In today’s episode, Yang Shi, the Co-Founder and CEO of VetSnap, rejoins Dr. Ivan Zak and Ryan Leech to talk about consolidators and the hospital technology stack.
We discuss the process of selecting what software to roll out first in hospitals after the acquisition, the importance of building a strong relationship with the vendors, and how the powerful inventory management VetSnap helps clinical staff.
You’re listening to Consolidate That! A lot of times, when we have great guests, we end our episodes by saying how much we would love to have them back. Well, this week, we actually took the opportunity to have one of those great guest come back and join us again.
That’s right. I’m very excited to introduce again to those that hear Yang for the first time but we have Yang Shi, a friend of mine and a Co-Founder and the CEO of VetSnap. Before VetSnap, he held a position of head of technology at the National Veterinary Associates, which is NVA and one of the biggest consolidators in the world. He graduated from Stanford University in 2006 and holds a Master’s degree in electrical engineering and MBA from INSEAD. The business school of the world. Yang, welcome back, thank you for finding the time again.
Hey. Really, really great to be on and thank you for having me back.
We wanted to – last time, just to remind listeners if they didn’t listen to the last episode, we talked about the technology stack at sort of the corporate level and the way we look at VIS and the technology and IT component of consolidation, there’s kind of two parts. There is the HQ, sort of your ERP, your project management software, your HR system or HRIS, all kinds of financial systems that should, in an ideal world, work together and provide the data.
Also, there is – we also refer to as the clinic stack or clinical stack, which is more related to, well, producing revenue, if you will. The way I look at it, I call it a patient digital journey or maybe like a customer journey from the perspective of what the pet or the pet owner is experiencing and what type of software they’re going through.
It’s not the customer facing but what the clinic, if it was one clinic, needs to have as the basic stack of technology to get the job done from the time I need a vet and I’m finding that vet, so some sort of marketing tool that will help me to then book myself into the appointment, and then check in the hospital, and then run the bloodwork, do X-rays, and then prescribe some sort of medication, check out from the hospital through payment processing and, hopefully, at home, to follow-up with some sort of compliance tools. That’s sort of what I call a patient –
Don’t forget the rebook. That’s the best part.
That’s sort of the, that level, this is what we wanted to focus on today and I think it would be interesting to kind of tap into your experience with NVA and thinking, what is necessary to change in that sort of clinic level, operational software and what is not necessary and what should consolidators focus on? Because if a lot of consolidators focus early on what PIMS we should we use across, should we change PIMS and I know that NVA had a great experience with not changing much.
From what we heard from news wire, yesterday, two days ago, that now, they acquired or partnered up with Rhapsody. Now, there is a software. What do you think is the ideal scenario, if you were to build it all over again?
Yeah, first of all, I think it’s fascinating and appropriate that you approach this as like the patient’s journey and I think, to start off, I’d say, from my experience personally, NVA has changed a lot since I left. My experience is that, a lot of times, consolidators certainly feel like they want to change a lot of things but probably should not do so. I think I said this last time, almost like repeating myself in the last podcast but I feel more passionate than before about it is buy really great hospitals. Buy great hospitals and they’ve been working before.
Probably don’t want to touch too many things. There could be a lot of downside, there may be a lot of upside, there may be a lot of downside but you know, like approaching it from a patient’s journey, that’s a fantastic way to think about it because it’s oftentimes distracting, right? When you’re trying to look at all the different software, all the different things that you can roll out into your newly acquired hospitals.Tthe ones that you think are antiquated and paper based and they really need a kick in the rear to get to modern times or what not.
You can focus on so many things but having that patient journey, yeah, that’s one way that we thought about it too. We find really – you meet these folks, these sellers, when you’re pitching the acquisition to them. You can tell immediately who these folks are, the ones you want to help you think about it. To answer your question, a lot of times, your hospitals already know what they really want. You should work with some thought leaders in your base of acquired hospitals and kind of have them be the advocates for you.
You want to help them organize using something like the journey of the patient. That really resonates with me. In terms of like, how to pick which thing to change first. Give you an example. Maybe two contrasting examples. One is a long time ago, five years ago, no one really had online booking figured out. It’s almost like we knew at the time, hey, we need to do online booking because even if the hospitals have a really great relationship with their clients and you know that they’re going to come back, it’s still a better experience to be able to book online, save time from the front desk and all that.
With that in mind, you go out and you find a good partner. Not necessarily the most advanced or the cheapest but you find a good partner. That’s a good example of that. The counter example be like, well, sometimes we think that telemedicine for a while was like going to be the topic, right? Again, it started off like in like the first veterinary innovation summit in Texas, which I think, Ivan, you went to as well and I went to. It’s like, they talked about telemedicine probably every other –
85 percent of the time.
Yeah. Then you get – I think it’s VPCR or VCPR. Yeah, it’s like, no one’s really dare to do anything because they’re worried about being sued and then the pandemic hits. My point is like, sometimes, as a consolidator, you know what you want and it’s like the right thing to do and sometimes you want to do it and it’s not going to happen. Prior to pandemic, no one was going to do telemedicine.
Try to pilot it, there’s no traction. Then the pandemic hits and then you got to seize the opportunity. I think it’s been practical figuring out what might be the right time to deploy something.
Yeah, you know, it’s interesting, that you touch on telemedicine, my favorite topic, because prior, I went into the first, what, three VIS? Constant VCPR conversation, I was sick of it. When the pandemic hit, it was like, finally, we’ll convert the industry and, nope.
Right now, I know very little other than Modern Animal and then a couple of other groups that build it intentionally in my mind with telemedicine, they actually adapted it. I think that that’s an interesting topic, I’ve been of the opinion, I think we had this conversation actually when I was at ITX with you. I don’t know if you recall it or not but I asked you, when we were talking about data, I said we just measure the top of the organization, what is your balance score card so we can help you to build out the data stack so it supports the metrics that you need?
I remember you smiled, didn’t really respond, I don’t know if they had the metrics to that degree mapped out or not but I remember that it was kind of died as a conversation. That’s what we were trying to articulate right now, to most consolidators that we worked with is instead of saying, let’s – should we change the PIMS, should we not change the PIMS?
Well, VCA comes in and guts the hospital. Then, Pathway went in and did a bunch of clinics with EasyVET and Smartflow. Then NVA doesn’t do anything. All three super successful companies. Should you or should you not? I don’t know. I think what they should be paying attention to is what did we promise our investors, we’re going to do with these hospitals after we acquire them?
When you have that pitch deck in which you say, what are your growth levers if you call them or what are your – whatever you call it but synergies, value creation plan, what are those items? Most consolidators, most that we see right now on the market, it’s improve marketing, improve financial back end, improve HRIS, and people management, and labor cost management, and improve inventory. Those are sort of the basics, right? Instead of going and saying, should we change PIMS? I think you should focus on things that you said to your investors and the vets that you’re buying clinics from, we’re going to improve.
Then, also to parse between let’s say, we’re going to improve marketing, then all of a sudden, we’re hiring a person who will change website for every single hospital, improve SEO, change website, and put booking in. Without looking at the capacity of the clinic, if they’re up to their gills, you know, the capacity, you pour more marketing in, and everybody’s burned out.
I think there’s an assessment and then after that implementation, which is sort of a long segue, which I apologize for, to what you do now. Inventory management is at every consolidator’s top of mind, we need to do this, and some of them just do vendor management by using the buying power but then also, being economical and being strategic about how you do inventory management.
I think that’s one of the things that they should focus on because most of them talk about it. From your current experience, and as you were building VetSnap as the inventory management solution, and thinking back through the lens of NVA, is that something that we can do at scale at consolidation? What are those sort of tactics that you can do without software change and then with additional tools like VetSnap?
Yeah. I’ll definitely answer that question and first, I think, what you said around focusing too much on marketing and if you want to break it down, it’s like revenue and cost and then you kind of get to EBITDA, fundamentally, I think from what I hear, everybody’s swamped. Focusing on marketing just like –
Right, that makes sense.
Good point, demand is much higher than supply.
This kind of like, touches on why we started VetSnap but more broadly I think, yeah, what can you change? How can you improve your EBITDA? It comes to around like managing cost and also, just making the lives of the staff in your hospitals better. HRIS, another thing talked about, just helping people management, helping with recruiting. I think that’s so important right now because there’s a dearth of talent, a dearth of labor, talent, whatever you want to call it in our industry.
Not just the US but probably like other countries as well. That really resonates with me and inventory management, I got a few things that’s important to us is one, we think that good inventory management software can be very successfully deployed by consolidator and can serve the purposes of the corporate entity very well.
Our strategy, it’s from our, it’s our theory is that you’re not going to have good data, you want good data, real time data and you want to be able to affect change. Maybe, it’s a large ship but at least, know where that ship is sailing and nowhere there might be leaks or particles, but you want to be aware of them, right?
To do that well, you got to make the lives of the folks on the ground better.
A hundred percent and I like where you went with this because this is my eternal question for consolidators. Who is the customer for a consolidator? Is it the pet or is it the clinic or is it employees in the clinic? Who is the customer because once you align on that strategically, your choice of change management that you are applying to clinics will be dramatically different than if you’re – you know, depending which camp you’re at. Who do you think is the customer of consolidator? Is it the pet owner or the clinics?
This is my personal belief I’d say, you know what I mean? I am very passionate about pets. My wife and I, we love our dog and that’s the only reason I am in this industry. Do you know, I didn’t even realize there was an industry until we adopted Penny and then trying NVA. My opinion is, if you try to optimize, where are you going to get the biggest bang for your buck? It is actually the staff. I may be wrong, right?
You could say it, from a very tactical standpoint, it is generating the right ROI for your investors, which then leads to more capital being invested in our industry, which then leads to better care. Well, I think it’s the staff on the ground. You could say it’s the patient or the pet owner but really if you serve the staff the best then they’re going to be able to impact more folks. I think it’s, humbly speaking, in my personal opinion, it’s the staff.
I can’t agree more.
Yeah, I agree with you there too Yang. I think one question though as you’re just to think about the consolidators that are looking to build those relationship with vendors that are in the patient corridor, you know. I know VetSnap is a fairly new business. There’s companies in all sectors, the PIMS world, client communications, all of those that are have been around for a really long time, that are newer. What do you think is a key benefit to going with maybe an established company versus one that’s younger or what do you think the consolidators should be looking to find the sweet spot there?
Yeah, that’s a really good question. From our experience at VetSnap and I was on the other side of the table at NVA so to speak, and you can really help out a startup. You can really help out one of the smaller companies grow and there is a lot of benefits developing that relationship. Again, just going back to vet story just because the management team there are just fantastic folks. They were relatively young when we partnered with them at NVA and because they were younger and kind of entering into the United States, there was a lot of mutual benefits in working with them.
Now, it wasn’t a one-way street. It wasn’t just us knowing that they needed us, so therefore we asked to get us much out of them as possible. It was also helping them figure out problems, for instance, as an example, we were told we couldn’t actually integrate with them and if you can’t integrate the PIMS with the online booking system, you don’t have an online booking system. It turned out it wasn’t anything related to that.
It was just like a weird curricular business world that the PIMS vendor assumed was a necessity, was a hard no if it didn’t – if that wasn’t the case, it was a hard no. You want to be a good partner to your vendor. You want to be knowledgeable, and you need to get your hands dirty. You can’t just beat on your vendor and then tell them to integrate, integrate, integrate. You’ve got to ask them, “Hey, what’s going on?”
I think that gets to one of the points I want to bring up, as a consolidator, if you have the ability to start investing in someone that manages the patient journey, wrapping back to Ivan’s original point, someone who is really aware of this entire journey. Someone that is responsible for it, someone who is paid and bonused to make that experience great, that is the kind of person you want to person with these vendors. The vendor is going to get a lot out of it because they are going to be able to ask more detailed questions and help the vendor solve problems.
To answer your question, for a consolidator to pick the size, I mean I care less about the size. You care more about the people. You want to make sure that they are good partners with you, that during the onboarding process and during the ongoing support, they are flexible without being unreasonably flexible, making them bend too much to your will. They just want someone that is willing to work with you and I’d pick that over a more mature offering anytime.
My opinion also might change because, back then, we had 300 hospitals. Now, if you have 1,000 hospitals, maybe you also want to care about can they actually scale? And we as NVA past tense, right? It also depends on can they scale with you and that’s also very important.
Well, that kind of leads to an interesting question. Only asking for your opinion, not as NVA. I know you want to talk to about them from your past experiences but right now as an outsider, so this partnership between NVA and Rhapsody, right? This is a cloud PIMS, a great product I think. I hadn’t used it in the hospital, the presentation they made looks great and a great team. They are phenomenal, very experienced entrepreneurs and developers.
They created – I was shocked how quickly they created a product. I was actually shocked how can you even write requirements to that degree in such a short period of time? So, I think they’re phenomenal, but I don’t know what’s their sort of implementation team and maybe NVA will take on that role but what do you think are the chances or duration, let’s say not chances, the duration of a change and is it possible in a 1,000-hospital organization to go and say, “We’re all on Rhapsody right now.” How many years do you need to actually switch to that with 1,000 hospitals?
Yeah and that’s a very good question and I ponder that myself not knowing that NVA made an investment in Rhapsody. That was just a question in my mind when I heard they wanted to make a change. I thought about Rhapsody last night. I was having dinner with a former colleague of mine from NVA and he asked me, “Hey, did you hear?” I was like, “No,” and they’re like, “Oh they made an investment,” so congratulations to the Rhapsody team, really awesome.
I think there is a lot of benefits mutually that are going to be captured there.
Yeah and that centralization of data and unifying the data in one way is going to be definitely powerful for them. I think that will be really interesting. !e will all see. I know we don’t have NVA anymore. We have NV Yang or Yang VA but –
Trademark infringement notice on NVA.
NV Yang, well I think it is going to be interesting to see, for sure. I know that was one of the big questions is I was on the PIMS side of things looking at that deal, so it is happening and trying to figure out, yeah, winning the deal is one thing, but delivering upon it is the next major hurdle for the team. I am going to be curious to see. I know I signed up for an input session they’re doing in Vegas online to see what the game plan is there.
All right. Well, we ran out of time as we usually do. Yang, thank you so much for the insight and good luck with VetSnap. If people want to find out more about inventory management using your current startup, where do we find you?
Yeah, you can go to vetsnap.com, exactly how it’s spelled.
Thanks Yang, have a great day.
Thanks for finding the time. Cheers.