How To Stay Busy During Your Clinic’s Recess

The authors explain how to ensure a practice stays busy during the slow times.

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Children take recess from school; consumers are taking recess from spending. What will you do during your hospital’s recess?

Unlike our children, we do not have the options of jump-rope or kickball; instead, we must focus on hitting home runs with our clients and playing hide-and-seek with missing charges as a few ways to stay busy during our hospitals’ recess.

Practitioners, take comfort! Though five recessions have occurred since 1973, spending on veterinary care has remained constant or increased1.

Despite these observations, some practitioners have felt the effects of a recession. These veterinarians report that they have noticed a decline in client growth and client purchases within their practice or heard of the same from neighboring practices. Many believe recession effects tend to spread region by region, state by state and town by town.

For example, as a result of auto industry cutbacks and auto workers on strike, Michigan veterinarians report a financial decline in their practices, as many of their clients are/were auto industry employed:

• For example, Chrysler alone will terminate 8,500 to 10,000 hourly workers within 2007-086.
• Early-retirement and buyout packages have achieved 78 percent of that goal this year6.

On the other side of the playing field, some practitioners report that business is as strong as ever.

Consider the following Fleishman-Hillard International Communications Survey2 performed by a public relations firm that works with animal-care companies. The following are the survey results:

• Pet owners are more likely to decrease spending on luxury items and electronics, including groceries and household goods, rather than on care or supplies for their dogs and cats.
• If they did cut back, it would be on pet fashions, toys, and services of pet walkers, pet-sitters and groomers.

That sounds great, but what about the rest of your clientele? Veterinarians must not forget the importance of communication as it relates to consumer purchases within veterinary medicine.

It is important to always remember that the best communication leads to the best possible compliance from veterinary clients. Consider the following from a veterinary client survey in the Journal of the American Veterinary Medical Assn.4:

• Confusion, uncertainty and misunderstanding played a far greater role in noncompliance than cost.
• 30  percent of owners surveyed felt the recommended treatment was unnecessary.
• 19 percent of owners cited could not give a reason for not following a recommended plan.

Thus uncertainty and lack of perceived value are outweighing concerns about cost, and good communication has the potential to increase compliance to 40 percent of owners.

Still not convinced? Perhaps you are worried that your clients are too price-sensitive. Veterinarians can do things to help ease price sensitivity. Consider these suggestions from a client focus group study5 regarding pet owners’ perceptions and the monetary aspects of veterinary care:

  • Care of the animal should take precedence over monetary aspects.
  • Discussion of costs should be initiated upfront.
  • Costs of veterinary care should be placed in a meaningful context.
  • Client suspicion should be addressed.
  • Financial limitations of clients should be considered.

Understand that when money gets tight, clients question all financial relationships.

Therefore, practices must excel at customer service, keep offering their best medicine, and educate clients to help them make informed decisions.

Finally, do not forget to recommend financial alternatives such as third-party payment plans and pet insurance for future needs. In addition to focusing on the other team (your clients) during recess, practitioners should focus on their practice habits, too.

Veterinarians can reduce their practice expenses. Start by focusing on the three largest expense categories3 for a veterinary hospital:

• Drug and medical supplies
• Salary and bonuses for ancillary staff
• Salary and bonuses for non-owner veterinarians

In which of these areas can you reduce spending? If times are hard and your practice is truly experiencing the results of a negative recess, take an honest look at your financial books and make the appropriate cutbacks.

Importantly, play hide-and-go-seek with your hospital’s missed charges. Did you know that catching $50 a day of lost charges can lead to more than $12,500 a year in extra revenue?

Often, missed charges7 for outpatient visits include fecal exams, skin scrapings and blood collection. Items7 often missed for in-patient visits include in-patient exams, injection fees when multiple injections are provided and the use of fluid pumps.

To avoid this, make sure to clarify the hospital team’s expectations on charging for all services rendered. Consider having only one or two trained staff members enter charges for consistency and accountability.

By paralleling childhood recess with a nationwide economic recession, the authors do not suggest that a recession is, or can be, all fun and games. We merely want to stress the opportunities for strengthening a hospital if veterinarians choose to take advantage.

By improving the bond with clients, increasing client compliance, taking an honest look at reducing hospital expenses, and catching and minimizing missing charges, hospital revenue can remain steady or even grow. These recommendations are designed to strengthen a veterinary hospital until clients and veterinarians can have confidence in the economy once again.

Charlotte Lacroix, DVM, JD, is chief executive officer of Veterinary Business Advisors Inc. of Whitehouse Station, N.J. Melissa Austin is a member of the 2009 class of the University of Missouri, Columbia, College of Veterinary Medicine, and is an extern with Veterinary Business Advisors Inc.

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FOOTNOTES

1. Howard, Brendan, “Special Report-The R Word,” Veterinary Economics, April 2008, pages 30-40.

2. “Survey asks how pet owners will respond to an economic downturn,” JAVMA, Vol 232, No.5, News, March 1, 2008, page 671.

3. “Veterinary practice expenses and financial ratios, 2005”, JAVMA, Vol 232, No. 7, Vet Med Today: Facts and Figures, April 1, 2008, pages 998-999.

4. “Impact of the owner-pet and client-veterinarian bond on the care that pets receive” JAVMA, Vol 232, No. 4, February 15, 2008, pages 531-540.

5. “A focus group study of veterinarians’ and pet owners’ perceptions of the monetary aspects of veterinary care,” JAVMA, Vol 231, No. 10, November 15, 2007, pages 1510-1518..

6. http://www.detnews.com/apps/pbcs.dll/article?AID=/20080502/AUTO01/805020389, Viewed May 2, 2008.

7. Tumblin, Denise, “Giving Away a Fortune?”, Veterinary Economics, July 2005, http://www.vetecon.com/vetec/article/articleDetail.jsp?id=168325, viewed May 2, 2008.

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