technology comes in and the research might be expensive but when it's implemented it lowers costs. And so I've been very involved in lowering the cost of delivering veterinary education that allows schools to start, that don't have 195 million sitting in some bank account to write a check to build a school and yet produce high quality students. And so that's what's been exciting about it and it's, you know, it's sort of Moore's Law, right? You know, Intel, you know, that the level of productivity improvement and efficiency gains. The same thing is true in higher education if you let it operate at its peak and COVID gave us that learning. So that's that's a big difference right now. I'll give you an example. If the top professor at Cornell in a certain field, I'll just say physiology and veterinary medicine, if he's delivering as most schools are now all their lectures virtually and students watch them at home, that's what Mayo does where my wife teaches on the human side, can you think of any reason, Scott, that you couldn't compensate that probably underpaid professor at Cornell, who might be looking at a private sector job that pays twice as much, what if new schools joined up and pay that professor for those virtual lectures to be shared with their students, right? Is there any reason to think that that won't be a quality lecture? No, of course not, you know, so it's those kinds of scale changes that I mean, they happen in other fields besides veterinary medicine every minute. That veterinary medicine is, has been kind of enamored of or comfortable with a 1970s model of education and it's been challenged and successfully challenged in terms of schools performing well that use a different model. So I'm an optimist there. And I don't think that'll be a barrier, but that I hear everywhere, on three issues. Veterinary schools being opened, mid level professionals for the first time being allowed in veterinary medicine, or telemedicine I hear chronically, oh, my god, the sky's falling, the walls are crumbling, we're going to be substandard care, you know, we're all gonna go to hell in a handbasket. And it's just hysteria created to stop change, in my view.

Scott Nelson  31:13  
Going back to government regulation, how is government regulation and oversight involved in veterinary care? For example, one issue you've written about his dog breeding,

Mark Cushing  31:21  
If you take the breeding of dogs, the mistake has been made the opposite. The attempt to to use government to regulate breeding has not been successful. There haven't been resources devoted, which means people haven't assigned enough value to that activity, to convince legislatures to fund it at a level necessary to truly regulate every single person raising a litter of dogs in America. That's that's an unachievable goal because it's expense, while much less than sending you know a rocket to the moon, nevertheless, people don't value it enough. So the solution is is the marketplace. And I'm much more libertarian, Scott, on the economic side so what's the marketplace solution and it's owned by Purdue University. They have a faculty member, Candace Croney, who's built an extensive, extensive set of guidelines on how you breed dogs humanely to produce excellent family friendly dogs. Not to be puppy mills, the dogs aren't undernourished, aren't environmentally at risk, aren't lacking health care, just the opposite. So Purdue, it's called Canine Care Certified, they then went to a third party auditor that does ISO type systems auditing, and you know those companies that don't have any stake in the game, they're just paid a fee to audit to see whether a particular breeder understands and is practicing in compliance with the conditions laid out by laid out by Purdue's Canine Care Certified program. They're paid to do that audit, that the breeder has to get audited every year, you can't get audited once and say, shoo, I'm home free, now I can now I can forget about it and just raise dogs the way I want. That system, once the public knows about it, becomes a major factor in where people get their dogs. And there's no government regulation involved in anything I just described. So, veterinary medicine, the role of government regulation is minimal compared to human health care. Because we don't have, insurance is a small part of veterinary medicine. 5% of all pets are insured. We don't have anything like Medicare, Medicaid. You don't have government subsidized health care. And veterinarians are regulated at the state level. So there's much less regulation but mainly on what veterinarians can and can't do, how they should do what they are allowed to do. Some states are very prescriptive, some aren't. But government regulation, honestly, isn't a huge threat to veterinary medicine in any given year. It's a threat but not a risk, you know, to use your terminology. But it's not an acute risk, it's a risk that can be managed.

Scott Nelson  34:21  
Forbes published an article earlier this year based on a survey of US dog owners that cited data from the American Veterinary Medical Association and the North American Pet Health Insurance Association. There are three data points I noted in the article. The first is that 77% of respondents consider various amounts of vet bills of $2,000 or below to be unaffordable. The second is that 63% of people surveyed said they would have difficulty paying a surprise vet bill amid inflation. The final one is that 28% said a vet bill of $499 or less would cause them to go into debt while a bill of $999 or less would cause 42% to go into debt. Recently, a friend of mine had unexpected emergency with one of his family's pets, a cat. Their cat didn't seem well so my friend took the cat to their vet. The vet immediately said the cat needed to go to the hospital. The cat's back to normal now after multiple days in the ICU and a bill in the 1,000s of dollars. Veterinary care predominantly is cash and credit with little insurance, so thinking about affordability as a risk to the animal health care system and/or individually to the doctor and owner, and not just pet owners taking on debt, but also the doctor or hospital managing and balancing a business with pet owners ability to pay, how is affordability a risk in veterinary health care?

Mark Cushing  35:36  
Well, I think you have a lot of things at play there. Great question, I'll break it into elements or components. Shortages, as you know, the law of supply and demand, right, when supply shrinks and demand doesn't obviously prices go up so you have that factor, number one. Number two, you have a lot of pet owners that didn't understand, and there weren't tools seemingly readily available to understand, when in the pets life and what type of scenarios could cause expensive care to be necessary. And so they were caught by surprise. And that survey from Forbes, I remember that well, there was somewhat of an element throughout that survey of an underlying surprise, I had no idea, I had no idea. Now people get human health care procedures, very complicated, they cost a good deal more than the numbers you just shared, and they're not surprised by it. But there's also a system, insurance, or in some cases government systems, to offset the costs. So I think you need a lot more education of pet owners about chronic care, aging of a pet, what can happen from a cancer risk standpoint, what can happen from an orthopedic standpoint. Everybody wants their dog or cat to live one more year longer, multiple years hopefully. And there's a willingness to pay all the data shows people will make their own will suffer on their own needs to pay for their pet's care. But we do need to have insurance become something that pet owners understand and value. And there's plenty of carriers to compete with each other to make it a competitive process. Not one controlled by one major player. And we need much broader understanding and acceptance of insurance. And then the other idea, of course, a client of mine Banfield really popularized, the largest practice in the country, which is wellness care. An affordable monthly amount. I do that for three cats and the dog that I have and I have insurance. So my wellness care, what's it do, Scott, it forces me, it reminds me twice a year to take my pets in for a wellness exam. And to get certain procedures that I'm not paying for out of pocket because I'm paying a monthly amount of I think it's between, say $40 and $50 per pet or $30 to $40 per pet. And I can tell you that the latest survey done, people that make less than $30,000 a year own dogs at the same rate as people that make more than 100,000 a year. So people are able to get some care but but it's that surprise cost, and you don't have any insurance for it and you weren't prepared for it, that's been the problem but I think it's manageable. And reducing the shortages, increasing the supply of vets will do what, it will force people to practice on the edges, right, on the economic edges and go to parts of town that maybe don't have a vet and say I can make a good living there and I'm gonna I'm I don't I don't need to be here, I can be over there. And a whole group of people now see a vet as something they can access.

Scott Nelson  38:58  
From a macro system view down to a micro one doctor veterinary care practice view we've talked about some of the areas where risk is. How can groups or professionals or individuals, the practitioners, how can they check their vulnerabilities? So if they think that there may be something that they have in those areas, what can they proactively do to review their vulnerabilities and make sure that they are able to address and mitigate risk?

Mark Cushing  39:26  
I would say this, if I owned a practice, that's maybe the best way for me to look at it, and I employed two or three veterinarians and I said we're gonna go to this part of Phoenix and open we're gonna open a practice, we want to succeed. What do I want? I want I don't I want a steady supply of clients? I don't want to worry that on Monday I have 40 dogs visit but then on Tuesday and Wednesday it's five each. And the next week it's just the reverse. I want to have some predictability, right? I mean every consumer facing business is initially focused at a proposition that brings in consumers at a relatively steady and hopefully growing rate, right? So how do you do that? And part of that's to understand that community that you've attempted to serve, and what their level of interest is, what they're willing to pay, what they know and don't know about pet health care. I think you're gonna find most don't know much about it. So there's an educational function you play. So when a person walks in, you're not, you don't have your staff or veterinarian, Scott, selling insurance to them. And the original pet insurance forays into the market many, many decades ago depended in larger part, in large measure on veterinarians kind of promoting insurance. It didn't work. Veterinarians by nature are introverts. They weren't salespeople, they didn't go to vet school to sell insurance. So you have to figure out other ways to teach pet owners. So what could it be? What about a systematic way of telling pet owners, whether they're getting pets from a breeder, whether they're getting pets from a store, from a shelter or rescue society, wherever it might be? How about a systematic effort that explains to people not to scare the hell out of them but just explains these are the costs you're likely to face as you approach pet ownership and here's how to plan for them. There'd be a role for pet insurance here, there'd be a role for care credit plans, you know, just a host of steps one can take. And so if I were opening a new clinic in a new area, I'd want to be viewed as a place and when you come in we have a straight conversation. What are your goals for your pet? What are your worries? Have you thought about this? Not to scare them but to say we want to help you here. And then you can begin to have payment plans that look more like what we have in the human health care side through insurance, where it's not every dollar out of your February paycheck and now you're having a hard time paying rent in March, but it's leveled out. And I think we haven't done nearly, nearly an adequate job in that area. And it's education about the realities, and then having mechanisms that are client friendly, that address those realities, and that would make a big difference. Now, a vet clinic can say that's not my job. My job is to fix pets that are sick. Yeah, it is, but your supply of pets that need those services is going to vary and why not do things that make it easier. For example, there's a very exciting new group in the Southeast called Petfolk, one word, P-E-T-F-O-L-K, Petfolk, and they combine in clinic care with telemedicine care with mobile care. And they have a membership based, subscription based practice. They have, whereas most vets see a client, they're happy seeing them once a year, they'd be thrilled if they saw a client twice a year, their average is five times a year contact. They've made it so convenient. We'll come to you or your area with mobile, you can call us and we'll have telemedicine, you can get an appointment and come see our staff, we use our nurses to the height of their training and their certification. So nurses are doing things that historically doctors have had to do, that nurses were legally able to do and trained to do but doctors just didn't trust anybody but themselves. So there are models working. And to me, those are the sustainable models of the future and they're operating right now, so it's not some pipe dream. To me, that's where we're going with this.

Scott Nelson  43:49  
Looking back through recent history from a risk standpoint what was expected versus unexpected in veterinary care to you and what could have been done differently. And then looking forward, you recently wrote that animal health and pet companies will expand horizontally in 2024 and that a cooling trend is unlikely in that consolidation. What do you mean by that and looking forward during this year what do you see as other potential issues?

Mark Cushing  44:14  
I'm gonna jump in the last one first. What I meant by that was you saw three or four years ago a little bit of this, a little bit of that, but last year we saw more what I call pet service, pet care, pet health companies that were in one silo or one narrow niche expand out into a technology company, into maybe insurance, into nutrition, into an access to care delivery model that was different. And that's what I call horizontal where you don't just have this group it does one thing and this group does a second thing. And there was what I call the hurricane force behind that was the new Millennial and Gen Z pet owner because they don't wake up and care about veterinarians,or nurses, or this and that, they care about their pet. And they want tools to manage the health of their pet just as they have tools to manage their own. And so companies began to see that if I provided more than one tool to address more than one need that the pet owner has, I can build a loyalty there, and a client that I can then cross sell to, and they can access other parts of a care portfolio. And so that's very much an active trend. And I think everything is going to be governed quite candidly by the needs and really the demands of Millennial and Gen Z pet owners. And their children are going to be more demanding than they were. That's what we learned from Boomers to Gen X to Millennials and so forth. So that's what I mean there and that's exciting because those horizontal investments, often involving technologies, can have the benefit of lowering cost and making acquisition of customers less expensive, as you know, that's a big business issue, how do I get clients? What money do I have to spend to get them? So that's that. As far as looking back, I think what could have been done differently is we could have recognized that the generations that are now here, Millennials and Gen Z's, might want something different. Nobody really saw that coming, number one. Number two, we might have looked at human telemedicine, which got started their telemedicine exploration and and legalization 25 years ago, and we didn't start, I wrote the first article on that in veterinary medicine in 2015. There have been 20 to 25 years of a lot of telemedicine on the human side. We could have looked at it earlier and thought this could work. What if the national trade association had embraced it and said let's work, have guardrails, be smart about it, let's encourage it. And that kind of encouraging innovation would have made a difference. I think on the vet school side, we had a model where we thought vet schools should all look like a land grant, 400 acre, massive complex, large animal, small animal, everything in between, everybody being urged to conduct research at the same level as some of the elite schools like Penn and Cornell and Tufts and Texas A&M, and not realizing that there was room for alternative models that were much less expensive. And that could have attracted more faculty, more students, and so forth. So that that'd be a quick take on that.

Scott Nelson  47:39  
That's a great point to close our conversation. Mark, thank you very much for your time and sharing your thoughts and experiences today. I really appreciate it.

Mark Cushing  47:44  
They're great questions, by the way, and no one else is really focused on those questions.

Scott Nelson  47:49  
Thank you very much. 

Thank you for listening to The Risky Health Care Business Podcast. You can listen to all episodes from the resource center page of the SpringParker website, springparker.com, or click the Listen link in the show notes to listen and subscribe for free on your platform of choice. And remember, accelerating health care performance is achieved through creativity, not just productivity.

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