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Can an HMO Help You Achieve Professional Bliss?

An in-house health plan can benefit practice, client and patient.

By Phil Zeltzman, DVM, Dipl. ACVS
For Veterinary Practice News

Posted: Jan. 6, 2012, 12:30 p.m. EST

Vet health care plan
While many veterinarians are struggling to make pet care affordable through third-party payment, compromise, pet insurance and—let’s face it—discounts, designing an in-house health maintenance organization is the natural progression of this thought process, says Louise Dunn, a practice consultant at Snowgoose Veterinary Management Consulting in Greensboro, N.C.

An HMO is fair to the practice as well as the client, and it enables pets to receive the best possible preventive care year round. Some corporate practices, as well as some private clinics, have already embraced the idea.

Although HMOs tend to have a bad reputation in human medicine, the concept in veterinary medicine is very different. The plan is set up and managed entirely by the clinic, not by a health insurance plan. Plan components are chosen by the clinic, not by a distant, faceless administrator. The fees are chosen by the clinic, not dictated to please shareholders.

When you are ready to start the process, consider these seven steps:

  • Sit down with a few key team members to brainstorm about the opportunity and weigh the pros and the cons.
  • Design different plans, offering an increasing number of services and products as the level (and fee) increases.
  • Find a name for your plan and its different components: 1-2-3, or A-B-C, or gold-silver-bronze, or good-better-best. Or have fun and come up with truly creative names.
  • Present the plans to your entire team and make sure everybody is comfortable with the concept and recommending it to clients.
  • Promote the plans.
  • Tweak the plans as needed.
  • Track your progress and return on investment.

It is important to track the income generated by your health–care plan so you can actually measure the benefits to the practice. After six months or a year, you can decide if it’s worth continuing the plans by answering the following questions:

  • Has the program been successful based on financial criteria?
  • Has the program been successful based on medical criteria?
  • Are clients happy with the plans?
  • Are pets healthier thanks to the plans?
  • What can you do to make the plans even better?

The idea is to offer three broad categories, for pediatric, adult and senior pets. If you only offer two options (A and B) for each age group, clients typically will choose the cheaper one, Dunn has noticed. 
If you offer three options (A, B and C), most clients will choose the middle-of-the-road option, which is often the best compromise for everybody—patient, owner and clinic. And of course, you can offer these plans for cats and for dogs, with a slight variation adapted to each species.

A Sample Plan
Below are a few sample programs. Louise Dunn suggests you also refer to the AAHA standard of wellness care that will be available soon. There are merely suggestions, and so are the prices indicated. Plans and fees should be tailored to your practice and locale.

Pediatric Health-care Plan
Level 1 Exam, vaccines, fecal, deworming, nail trim $11.50/month
Level 2 All of the above
+ heartworm test (dogs)
or FIV/FeLV test (cats)
$15.50/month
Level 3 All of the above
+ year supply of anti-parasitic meds
$22.50/month

Adult Health-care Plan
Level 1 Exam, vaccines, fecal, deworming, nail trim,
heartworm test (dogs)
or FIV/FeLV test (cats)
$12.50/month
Level 2 All of the above
+ CBC-chem
$16.50/month
Level 3 All of the above
+ additional lab work
+ dental prophy
$41.50/month

Senior Health-care Plan
Level 1 Exam, vaccines, fecal, deworming, nail trim,
heartworm test & intraocular pressure (dogs)
or FIV/FeLV test & blood pressure (cats)
$17.50/month
Level 2 All of the above
+ CBC-chem
$21.75/month
Level 3 All of the above
+ additional lab work
+ dental prophy
$48.75/month
Examples courtesy of Louise Dunn

Which services should you include?

Dunn suggests a combination of physical exams, blood work (including heartworm or virus screenings), urinalysis, elective surgeries, dental prophylaxis, fecal exams and vaccines. As patients age, you can include more specific tests: intraocular pressure, blood pressure, ECG, survey radiographs or even survey ultrasound.

Although you can add any perks you wish, such as a discount on therapeutic pet food or specific anti-parasitic drugs, it is important to keep the plans simple. Your success depends on your entire team: Everyone needs to understand the offers, buy into them and feel comfortable promoting them.
 
In order to make owners aware that you offer a new health–care plan, you can use any or all of your current means of communication: in-house marketing, snail mail, newsletter, email, clinic website, Facebook, Twitter, etc.

Some clinics manage the financial aspect of their HMOs themselves, i.e., they automatically charge clients’ accounts each month. Others prefer to outsource the billing to a third party, in exchange for a small fee, Dunn explains. 

She notes that the major disadvantage of such companies is that they are required by law to stop charging a client if the client so desires. This becomes an issue when a client takes advantage of your services and cancels after a few months.
 
If you manage the plan yourself, you can stipulate that a client may cancel at any time, but still owes the balance for the rest of the year. The specific conditions of the plan are explained in a contract that pet owners sign when they enroll. Clearly, this could all be tied in to a third-party payment company.

Either way, this system enables the clinic to receive a steady stream of income, say on the first of the month, regardless of how business is going. There are many other benefits to the clinic: healthier patients through preventive medicine; increased number of client visits per year; more opportunities to bond with clients and educate them; increased client loyalty; better client flow, because you can schedule these appointments during the slower times; and ultimately, happier clients. 

You could even schedule drop-off appointments, which helps you organize your day and adds convenience for the client. When the patient is ready to go home, you can meet with the client, go over your findings and increase your chances of bonding and educating.

Dunn has helped practices set up HMO programs that have substantially increased patient health and practice income. She says practices that offer HMO plans have more consistent standards of care by embracing the “every patient, every client, every record, every time” concept.

There are also some obvious benefits for the client and the patient.
 
Clients get a great financial deal. Costs are spread out. Managed care is technically not discounted care. Rather, the clinic passes along savings to the clients by bundling services and sometimes products. As in many other industries, bundling enables savings.
 
Once they pay a reasonable monthly fee, pet owners don’t have the mental block about the cost of an office visit that seems to prevent so many from taking their pet to the vet.
 
And of course, pets receive better care, mostly in the form of preventive care, throughout the year. In turn, dealing with problems early improves the patient’s quality of life and helps the client’s finances.
Why would an HMO plan be good for pets when humans routinely complain about their own HMOs? 

Simply because even though the name is similar, the concept is completely different. Of course, there is no need for a network of providers (unless you own several clinics).  There is no involvement from an insurance company, although clients could still be reimbursed for part of their expenses should they opt for pet insurance.

If you don’t like the name HMO, or if you are concerned about the negative connotation, then be creative and find another name that suits you. Call it managed care, or a wellness plan, or a health-care plan, Dunn says. 

Offering an HMO option helps your clients provide you the opportunity to give the best care possible. Managed care, as long as it is controlled by the clinic, seems like a win-win-win situation: It benefits the practice, the client and the patient.

Dr. Zeltzman is a mobile, board-certified surgeon near Allentown, Pa. His website is DrPhilZeltzman.com.

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Can an HMO Help You Achieve Professional Bliss?

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Reader Comments
These plans are not good for veterinary medicine. We are not insurance providers and should not offer programs that appear to be pet insurance. Even if we call them health plans this puts our profession on the same level as fitness centers and karate studios. If we really wanted to do something for our clients we would recommend they invest the same amount of money in an actual pet health insurance plan that would be portable and could be used at our facility as well as at the emergency clinic or referral center. These plans are self-centered, and the goal is to lock the client into something they cannot get out of.
Kenneth, Temecula, CA
Posted: 1/28/2012 9:24:36 AM
We have been using just such a plan for the last eight years. There are big advantages and some real disadvantages. The most difficult challenges are keeping the ever changing staff motivated to promote the plan and seperating the in house plan from an insurance in the clients mind.
Carlos, Fort Worth, TX
Posted: 1/28/2012 9:13:19 AM
Well thought out article, and it is a solution that might be worth the time and energy to increase the bottom line. Having been in human health care for over 13 years and now a veterinarian I think the article has missed the root of the problem. We as veterinarians and practice owners are responsible for client education not only about disease processes, but preventative medicine. The one area I think we all need to improve on and not be afraid to talk to our clients about is MONEY. We need to look at our prices and tell our new puppy and kitten owners and not only tell them they need flea prevention, heartworm prevention, good diet, etc, but we need to tell them how much it is going to cost every year. Most folks don't know that they need to budget $X.XX every month for routine health care and add $X.XX every month in case of an emergency. They just don't think about and plan for the future.
I tell my clients that don't want to spay their bitches that they need to have $1,000-2,500 in the bank in the case of an emergency c-section and/or parvo treatment and vaccinations for the puppies. They soon elect to spay them. I ask folks that don't want to use heartworm medication because it is too expensive if they could miss eating out a meal or two every month, it's the same cost as the prevention.
James, Flint, TX
Posted: 1/27/2012 11:38:39 AM
dEAR ADMINISTRATOR,
tHIS IS WONDERFULL IDEA THAT HAS BEEN ON MANY VETERINARIANS MINDS, HOWEVER,,,WE LACK NOT ONLY THE TRAINED NURSES AND MANAGERS,BUT ALSO THE VETERINARIANS THAT WANTS TO STAY IN THE PROFESSION,,,
I MAY GO FOR THE SAME IDEA BUT WITH A SMALL TWEEK,THAT IS GO MOBILE,,,,
THANK YOU
MUSTAFA, DAVIE, FL
Posted: 1/13/2012 6:13:33 PM
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