Medical Management International, Inc.

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Medical Management International, Inc.

dba Banfield, The Pet Hospital
11815 NE Glenn Widing Drive
Portland, Oregon 97220
U.S.A.
Telephone: (503) 256-7299
Toll Free: (800) 838-6738
Fax: (503) 256-7636
Web site: http://www.banfield.net

Private Company
Incorporated: 1955
Employees: 1,000
NAIC: 541940 Veterinary Services; 533110 Lessors of Nonfinancial Intangible Assets

Medical Management International, Inc., which prefers to be known by the name under which it does business, Banfield, The Pet Hospital, stresses "human quality medicine" and customer care for pets. The company still owns and operates its original animal hospital in Portland, Oregon, along with more than 300 other animal hospitals and more than 100 wellness clinics in 43 states, as well as a handful of clinics in the United Kingdom. Banfield, in addition, is a pioneer in the pet health insurance market and has embarked on plans to build teaching hospitals supported by two schools of veterinary medicine.

1985–93: Growth As a Neighborhood Animal Hospital

In 1955, Warren Wegert, a veterinarian, opened Banfield Pet Hospital, which he named after the area in Portland, Oregon, in which he located his business. Banfield was successful, and Wegert, a breeder and racer of greyhounds, operated the hospital continuously until he sold his practice to Scott Campbell in 1986.

Campbell, who had received his degree in veterinary medicine from Oregon State University in 1985, expanded Wegert's practice, adding a third veterinarian in 1987, and heavily promoting the business. Wegert continued to practice as a veterinarian at Banfield until he retired in 2001 at the age of 82. In 1990, Campbell moved Banfield into a new 6,600-square-foot hospital across the street from the 2,000-square-foot hospital that Wegert had opened in the 1950s. According to Wegert in a 2003 Oregonian article, "Scott Campbell's a brilliant person—a genius at marketing [who] could foresee the future of veterinary medicine." The new hospital, open seven days a week, 365 days a year, with slightly limited hours on weekends, had a drive-up window, a closed circuit television system for monitoring sick patients 24 hours a day, a laboratory, low-radiation x-ray equipment, an operating room and five examination rooms, and a video system with tapes to educate pet owners about pet care. Wegert's old hospital, still owned by Banfield, was converted into a boarding and grooming salon capable of handling up to 100 pets.

The new Banfield stressed "human quality medicine" for pets. "We ask staff how they would like to be treated and try to treat the clients the same way," Campbell attested in a 1990 Oregonian article. "We certainly aren't the cheapest veterinary clinic. We have more staff, more equipment—but we practice a different quality of medicine and we think that is what people want." Unlike most veterinary practices, Campbell's did not require an appointment and practiced team-based medicine. Banfield also differed from other clinics in sales, generating more than twice as much revenue per veterinarian as the industry average.

Banfield stressed efficiency and responsiveness to its human customers. Staff tracked activities performed and the length of time each customer spent in the clinic—on average, 29 minutes, 19 of those with a vet. The hospital handled 60 to 120 pets a day. When a pet was hospitalized, staff called at least twice a day to keep the owner informed of the pet's progress. The hospital also called everyone whose pet had not been in for more than a year or had missed vaccinations or checkups. Beginning in 1986, Banfield hired a research company, Bardsley & Neidhart Inc., to call and survey 200 of its clients monthly and about 350 once a year. In 1987, it began to offer an HMO-type plan, its Optimum Wellness Plan, to customers. It also marketed this plan to 12 other veterinary hospitals.

Banfield's emphasis on customer care was very timely. With a concurrent development in the sophistication and cost of veterinary medical and surgical services, procedures once reserved for humans, such as ultrasound, chemotherapy, and blood transfusions, had made their way into veterinary medicine. There were veterinary specialists in fields as diverse as neurology, cardiology, ophthalmology, dermatology, dentistry, and surgery. By the mid-1990s pet owners were spending about $5 billion a year on healthcare for pets in the United States and wanted to be sure that their money was well-spent. In fact, to accommodate and encourage this trend, veterinary clinics around the country picked up on the new practice of pet HMOs.

1993–2003: Developing a Partnership with PETsMART

Banfield's success did not go unnoticed. In 1993, PETs-MART, a Phoenix-based pet supply chain, decided to open stores in Washington and Oregon, and approached Campbell to propose that he open additional veterinary practices inside individual PETsMART stores. Store research had shown that about half of PETsMART's customers did not have veterinarians. Campbell agreed, and by the end of the first year, there were 37 Vetsmart hospitals owned by Banfield in stores across the country. PETsMART, meanwhile, retained ownership of its own chain of pet clinics in stores without a Vetsmart veterinarian. These clinics, called PETsMART Veterinary Services, offered vaccines, therapeutic diet sales, and neutering for dogs and cats, but were generally not full-service pet hospitals.

In the summer of 1995, Vetsmart Pet Hospital introduced its own Optimum Wellness Plan. Pet owners paid a one-time membership fee ranging from about $70 to $100, followed by monthly payments of about $10 to $35. The lowest-cost plan covered vaccinations, two physical exams per year, and several blood tests. The next plan up also included surgical fees for sterilization, de-worming, and blood and thyroid tests. The more expensive plans added in higher-priced dental services and chest x-rays and electrocardiograms.

In 1998, Banfield started to franchise hospitals in PETs-MART stores to individual veterinarians; these practices, which bore the Banfield name and branding were referred to as "Charter Practices." Then, in the summer of 2000, Banfield bought all of PETsMART's 118 clinics. At the time, fewer than 5 percent of the 18,000 pet hospitals nationwide were owned by large corporations. Banfield upgraded the PETsMART Veterinary Services clinics to full-service hospitals and changed the name of all of its hospitals to Banfield, The Pet Hospital. The reason for the name change was that a study that Banfield had conducted showed that people associated Vetsmart with PETs-MART and assumed that the veterinary hospitals were a part of the pet supply chain. The name Banfield, on the other hand, connoted high-quality independent veterinary care and allowed the practice to capitalize on its long history.

But many independent vets were critical of the services provided by Banfield and objected to the image the franchiser wanted to create for its practices. According to one veterinarian quoted in a 1996 issue of the Chicago Tribune, the veterinarians at Banfield were "on limited salaries, often inexperienced, and commonly transient." Another offered that "[t]he strongest lure of the corporate organizations is convenience for the pet owner. He buys dog and cat food and inoculates his pet at the same location. . . . Corporate apparently doesn't solicit the long-term veterinary patient or the long-term veterinarian." The implication here and elsewhere was that the quality of care Banfield vets provided was questionable.

However, at least some customers felt otherwise. Pet owners' pocketbooks were not keeping up with the advances in veterinary care and the cost of this care. At the same time, a shift was occurring in the way in which many Americans were treating their pets, with more and more willing to regard companion animals as members of the family. According to a survey of small animal veterinarians published in the July issue of DVM Newsmagazine, the average amount pet owners spent before deciding to end a pet's treatment or choose euthanasia was $576 in 1997. Veterinarians also were changing. In 1980, more than 90 percent of graduating veterinarians were male and most owned their own practice. By 1985, the number of female and male veterinarians was roughly equal, with female veterinarians much less likely to own their own practice.

By 2000, there were more than 200 full-service Banfield hospitals in 27 states throughout the nation, and Banfield had partnered with PETsMART to increase the number of its franchises. By 2001, Banfield's 260 hospitals were caring for 60,000 pets each week. Banfield took action to dispel the image attributed to it of the corporate, impersonal vet. In the fall of 2000, it began national promotions to introduce itself to pet owners by offering free weight evaluations for pets along with food measuring cups and nutrition guides. By early 2002, its hospitals and Wellness Clinics had increased to number more than 300 in 38 states, making it the largest veterinary practice in the world. It cared for an estimated 50,000 pets per week, or a total of almost two million per year.

Company Perspectives:

Today our hospitals provide the same medical systems, procedures and client service that made our original hospital a critical part of its neighborhood for half a century. And, we continue to be driven by the same goal that has always inspired us: making life better for families. We do this by giving Pets the same care we want for ourselves, making Pet health affordable, strengthening the value of Pets in families, teaching how better Pet care maximizes lives, and stopping euthanasia by keeping Pets healthy. Put simply, treating your Pet like family.

By 2000, although fewer than 1 percent of the nation's estimated 120 million pets were insured, more than 260,000 pet owners had purchased Banfield's Optimum Wellness Plan. Campbell took his company's involvement in preventive pet care one step further and founded BluePaws Pet Health Insurance. BluePaws, with access to two million pet health records from Banfield, created the only actuarial tables ever created for pets and offered a more sophisticated rate schedule than other pet insurances. It also created a streamlined online claims system that greatly reduced claims processing costs. Veterinarians went online to determine their client's share of the bill and to submit claims.

BluePaws ran into branding problems, however, with Blue Cross and Blue Shield. The health insurance provider for humans alleged "infringement of trademark" in 2001 on the basis of the similarity between the two companies' names. BluePaws changed its name to TruePaws and modified its signature color and logo from blue to maroon and black. It continued test marketing its services in Portland, Oregon, and Austin, Texas, until the end of 2001. Then, at the end of 2001, it closed.

2003: Entering the Field of Veterinary Education

By 2003, Banfield was operating more than 300 hospitals and more than 100 Wellness Clinics in 38 states and employing more than 800 veterinarians. Banfield vets saw approximately 2.5 million cats and dogs a year, or 2 percent of the nation's pet population, and delivered about 5 percent of the veterinary care provided in the United States. Since all Banfield hospitals used the same computer programs and data systems that were backed up regularly to central computers in Portland, Banfield's records offered exciting opportunities for research. Epidemiologists at Purdue University's School of Veterinary Medicine began to develop software to allow them to review Banfield's data to look for unusual clusters of symptoms, which might signal early signs of biological or chemical threat. Anthrax, plague, and tularemia all affect animals in the same way they do humans, but animals feel the effects more quickly because they are smaller.

Banfield also initiated a collaboration in 2003 with Western University of Health Sciences College of Veterinary Medicine to create a primary teaching hospital for first- and second-year veterinary students where they would have the chance to learn about routine veterinary care as part of the school's new problem-based curriculum. Construction began on the new hospital, located in Pomona, California, in 2003. Plans for the facility included five exam rooms, a large surgical suite, an x-ray room, isolation facilities, and two conference rooms.

Banfield expanded in another direction as well in 2003, partnering with mypetstop Pet Resort & Care Centers to open its first hospital overseas in Manchester, England. It also made plans for its second small animal teaching hospital at the Universidad Nacional Autonome de Mexico (UNAM). These plans included a full-service hospital with nine exam rooms, in-house laboratory, three surgical suites, and overnight accommodations to house residents. Campbell described the relationship with UNAM in the October 2003 issue of DVM. "They need a hospital and we can help them obtain practical training and they can help us with the shortage of veterinarians."

Key Dates:

1955:: Warren Wegert opens Banfield Pet Hospital in Portland, Oregon.
1985:: Scott Campbell receives his degree in veterinary medicine from Oregon State University.
1986:: Scott Campbell purchases Banfield Pet Hospital.
1990:: Banfield moves into a new 6,600-square-foot hospital across the street from the original hospital.
1993:: Banfield enters a partnership with PETsMART.
1998:: Banfield begins to franchise its hospitals in PETs-MART stores to individual veterinarians.
2000:: Banfield buys PETsMART's 118 clinics, upgrades them to full-service hospitals, and changes the name to Banfield, The Pet Hospital.
2003:: Banfield has become the largest veterinary practice in the world, operating more than 300 hospitals and 100 clinics in 38 states and employing more than 800 veterinarians.