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November 14th, 2012 ANDREA DAMEWOOD | Cover Story
 

Rent A Pup

Oregon’s richest veterinarian wants to lease you a pet—but complaints dog his business.

lede_puppy_3902IMAGE: Amaren Colosi
HOMEWARD BOUND: A pooch available through Hannah the Pet Society (above) gets a hug at an adoption event. The business matches people with animals and leases pets for a monthly fee.
Image courtesy of Hannah the Pet Society

There’s a small storefront near the Nordstrom at Clackamas Town Center that’s hard to ignore.

In the window is a gray bunny that can bounce a ball. On a recent visit, there was an impossibly fuzzy goldendoodle puppy. Inside, there is leather furniture, a gas fireplace and glossy dog books in a cherry bookcase.

This is no average pet store.

According to its founder, this is the most revolutionary development in pet ownership since the Chuckit!

This is pets.

For lease.

Hannah the Pet Society is the first store of a planned rollout across the country where customers can take home a dog, cat, rabbit or guinea pig and, for a monthly fee, receive food and veterinarian care in the knowledge, if it doesn’t work out, they can return the animal.

“It’s very different,” says Hannah president and CEO Will Novak. “It’s our vision to take this regionally and nationally over the next several years.”

The vision is Scott Campbell’s. The richest Oregonian you’ve probably never heard of, Campbell is a veterinarian who built the largest chain of vet clinics in the world. When he sold his Banfield Pet Hospitals in 2007, the company was pulling in more than $400 million a year. 

Campbell and others think Hannah the Pet Society will be his next big hit.

Others aren’t so sure. 

Customers have filed two complaints against the company with the Better Business Bureau (Hannah has an F grade), and one with the state attorney general’s office. Some complain of slick sales staff misquoting actual costs and dodging tough questions. Others say they’ve had a hard time getting their money back. 

Hannah has also spooked members of the local animal welfare community, who worry about a for-profit company operating under the veneer of a nonprofit. Others are put off by the notion of “renting” animals—and what that means about who decides whether Fluffy lives or dies. 

“When you say the name ‘society,’ people think, ‘Oh, humane society.’ But it’s not, it’s totally for profit,” says David Lytle, spokesman for the Oregon Humane Society. “What happens if the animal does need really expensive care? Is that decision out of your hands, because you’re leasing that pet? If my dog gets a serious illness, is it going to be euthanized? I just don’t know.” 

Campbell scoffs at such criticisms, saying they are understandable bumps in the road for any new business. It’s the kind of response he expects from established organizations who view his business model as a threat.

“What we’re doing with Hannah,” he says, “is trying to help people have a better life.”

HOW MUCH IS THAT DOGGIE…: More than 3,000 people a week pass Hannah’s sales storefront at Clackamas Town Center.
IMAGE: Amaren Colosi

 

To understand Hannah’s business model, consider the genius behind Banfield Pet Hospitals. Campbell, 55, was raised in Burns, a small prairie town in Eastern Oregon whose 2,000 residents are outnumbered by cattle. His dad, Bert, was the town doctor, and his mother, Hannah, was a nurse. 

Campbell married his hometown sweetheart, Sandy, and earned his two bachelor’s degrees and two veterinary degrees from Oregon State and Washington State universities, finishing in 1985.

At heart, Campbell is an entrepreneur.  

A year and a half out of school, he bought the original Banfield Pet Hospital, founded by Dr. Warren Wegert. Before he died, Wegert told a newspaper: “Scott Campbell’s a brilliant person. He’s a genius at marketing, and he could foresee the future of veterinary medicine.”

The future, Campbell believed, meant standardizing veterinary care, reducing costs, marketing a brand and offering pet owners a wellness plan—a monthly contract that covers clinic visits, shots and other basic care for their pets. 

Will Novak, who served as Banfield’s chief medical officer and vice president of operations, says the goal was to make Banfield the Southwest Airlines of the veterinary industry.

“If you want first class, you can buy it from a different airline,” Novak says. “One of their goals was to standardize transportation.”

Banfield grew by locating many of its clinics inside PetSmart stores. And by 2006, there were 600 Banfield hospitals in the United States and in England. More than 1 million pets were on a Banfield Wellness Plan. 

Such a massive chain was a big change for the highly fragmented veterinary industry.

While some called Banfield “vet in a box,” the cash flow was considerable—the business grew by more than 20 percent a year for the two decades Campbell ran it.

“He was really good at locking in payment plans; that’s where he’s a champ,” says Greg Lathrop, owner of Powell Boulevard Veterinary Clinic, who met Campbell several times. 

Lathrop says he was always concerned about what he saw as a lowered standard of care at Banfield. 

“He’s a smart guy,” Lathrop says. “He’s pretty charming and quite engaging. He’s certainly opinionated. He sees life as a business model and a business opportunity. That didn’t have much to do with the best care for a pet.”

Campbell denies this and says Banfield was always about a higher level of medicine for a lower price. When he bought Banfield, he says, the average death rate for pets under anesthesia was greater than 1 in 100. When he sold the company, the death rate was 1 in 12,000, Campbell says.


MAN WITH A PET PLAN: Scott Campbell sold his Banfield Pet Hospitals for millions. Now he wants customers to lease their pets from him.
IMAGE: John Lofflin
In 2007, Campbell sold Banfield to Mars, the candy and pet food manufacturer that does $30 billion in sales a year. He could have sat back and collected interest on his millions, but since selling to Mars, Campbell has hardly retired.

He owns numerous businesses, including a Portland pipe-drilling company and a restaurant, Bear Valley Roadhouse, in tiny Seneca, Ore. He spends most of his time in Seneca, about 60 miles north of Burns, where he is developing a 140,000-acre ranch. The Silvies Valley Ranch is a working cattle ranch; Campbell is building as many as 575 guest cabins, lodge rooms and time-share units.

In Portland, he keeps the same home in the Pleasant Valley area that he bought in 1986 with Sandy, and still votes here. His two sons attend Oregon State. He also runs an internship program for OSU veterinary students.

But even that is not enough. 

In 2010, Campbell decided to start Hannah the Pet Society, which he named after his mother.

Campbell says he looked at the major reasons 38 percent of American households don’t have pets, and tried to tailor Hannah to address those issues.

The big one, he maintains, is that people worry whether a pet is going to be a good fit—if it isn’t, they’re stuck with an unwanted member of the family.

So Campbell developed a software he calls Hannahware to match owners to pets. A visitor to Hannah is asked a series of questions to find a perfect match: “Do you prefer to make decisions intuitively or with a lot of research? If a pet does something wrong, do you blame yourself or the pet?” Hannah will sometimes have the perfect pet at a location, but more often it will find an animal by contacting a network of shelters, rescue groups and small-scale breeders.

If a pet doesn’t work out, a family can return it and try again to be matched to another pet through Hannah.

MOM’S BEST FRIEND: Campbell named his pet-leasing business after his mother, Hannah, who loved animals.
Image courtesy of Hannah the Pet Society

The cost of pet food is another reason folks shy away from animals, Campbell says. “It’s confusing as shit when you go in and try and figure out what you should be feeding your pet,” he says.

Customers who subscribe to Hannah get food delivered to their homes anywhere within 10 miles of Portland. 

Health-care costs are another concern, so vet care is included in the monthly rental fee—although only at Hannah’s hospital in Vancouver or a Mall 205 location. 

Renting the animals, rather than owning them, addresses what Campbell says is another obstacle to keeping a pet. Among other things, this feature is attractive to the elderly, who often won’t get a pet because they’re afraid the animal will outlive them. Now, Campbell says, they can rest easy knowing their pet will have a good home if that happens.

Hannah the Pet Society doesn’t just find pets for people, it also allows those with their own pets to join the program, if the animal passes a physical and personality test. Such animals make up a significant portion of Hannah’s business.


In only two years, Campbell has become the largest pet owner in the world, at more than 2,000.

“Our model is to own the pets,” he says. “Everybody says nobody will go for that. It turns out nobody really cares.”

Novak, the president and CEO of Hannah, adds, “All the standards we had at Banfield, we will have here.”

The monthly cost of renting a pet from Hannah varies. Cats, rabbits and guinea pigs start at $39 a month; dogs start at $59. Younger animals and large dogs cost more (a Great Dane puppy runs about $138 a month).

Julie Skeen says she loves Hannah the Pet Society. She runs a home-based doggie day care in Portland, and two years ago signed up her now-11-year-old miniature pinscher-Boston terrier mix, Iki. For $66 a month, Hannah provides all vet care, which includes eye medicine and dental work. She was so pleased with the plan that she leased a puppy. For both, she pays $124 a month.

“They’re my new religion, that’s what I tell people,” Skeen, 44, says.

Hannah provides Prozac for the younger pup, and has been an immense help with obedience training, Skeen says.

“I just wish I could get that good of health care for me,” she says, laughing.

Others aren’t quite so satisfied. 

Portlander JeJe Shenteal and a friend visited Hannah and spent hours with sales staff in Clackamas and Vancouver getting attached to two Chihuahua puppies. They ultimately backed out. 

What sent her running, Shenteal says, was what happened when she asked whether she would still be bound to the contract if a Chihuahua died.

“You can mail the carcass back to us, and then you can get out of the contract,” Shenteal recalls staff telling her.

In a telephone interview, Campbell said he couldn’t imagine Shenteal was told that and joked, “Come on. Why not just the ears?”

But if a pet dies, Hannah does require proof. 

A contract obtained by WW says if a Hannah pet dies in a Hannah hospital, the contract ends. Otherwise, the agreement “will terminate upon the pet family immediately contacting us so we can arrange for the proper cremation of the pet’s remains.”

If there is no proof because, say, an animal runs away, the family has to buy out the contract—at a cost that starts at $150 for cats, rabbits and guinea pigs, and $600 for dogs, says Lori Davis, Hannah’s placement director.

Davis says all Hannah pets are microchipped, so permanent loss of a pet isn’t likely.

Shenteal says it took six calls for her and her friend to get their $145 “holding fees” refunded. They later filed a complaint with the Better Business Bureau. Hannah says it was clear with Shenteal she would be charged, and called the complaint a misunderstanding.

WARM AND FUZZY: Hannah the Pet Society has “ambassador pets” at its mall locations to draw customers. People are welcome to nuzzle puppies and kittens as they learn about the program.
IMAGE: Amaren Colosi

 

Rose, a Portlander who asked that her last name not be used, says she and her boyfriend got a purebred Yorkshire terrier puppy from Hannah in June and were attracted by its affordability—$60 a month for the dog, food and vet care. A Yorkie can cost $600, she says. The rental option was “a little bizarre,” but also enticing since she says she lives paycheck to paycheck.

Months later, Rose says she’s having second thoughts, in part because she realizes she would not be allowed to decide what treatments her dog received if it became ill. It would be up to a Hannah vet, not her, what care her dog gets.

“They decide if they want to fix it or not,” she says. “It could be: ‘Oh, she has a tumor, we’re just going to put her down.’” 

According to the Hannah contract, “Hannah’s Medical Standards Board, in consultation with the Pet Parent, is the final determiner of any support, care or ‘end of life treatments.’”

Campbell says if a vet can reasonably treat a pet, Hannah will do it. 

“We’ll recommend what we believe is best,” he says.

If a pet parent wants to opt for other treatment, the parent can get veterinary care elsewhere, Campbell says. Or she can buy out her contract. But Hannah clients must wait for the end of a five-month-to-one-year “honeymoon period” before paying hundreds to end the lease.

Ultimately, if a pet is likely to die, Campbell says a Hannah doctor may give the pet away for free to the pet parent, who can then seek treatment elsewhere.

Earlier this year, Laura McNamara, who lives in Southeast Portland, says she decided to enroll her two rescued dogs, Alvin and Peanut, in the program. That way, their veterinary care would be covered.

Both are small dogs, but both have big medical problems: Peanut, a 7-year-old schnauzer-poodle mix, survived a bout of distemper, and Alvin, a 4-year-old bichon frisé-Maltese mix, suffers from a degenerative spinal-disc disease.

Not owning her pets was unsettling, but McNamara says the flat monthly fee appealed to her. She went in to the Clackamas Town Center location and described her pooches’ issues. The bubbly salesgirl told her Alvin and Peanut’s pre-existing conditions would add about $5 to $10 a month to the basic $69-per-dog-per-month fee. Her contract reflected that estimated price.

“It really is just sell, sell, sell,” McNamara says. (Davis told WW that Hannah salespeople have backgrounds in used cars and gym memberships.) “The salespeople, they were like, ‘Yeah, we’ll give you anything you want. Yeah, it’s covered.’”

McNamara signed a certificate of ownership that stipulates, “I hereby transfer/sell full ownership of this pet unconditionally to The Hannah Society.” She also handed over $95 per dog to sign up.

When she brought in Alvin for his physical six days later, however, the doctor told her the dog’s health posed too big a risk. He quoted her $300 a month, or more, for the one animal.

McNamara left. The Hannah Society kept her $190, until she called four times and finally returned to the Clackamas location to get it back. She filed a complaint with the Oregon Department of Justice. A spokesman says the department is not investigating.

“The whole thing was creepy and weird,” McNamara says.

Campbell says just one-third of the pets that owners bring to Hannah are accepted into the program. Novak points out that an initial contract always includes an estimated price, not a set one.

“There’s no way for us to get an accurate picture until a veterinarian sees a case,” Novak says. “I know for a fact that everything has been set up that way, and that in those circumstances we don’t give a final cost [at the sales location].”

He acknowledges Banfield has also had complaints with the BBB and attorney general: “If you practice long enough, someone will feel like their expectations were not met.”

AMBASSADOR BUNNY: Hannah’s resident rabbit frolics in the store window at Clackamas Town Center. Rabbits, cats and guinea pigs are also available for lease.
IMAGE: Amaren Colosi

 

Hannah hasn’t won over local animal-rescue groups, either.

At the store, signs tout Hannah’s partnerships with local and national shelters and rescue groups. “Straight from a shelter, directly into your heart,” reads one.

But no metro-area shelters—including the Oregon Humane Society and Multnomah County Animal Control—have agreed to work with Hannah, and some believe the company might be overselling its role as a rescue organization. 

For Multnomah County Animal Control director Mike Oswald, the impermanence of the Hannah arrangement is what made him decline an advance from the company.

“We’ve told them we adopt animals here, and if they want to send people to us to go through our adoption program, that’s great,” Oswald says. “What’s critical in any adoption program is that you’re placing them in a lifelong home with a family.” 

Despite an open invitation to critics, Novak says, most of Hannah’s detractors haven’t bothered to visit and learn about what he agrees is a radical new way of doing pet business. 

Novak and Campbell won’t say which groups it works with, save the Columbia Humane Society in St. Helens. There, shelter head Lisa Beggio says she has provided about 100 animals to Hannah in the past year. 

“It’s a win-win,” Beggio says. “Every animal that we place with them opens up a spot for another animal.”

Others are leery of where Hannah is finding goldendoodle and Maltese puppies—designer breeds under 6 months old don’t often end up in shelters, and if they do, they go fast.

As much as Hannah touts its work finding homes for pets, Lytle, with the Humane Society, says he thinks many get the wrong idea.

“I think people have the impression that it’s not a for-profit,” Lytle says. 

Campbell jokes that his 24-month-old venture is currently a nonprofit. But it’s clear he believes it won’t be for long: Hannah is growing. 

Hannah is opening a new store in Washington Square mall. And nearby the company is also building a 15,000-square-foot veterinary clinic, boarding facility and training center, in addition to those at Mall 205 and in Vancouver.

It’s beginning to look like the start of Campbell’s second empire. The company has nearly 10,000 likes on Facebook and a website overflowing with glowing reviews.

And, Campbell adds, if people don’t want a Hannah pet, they don’t have to get one.

“A lot of people feel threatened by anything new,” he says. “If you just create a business that does what every other organization does, you’re probably going to get the same results.” 

 
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