Are We Being Fair In What We Charge?

Are pet owners being fairly charged by veterinarians with each visit?

Late one night, one of my patients weaseled out of her E-collar and licked her spay incision until it was raw but thankfully not yet dehisced. Alarmed and too far away to bring her in, the owner sent a picture of the site via text. To be safe, I suggested that she might want to see her local ER doc.

She took my advice and went to the ER, whereupon, $700 later, ground zero was declared acceptably cleansed and a neat new row of staples applied.

The bill included preanesthetic lab work, anesthetics, antibiotics and a surgical fee. But $700 worth of it?

Now, it’s true there will always be financial tensions between after-hours facilities and referring veterinarians. I once ran an ER facility, so I should know. And while I never would have risked dissing a referring vet by racking up a big bill on one of their post-op cases, I accept that steep invoices are common in emergency medicine.

But $700 for uncomplicated wound care?

Business Theory

In case you think me overly partisan in this case, I’ll posit that intervet politics are beside the point. As is the issue of what kind of premium an after-hours facility deserves. Rather, at stake here is the larger issue of whether our profession in general is treating our clients fairly when it comes to what we charge.

In business school, our marketing professors were always plainspoken on the subject of pricing. The ideal price point on any good or service, they pointedly explained, always comes down to what the market will bear. In other words, the price of our services should be as high as your clients are willing to pay, but not so high that they’ll seek out our competitors—or worse, forgo care entirely.

Our profession’s practice management gurus think similarly: “Price is a signal of quality. You’re worth only as much as you truly believe you are.” And other stuff they probably sell on cheaply framed inspirational posters. Indeed, they’ll often go so far as to berate veterinarians for an en-masse case of low self-esteem.

Yet here’s where I’ll come to the defense of those who don’t charge as much as they know their clients will pay on any given day. The issue’s seldom so cut and dry. Exceptions abound and caveats are commonplace when it comes to pricing strategies.

Consider the ’90s and the turn of the millennium, when pet owners apparently would pay for anything and would demand increasingly sophisticated services of behalf of their pets. On the advice of the experts and the impulse to provide higher quality care (along with higher profit margins on such), we quickly responded in kind, migrating toward more expensive inventory (a pricier, expanded selection of drugs and products) and fancy infrastructure (upgraded hospitals and high-tech equipment).

Meanwhile, higher student loan indebtedness, fierce online competition on drugs and products, the rise of specialty medicine, and the emerging fear of legal liability, among other factors, led to correspondingly higher service fees.

Along came 2008, and what had once been dubbed the Golden Age of companion animal veterinary medicine started looking more like the perfect storm for loan defaults, higher unemployment (particularly among new grads) and—what with all those equipment leases and hospital overhaul loan payments—even bankruptcy.

What’s worse was that we were (and still are) little able to afford to cut prices, even as we recognized that many of our clients could no longer afford care for their pets. I mean, how can I charge any less for an X-ray when I have tens of thousands of dollars worth of radiology equipment to repay?

Still, that’s cold comfort for the owner of a recent paraphimosis patient. After a couple of days of ill-advisedly avoiding the ER out of cost concerns, this now-necrotic penis was no longer viable. It was time to either see a boarded surgeon or euthanize. Intermediate solutions were offered, but anything beyond $500 was not happening.

Pet vs. Human Family

We all have extreme cases like these: The perfed pyo, the botched “low-cost” cruciate, the DOA blocked cat. But these are just the tip of the iceberg. They’re a mere sliver of the huge underwater mass of pet owners who, credit card in hand, have to ask themselves just how much they love their pets.

While thrilled by the advances in veterinary medicine, these people think they would spend anything to save a pet, but when faced with a choice between the mortgage and their beloved family pet, reality has a way of kicking in real fast. They’re willing to pay, but they have only so much they can realistically afford before the human family suffers significantly as a result.

An April article on The New York Times’ front page (“New Treatments to Save a Pet, but Questions About the Costs”) addressed this issue. Though it concentrated on the most extreme expenses for bleeding-edge therapies in tertiary care settings, it incited a cacophony of chatter on the newspaper’s online edition and ultimately led to a series of commentaries addressing the underlying issue: “Is it ethical to spend $25,000 at the vet?”

Whether it’s ethical to spend your money on an animal may not sound relevant to the question of how we price our services, but I believe it’s actually at the root of how we need to approach the issue of pricing as a community.

Human vs. Animal Medicine

“Profit” may not be a dirty word in human medicine, but that’s only because of the extreme insulation physicians enjoy due to the third-party payment system and, by extension, of the perceived free access to care. Patients may not know how much their doctors get paid, but they know they won’t get turned away at a big-city ER.

In companion animal medicine, however, the insulation usually only goes so far as the front desk. Beyond that, it’s up to us to help solve our patients’ problems in a way that’s as humane to the people as it is to the pets. Otherwise, this human animal-bond thing is just something we pay lip service to when it serves our financial interests.

The systemic changes we’ve made to veterinary medicine as a result of the optimism and extravagance of decades past have hemmed us in when it comes to pricing. This I respect and accept as a tremendous obstacle. Nonetheless, we do have an obligation to think more deeply about pricing as a moral and ethical issue and, ultimately, as a major stealth public relations concern.

I have no answers other than to offer that the morality and ethics of pricing must be on our collective radar as a formidable threat to our profession’s reputation. The New York Times’ April-long conversation is evidence enough of this looming threat.

Moreover, if we continue to blindly heed the call of those who make a living advising us on how we make our money, we’ll be engaging in more of the same short-sighted thinking that got us into this mess in the first place. 

Dr. Khuly is a mixed-animal practitioner in Miami and a passionate blogger at Vetstreet.com. She earned her veterinary degree in 1995 and her MBA from Wharton in 1997.

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