In 2010, approximately 20 percent of veterinary practices in the United States were owned by corporate consolidators. By 2023, that number had risen to approximately 30 percent, with the pace of acquisition accelerating each year. The firms doing the buying — Mars Petcare, National Veterinary Associates, VCA, Thrive Pet Healthcare — are not veterinary companies. They are investment vehicles organized around the insight that veterinary care is a business with characteristics that private equity finds attractive: recurring revenue, price-inelastic demand, geographic fragmentation, and no real substitute.
Your dog is sick. You will pay what you are asked. The clinic understands this. More importantly, the fund that owns the clinic understands this — and has modeled it.
The veterinary consolidation is one instance of a pattern that has been running across the American economy for roughly fifteen years, in industries that share a specific profile: they serve needs that people cannot defer, they are operated at small scale by independent owners who lack the capital to compete with a roll-up strategy, and they exist in markets where pricing power is structurally available because the alternative to paying is an outcome the customer finds unacceptable.
The Roll-Up Playbook
The mechanics of private equity consolidation are not complicated. A firm raises a fund — money from pension funds, endowments, sovereign wealth funds — and identifies a fragmented industry where individual businesses are small enough to acquire at reasonable multiples but where a combined entity would have scale advantages. The firm acquires five, then ten, then fifty individual operators. It standardizes back-office functions, renegotiates supplier contracts from a position of volume, and either grows the combined entity or sells it to a larger fund at a higher multiple.
The returns depend on the multiple expansion — buying at 6x EBITDA, selling at 12x — and on margin improvement during the holding period. Margin improvement, in a service business, often means one or more of the following: reducing labor costs by replacing experienced staff with less experienced staff, increasing prices, reducing service quality in ways that are difficult for customers to detect immediately, or all three.
The industries where this playbook has been applied most aggressively are ones where the customer relationship was historically built on trust rather than comparison shopping. Your veterinarian. Your dentist. Your ophthalmologist. Your physical therapist. Your funeral home. Your gym. These are services you chose partly on the basis of a relationship with a specific person, and where switching costs — finding a new provider, transferring records, rebuilding trust — are high enough that many customers absorb price increases rather than leave.
"The rollup doesn't want the business you use once. It wants the business you can't afford to stop using."
The Car Wash Is the Clearest Example
Car wash consolidation is useful because it is the least emotionally freighted of the affected industries and therefore the easiest to analyze clearly. Between 2017 and 2022, private equity invested over $5 billion in car wash consolidation, creating regional and national chains from what had been almost entirely independent local businesses. The vehicle was the subscription model: unlimited monthly washes for a fixed fee, designed to convert a transaction business into a recurring revenue business.
The subscription model is excellent for the car wash. It is less excellent for the customer. Research on subscription behavior consistently shows that consumers overestimate how frequently they will use a subscription service and underestimate how long they will continue paying for it after usage drops. The car wash subscription captures this dynamic precisely: the customer pays monthly for the psychological comfort of unlimited access and the practical reality of occasional use.
The PE-backed chains understood this. Their financial models were built not on the behavior of the customer who washes weekly but on the customer who washes twice and forgets to cancel. The average car wash subscription customer, according to internal industry data from a consolidator I reviewed, visits 2.7 times per month. The break-even for the car wash is approximately 1.8 visits. Everything above break-even is margin. The customer who visits 2.7 times is paying for the customer who visits once.
Where This Is Going, and Why Regulation Won't Stop It
The Federal Trade Commission has been increasingly vocal about healthcare consolidation, and several state attorneys general have challenged specific acquisitions on antitrust grounds. The legal theory is that consolidation in local markets — where a single corporate entity comes to own three or four of the five veterinary clinics in a city — reduces competition in ways that harm consumers. The theory is correct. The enforcement has been limited.
The limitation is structural. Antitrust law was designed for horizontal consolidation in industries with clear national market definitions — railroad trusts, oil monopolies, software platforms. It is less well-designed for industries where the relevant market is a three-mile radius, where the harm is diffuse rather than concentrated, and where the acquiring entity is careful to maintain the appearance of independent operations. A corporate-owned veterinary clinic that keeps the founder's name on the door and the same front-desk staff is, from the consumer's perspective, the same clinic. The consolidation is invisible until the invoice changes.
What regulation is unlikely to address is the underlying incentive structure, which is that fragmented service industries remain enormously attractive targets for capital deployment, that the independent operators who built those businesses are often approaching retirement with no succession plan, and that a $4 million buyout offer from a PE fund is a compelling offer for someone whose alternative is spending two years trying to find an individual buyer at a lower price.
The consolidation of ordinary services is not a story about villains. The PE firms are doing what PE firms do, with money that belongs to pension funds and university endowments. The veterinarians selling their practices are making rational decisions about their retirement. The consumers paying higher prices are responding rationally to the absence of alternatives.
The story is about incentive structures and the markets they create. When capital is cheap, it flows toward the highest available return. Fragmented service industries with pricing power and inelastic demand are a category of asset. Once they are identified as a category of asset, they will be consolidated. The question is not whether this will happen — it has happened, and is happening — but what it costs, and who pays it.
Bring your dog in for the checkup. The price has gone up 18 percent since last year. The invoice will explain that this reflects the rising cost of medical supplies and equipment. It does not mention the fund's return requirements. Those are in a different document entirely.
