{"id":10961,"date":"2021-10-01T00:00:14","date_gmt":"2021-10-01T07:00:14","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=10961"},"modified":"2022-06-15T17:48:08","modified_gmt":"2022-06-15T17:48:08","slug":"veterinary-telehealth-law","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/veterinary-telehealth-law\/","title":{"rendered":"A Virtual Reality"},"content":{"rendered":"

A recent National Public Radio podcast episode, \u201cVet Clinic Chow Down,\u201d described why large corporations are acquiring veterinary practices. The segment reminded me why the corporatization of veterinary medicine is such a significant trend to watch, especially in light of the explosive growth of veterinary telehealth, which also is seeing significant corporate investment. Before I unpack why corporations invest in veterinary telehealth and the legal implications for them and veterinarians, I\u2019ll explain how corporate veterinary medicine works.<\/p>\n

In all but a handful of states, only licensed veterinarians can own a practice, and only veterinarians can be legally employed to provide hands-on care. Those two requirements are commonly referred to as the prohibition on the corporate practice of veterinary medicine. But there\u2019s a loophole.<\/p>\n

Essentially, a corporation forms a management services company as a wholly owned subsidiary. The subsidiary assumes the practice\u2019s premises lease and purchases all the assets except for \u201cprofessional assets\u201d such as client lists and clinical records. The subsidiary then partners with a \u201cfriendly veterinarian,\u201d who becomes the nominal owner of the professional entity, the assets of which are limited to the client lists and clinical records. The friendly veterinarian then enters into a long-term management services agreement with the subsidiary to provide the premises, facilities, goods, services, and administrative and management functions needed to operate the practice. The subsidiary also hires all the practice\u2019s former employees and leases them back, except for the veterinarians, who continue as practice employees.<\/p>\n

The subsidiary effectively owns, manages and operates the practice. Because this company is entitled to earn a profit in such a business arrangement, it technically owns the practice financially. Its ownership arises from the fact that the subsidiary can legally realize the veterinary practice\u2019s profits through the fees charged under the management services agreement.<\/p>\n

The Corporatization of Telehealth<\/h3>\n

Even before the pandemic, pet ownership rates were rising, and the trend has accelerated. Meanwhile, many of today\u2019s pet owners demand the same levels of health care for their pets as people receive. Services such as magnetic resonance imaging, chemotherapy and advanced surgical procedures used to be unheard of in veterinary medicine but are now commonplace.<\/p>\n

When you combine these trends with changes in consumer behavior stemming from the pandemic, you can see why veterinary telehealth is estimated to become a $346 million global market by 2027. As such, it\u2019s a market that corporate investors are moving into in droves, and how they do it is similar to the brick-and-mortar model of corporate veterinary medicine. Instead of owning a physical practice as described earlier, the management services company establishes and operates a web-based platform that provides one of two types of veterinary telehealth services.<\/p>\n

The General Advice Model<\/h3>\n

In the first model, the veterinarian is giving only general advice to the pet owner. The doctor isn\u2019t virtually examining and treating patients. For that reason, such a model has the upside of significantly reduced legal implications, but the business downsides are significant.<\/p>\n

Legally, because the veterinarians are arguably not engaging in the practice of veterinary medicine, the prohibition on the corporate practice of veterinary medicine does not apply. Consequently, the management company hires a group of veterinarians as employees or independent contractors to provide the pet owner with advice on the management company\u2019s web-based platform. Eliminated are legal issues such as multistate veterinary licensing and professional liability.<\/p>\n

The downsides are these:<\/p>\n