Report: The Future of Healthcare
Publication Date: 2020
Mike Ellis, President Europe of Covetrus
Covetrus has been harnessing digital technologies to assist pet owners in staying on top of the care of their pets by promoting a frictionless engagement with vets and connecting data-driven insights to a pet’s medical record.
Could you please start by introducing Covetrus and the underlying rationale behind the ambitious amalgamation, in 2019, between Vets First Choice and the animal health division of Henry Schein?
Covetrus was created, as recently as February 2019, as a result of a merger between Vets First Choice and a spinoff animal health business of Henry Schein to create what can perhaps best be described as a “single operating system for vets.” Henry Schein’s core competency was traditionally around distribution catering to office-based practitioners. The company had been through an aggressive round of inorganic growth during which time it had increased its revenue base from $40 million to $4.3 billion and secured strong market positions for practice management systems in countries like the US, UK, Australia and New Zealand.
In parallel, Vets First Choice had probably spent the best part of seven to eight years fine-tuning technologies to gather greater insights into the marketplace of veterinarians. They harnessed data insights within practice management software as a vehicle for flagging gaps in care. With their data-driven insights you could effectively track care pathways very precisely such as whether Fred the dog was receiving his full treatment of tick or flea product throughout the course of his lifetime.
It was ultimately decided that meshing together these two entities would make a great deal of sense and result in a global, animal-health technology and services business supporting the companion, equine and large-animal veterinary markets. The brand-new structure of Covetrus thus combines leading practice management software, prescription management, multi-channel client engagement services, and supply chain infrastructure in a way that promotes new levels of connectivity between veterinarians and their clients.
To what extent can Covetrus be considered a disruptor of its sector?
I think the use of the term ‘disruptor’ is pertinent and appropriate because Covetrus is ultimately providing a compelling and transformative value proposition within the global animal health market. We are shaking up the traditional animal health sector with technology whilst simultaneously harnessing core distribution and brands practice management platforms, with a view to bringing all these components together in unique ways. Most people think of animal health distribution as an antiquated and basic business, something akin to delivering soft drinks and snacks, when, in reality, it is highly complex both in scope and scale, much like the human healthcare market. Covetrus offers a rationalised and enlightened approach to navigating and managing these complexities in the form of a single operating system.
How easy has it been to integrate the two companies and create a new single coherent and unified corporate ethos?
Blending together different corporate identities can be a challenging process, and often the most difficult factor in making a success of mergers of this nature is mastering the cultural aspect. In this particular instance, however, the integration has progressed very smoothly and at phenomenal speed. I think what helped were the strong cultural affinities and commonalities on both sides: namely the emphasis that both Vets First Choice and the animal health business of Henry Schein placed upon making veterinarians the centre of everything that they did. We’re also talking about two well-known brands that command a great deal of trust and standing within their respective client bases and market niches. There was therefore a very solid shared foundation on which to build upon. There was also a common mind-set, posture and ambition within both businesses in the sense that their managers were pioneers unafraid of taking a chance to go forward and win.
It would certainly seem that Covetrus is ahead in the game if we consider how the animal health sector is undergoing consolidation and gearing up to embrace the digital revolution…
That’s absolutely right. The core of what we are trying to do is to bring the next generation and wave of technology to the aid of the veterinarians who are facing increasing challenges from multiple fronts. What we can do is help improve their operating environment and workflow so they can concentrate on what they do best which is caring for animals. Right now, veterinarians are facing significant pressure from e-commerce, so we are introducing technology into the mix that empowers them to compete in the new climate. This is because we fundamentally believe that the lives of both companion animals and livestock are best served by having a veterinarian have a proper say in their treatment decisions.
At base, Covetrus is striving to reinforce veterinary practice partners to drive improved health and financial outcomes. We’re bringing together products, services, and technology into a single platform that connects our customers to the solutions and insights they need to work best and most efficiently. Our supply chain services connect practices with industry-leading essentials for growth; our software solutions increase staff efficiency and improve business health; and our prescription management tools help veterinarians thrive in a radically changing market landscape.
Can you perhaps give some specific examples of the value-additions you deliver?
If you take a rudimentary, vanilla, no-frills distribution company it is possible to source and deliver up a flea and tick product to a veterinary practice for them to sell to a client. Covetrus, however, goes well beyond this by also introducing solutions to manage the day-to-day tasks of dealing with inventory. We simplify the way the vet orders the product and gets it into the practice by introducing automated inventory replenishment. This way they automatically receive the next product as soon as they’ve utilised the old one. We then can go a stage further by linking them to an e-commerce platform, which they can use to connect with their client and place that client on an annual replenishment programme. Efficiencies and a rationalised process like this frees up the veterinarian to focus on prescribing and maintaining the client relationship. If we can give the veterinarian 10% of their day back to focus on patients, then we are clearly triggering an improvement in the quality of care delivered.
And for pet owners?
We are also trying to assist pet owners in staying on top of the care of their pets by promoting a frictionless engagement and interaction with their veterinarians. For example, wouldn’t it be great if my veterinarian knew what volume and kind of consumption of food my miniature schnauzer’s on? If we can help automate the purchase of that bag of food back into the client records which the veterinarian has access to, then the standard of care that is ultimately given can be much enhanced by that knowledge. The more we are able to connect data-driven insights to a pet’s medical records, the better informed the veterinarian will be, thus resulting in a greater quality of care delivered. That is the great advantage conferred over a purely economic e-commerce platform that misses any kind of linkage to animal health.
What are the potential implications for treatment compliance of this sort of enhanced frictionless engagement and interaction between clients and their veterinarians?
Clearly it can have a very positive impact on compliance in administering treatments exactly as they are prescribed. Our systems can facilitate appointment management; so a pet owner knows exactly when his pet’s tests are and gets swift feedback. If my pet is being put on a course of treatment, then the process is incredibly user friendly because my payments are made automatically to the veterinarian, I get the opportunity to validate them quickly on my smart device and then the medication arrives in the post the next day. Having all of this online not only surmounts gaps in the care continuum and speeds up the entire process, but it also renders the veterinarian an increasingly present and trusted partner of the client. It satisfies the client’s demand for quasi-instant feedback and properly embeds the veterinarian at the centre of the treatment paradigm while simultaneously serving the enhanced welfare of the animal.
Where do you see your competition coming from?
When you disrupt a sector in the manner in which we have and present yourself as a one-stop-shop offering a complete suite of distribution and integrated practice solutions – encompassing among other things inventory management services, data insights, easy prescribing, client outreach and the largest online formulary of veterinary compounded medications – then it is clear that the competition will derive from multiple directions.
In this very fluid environment, we often see competition coming from our presumed customers and customers coming from our supposed competitors. The main thing is that there is no other single player out there striving to harness the entire end-to-end ecosystem, and to emulate us would be quite a feat given our considerable accumulated knowledge base and experience.
What do you see as the next steps for expanding the business?
We want to expand our client centric e-commerce business by rolling it out across the European market space. At the end of the day, this is a phenomenal platform, and we want to build on the traction that we have been gaining in the US where we have already reached a penetration in excess of 9,000 practice users.