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From the Editors

Out of This World

Scooping up independent veterinary clinics left and right, consolidators are going about it the wrong way, said Ivan “Zak” Zakharenkov, DVM, MBA, the CEO of a new competitor, Galaxy Vets.

“Usually, consolidators focus on three areas of the business that they want to improve: marketing, the cost of the products they buy, and managing the cost of labor, which is essentially cutting salaries,” Dr. Zak said. “We think that’s a losing strategy.”

Galaxy Vets’ approach is worker-centric. Everyone — from a veterinarian to a technician — will be competitively compensated and a part owner through an employee stock ownership plan (ESOP). The selling practice owner will stay with the team and roll 50% or more of the proceeds back into the business.

Dr. Zak, the entrepreneur behind SmartFlow and Veterinary Integration Solutions, is motivated to prevent employee burnout, which during a practice takeover, he said, can arise from a lack of autonomy, a misalignment of core values and a heavier workload. Guaranteed time off is one of his solutions.

“We’ll be monitoring that people don’t work more than five days in a week and aren’t present more than 10 hours in the building,” he said. “You have to take two days off in a row, unlike when I was an ER vet and burned out. You have to take vacation once a year.”

Backed by institutional investors — all minority stakeholders — Galaxy Vets plans to buy 10 existing practices in each selected metropolitan area and then construct a nearby specialty hospital and reference laboratory to serve them.

In astronomical terms, “Galaxy is the whole thing, one [metropolitan] location is the solar system, the central hospital will be named after a certain star, and the hospitals we acquire in the area are planets,” Dr. Zak said.

A Dallas network is expected to launch in January 2022, followed by “solar systems” in the Bay Area, San Diego and Phoenix.

Dr. Zak wants to turn Galaxy Vets into a publicly traded company in five or six years, at which point employees could keep or sell their shares.

Galaxy Vets’ marketing campaign is paying off.

“In four weeks,” he said, “we have 48 applications to acquire hospitals, and we have 110 employees asking for a job.”
Ken Niedziela








Ken Niedziela, editor