Wellness Follow-ups Could Add $350M To Veterinary Coffers, AAHA Reports

Posted: March 14, 2013, 7:00 p.m. EST


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The average U.S. veterinary hospital is leaving $40,000 annually on the table in preventative care revenue by simply not booking follow-up visits when owners and their pets initially come in, the American Animal Hospital Association reported today in Phoenix.

The State of the Industry report is given annually at the AAHA Annual Conference and is based on data from earlier surveys and interviews conducted by the Lakewood, Colo.-based association and Westbrook, Maine-based Idexx Laboratories Inc., a purveyor of diagnostic technology and service.

The joint study looked at veterinary hospitals that demonstrated year-over-year revenue growth for 2011-2012 of more than 10 percent, termed “Growers,” and those that showed declining revenue, called “Decliners,” to identify the key reasons for their reversals of fortune.

One of the key growth factors for veterinary hospitals, as identified by AAHA and Idexx analysts, is how well they drive regular preventative care visits, called “forward booking,” which simply means being proactive and scheduling a pet's next wellness check prior to checkout.

AAHA used the human dental industry, which has a forward-booking rate of 80 percent, as the gold standard. By comparison, preventative care visits being forward booked in veterinary medicine currently stand at a paltry 5 percent or less, AAHA noted.

In fact, if veterinary medicine could increase forward booking from 5 to 10 percent, it would mean $350 million in additional preventative care revenue for the veterinary profession overall, according to AAHA and Idexx analysis.

When forward booking is used in concert with automated client communication and reminders, the total in potential preventative care revenue balloons to $450 million, says AAHA. Revenue increases even more—to nearly $1 billion—when preventative care visits are combined with add-ons, such as dental cleaning.

Growers Versus Decliners

Data in the State of the Industry address showed an average 2011-2012 growth in veterinary hospital revenue of 5.6 percent across veterinary medicine. Of the total hospitals surveyed, about 25 percent bettered their revenue from the prior year by 10 percent or more.

AAHA and Idexx discovered that the single-most important factor separating “Growers” from “Decliners” was how focused they were on their clients.

“It is clear from the data that the first key to growth is focusing on...client relationships,” said Michael Cavanaugh, DVM, DABVP, executive director and CEO of AAHA.

Whether a veterinary clinic grew or not last year came down to how it answered this question: “What do you believe is most important for determining whether or not your hospital grows?”

The top responses from “Growers” all focused on clients, including building the hospital's reputation through referrals as well as the importance of good communication between hospital staff and the client, AAHA noted.

On the other hand, AAHA reported that top responses by “Decliners” focused on things like breadth of medical services and the state of the economy.

“These findings make sense—it is the client that makes the decision to bring the pet in, it is the client that has to pay the bill and it is the client that has to comply with the [veterinarian's] recommendations,” Cavanaugh said.

“What's most important for growth is the ability of the veterinary team to communicate the value of the services in language that the client can understand,” he added.

Veterinary Practice News blogger Phil Zeltzman, DVM, Dipl. ACVS, discusses client communication often. Click here to read his most recent entry on the subject.

Hospital size and location were not determining factors in whether a hospital's revenue grew or declined, according to AAHA and Idexx studies.

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