Third-party Financing Can Help Clients Pay

It’s long been a tradition in the veterinary community to discount services for a sick or injured animal, especially when pet owners’ emotions are running high and pocketbooks are perceived to be low.

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It’s long been a tradition in the veterinary community to discount services for a sick or injured animal, especially when pet owners’ emotions are running high and pocketbooks are perceived to be low.

A recent survey by veterinary consultants Tracy Dowdy, CVPM, and Shelley Johnson, CVPM, finds that veterinarians are sacrificing substantial revenue that could be saved through promoting third-party financing, such as ChaseHealthAdvance client financing, and pet insurance options to their clients.

Dowdy is founder and managing director of MRG Consulting LLC in Dallas and Johnson is founder and owner of Company 42 LLC in Winchester, Va.

The two conducted a survey of members of the National Committee of Veterinary Economic Issues and the Veterinary Hospital Managers Association asking how veterinary hospitals give discounts for services. The query was divided into two parts: planned discounts and unplanned discounts.

Planned Vs. Unplanned

Planned discounts are part of the practice’s strategic marketing plan. Many practices offer predetermined reduced rates for seniors, employees, good neighbors, community partners, special promotions and other situations. Most practice management software programs even have built-in measurement tools to track these discounts.

Unplanned discounts are those that veterinarians or practice managers grant arbitrarily at the time of service. They are not written into the practice’s marketing plan, so no accommodation for revenue adjustment has been anticipated.

Such discounts are often made under emotional circumstances: a beloved animal needs expensive treatment and the owner is unable to pay the hospital’s full price at the time of service. Dowdy says emotions often influence these heat-of-the-moment decisions, which usually aren’t tracked in practice management software. Through research, Dowdy and Johnson found that while 95 percent of respondents offer planned discounts, about 78 percent also offer unplanned discounts.

“It is primarily these unplanned discounts that can undervalue the cost of services in the eyes of clients,” Dowdy says. “Veterinarians are losing revenue for services provided.”

“Practitioners need to think about encouraging pet owners to pursue third-party financing and pet insurance,” Johnson says. “Most owners are willing to pay for the care of their pet. The pet gets the needed treatment and the veterinarian is compensated fairly for services provided.”
Veterinarians often think they are increasing client loyalty, business reputation and compliance by reducing their prices in a client’s time of need, but, Dowdy says, practitioners aren’t realizing the actual cost of giving unplanned discounts.

“Without measurement tools in place, veterinarians are making much less money than they think,” she says.

“Unplanned discounts seem to be given throughout the industry,” Johnson notes. “Though veterinarians and staff are dedicated to animal health, we need to get hold of our emotions and operate within our own budgets.”

Both Dowdy and Johnson encourage the promotion of third-party financing plans offered by well-known companies such as ChaseHealthAdvance, headqartered in Wilmington, Del. For the most part, the plans offer a quick and easy application and approval process, no down payments, low interest rates and payments, extended payback plans and revolving credit.

Third-party financing prevents “costs from getting in the way of care for a pet,” Dowdy says.
“When they are making those payment decisions,” Johnson says, “many owners do appreciate knowing all their options. Most love their animals dearly and are willing to pay for the care of their pets. Third-party financing makes it easier for many to do so.”

Different Ways of Looking at It

Because most veterinarians enter the profession to help animals, it can be a challenge to get practice owners to change their way of thinking about discounted services, Dowdy says.
“Practice owners have to decide what kind of practice they want,” Johnson says.

“Do they want a high-tech, high-rent, high-employee, Ritz Carlton-type of hospital?” she asks. “If so, the client is going to have to pay for that service or the practice owner is going to suffer financially.”

“A lower-cost practice,” Dowdy says, “perhaps a satellite facility with lower rent and lower-cost care is usually more capable of giving the client more pricing options.”

“Do they want to be the not-for-profit animal hospital in the community or operate as a for-profit hospital?” Johnson asks. “The client has to cover the costs. It’s not fair to discount some clients and expect all others to pay full price. It cheapens the veterinarian’s value as a caretaker.”

Dowdy agrees. “It is better practice management to charge consistent yet fair prices to all clients for all services.”

“Keep in mind that discounting can devalue the entire team,” says Johnson. “Really, giving one client a better price than another for the same service goes against most veterinarians’ core values of honesty and integrity. And there is no documentation and measurement to show that deep discounts work when trying to increase revenue, compliance or reputation.”

“Only three percent of the pets in the country are covered by pet insurance,” Dowdy notes. “Veterinary professionals might consider encouraging their clients to buy pet insurance to help cover veterinary costs.”

She encourages veterinarians to discuss third-party financing and pet insurance with their colleagues, as well.

“Practitioners are missing out on more than money,” she says. “By providing clients with information about all their financing options, they can offer support, increase loyalty and compliance with point-of-sale decisions.”

Tough Times and Tight Budgets

If a practitioner wants to help clients in this tight economy, the consultants suggest discounting be replaced by across-the-board reduced rates or rebates.

“That way, individual clients don’t get a deep discount that others don’t,” Johnson says. “And veterinarians don’t devalue themselves or their team. Costs for services become more equitable for both parties.

“Remember, as a practice owner, you have to cover all of your overhead and expenses, your HR costs and all operational costs. When you don’t charge enough, eventually the clients, the practice owner and the staff all suffer.

“Strategic pricing is important,” she says. “Discounts need to be tagged to a marketing plan. With the combination of planned discounts and the availability of third-party financing and pet insurance, you don’t have to give away veterinary care.”

“Before X-raying the pocketbook of the client and determining they can’t afford the recommended treatment care plan,” Dowdy says, “encourage them to explore third-party financing and pet insurance. Don’t give away your service first.”

The consultants also found that most practice managers are also responsible for keeping an eye on accounts receivable, which are not going to be consistent if unplanned discounts are not documented in the practice management software system.

“Keeping full and fair prices for services rendered by using third party financing and pet insurance helps practices better manage revenue and keeps veterinary hospitals from carrying pet-care financing for their clients who can’t pay the entire invoice at the time of service,” Dowdy says.

“Veterinarians are not in the banking business,” Johnson notes. “And most practices aren’t large enough to have the infrastructure to be in the financing business. Third-party financing and pet insurance give them a better way of managing their costs and revenues.”

This Education Series article is underwritten by ChaseHealthAdvance financing options of Wilmington, Del.

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