A new couple turned up recently at Highland Animal Clinic in Mount Vernon, Wash., distraught about their 10-year-old dog. Roscoe had grown weak and emaciated, but another clinic had needed $500 upfront to start tests and hospitalize the animal–and the young family couldn’t scrape it together until payday, nine days away.
Practice manager Jennifer Schubeck and her staff didn’t want the family to wait that long. They set the clients up on a payment plan, using their own in-house service set up through ExtendCredit.com, so treatment could start immediately.
"Apparently, the dog had saved the life of one of the children in the family years ago, so they wanted to do whatever they could for him,” Schubeck said. "Ultimately, we weren’t able to save him, but the family was extremely grateful and has since transferred their other three pets to us, because we helped them in their time of need.”
For many veterinary practices, offering financing options, including payment plans and installment-pay preventive health care plans, is not only a way to save animals and help clients. It’s a smart business decision that can also increase revenue and build client loyalty.
"We all know that money is an issue for many clients, and even though the recession is officially over, it’s still a challenging time for many individuals and for many practices,” said Karen Felsted, DVM, MS, CPA, who provides financial and operational consulting to veterinary practices.
"I don’t think the issue of people being able to afford vet care is going to go away, so I think smart practices will provide their clients different payment options so they can afford to pay for the care their pet needs.”
Historically, many experts have cautioned against veterinary practices carrying too many client accounts.
But that sentiment has largely changed because of several factors, including the increasing cost and complexity of veterinary care; the difficulty many households experience in paying unexpectedly large veterinary bills; and the development of services that allow practices to more easily offer credit or installment plans without taking on all of the risk and labor themselves.
"Clients are requesting payment options and many practices prefer to accept a third-party financing program, in addition to other forms of tender, because it enables them to focus on delivering care and provides resources to help clients more easily fit the cost of pet treatment into their budget,” said Cindy Hearn, vice president of branding and communications with CareCredit, which offers third-party credit programs. It is based in Costa Mesa, Calif.
Such financing can also save animal lives.
"The goal for the combination of wellness and in-house financing plans is to help prevent economic euthanasia, where the client is facing a big bill that they cannot pay, so they decide to euthanize instead of treat,” said Bob Richardson, CEO of ExtendCredit.com of Aliso Viejo, Calif., which offers in-house financing and wellness plans.
Providing additional financing options can also offer a competitive edge.
For instance, about 70 percent of all U.S. animal hospitals accept CareCredit, Hearn said. A much smaller number–from nine percent to 20 percent, depending on the study cited–offer preventive care plans of any type, Felsted estimated. However, many veterinarians, as many as half in one recent study, are considering adding such plans, Felsted said.
To expand their financial offerings to clients, clinic managers and veterinarians should look carefully at their business model and their clients’ needs, Felsted said.
Clinics that perform a lot of emergency surgeries or provide cancer care may want to start by adding a third-party or in-house credit plan to provide clients easier access to financing for unexpected costs. Such plans can be added with a minimum of administrative and marketing cost.
Still, choosing the right provider is key, Felsted added.
"I think everybody just jumps to price–’What are they going to charge me?’" Felsted said. "But in my mind, you also want to look at things like, how does the company work, do they have a good reputation, do they offer training and support, how are they going to help me implement this service into my practice?”
These factors are also important when choosing to introduce a preventive care plan, said Carol McConnell, DVM, MBA, chief veterinary medical officer for VPI Pet Insurance of Brea, Calif., which launched its preventive care plan, PAWS, this year.
Preventive care plans allow practices to bundle a year’s worth of care, including vaccinations and well-pet exams, into one yearly price. Typically, the practice will charge an enrollment fee and spread the rest of the cost over monthly payments. Some plans allow for customization; for instance, dental services can be incorporated into the plan or offered as an optional add-on.
These plans have clear benefits, including increasing the likelihood the pet will receive needed care and improving client retention, McConnell said. But they also present challenges, including managing cash flow and training the staff to administer the plans.
"It really is a paradigm shift for veterinarians,” McConnell said.
"Instead of collecting $200 [for a yearly exam and shots], they’re only going to collect $60 at the time of service. … It’s scary at first. That's why it's important for practice owners to research preventive care plan administration options. A full-service program can include cash flow impact analysis and staff training.”
To prevent cash flow problems, Richardson suggests that clinics structure payment terms carefully. For instance, rather than spreading payments over a year, clinics might consider three- or six-month terms.
"You don’t want to get too far ahead with services provided vs. money collected,” he said. "For wellness plans that have a lot of front-loaded services, we would encourage a clinic to create a six-month payment plan, while allowing services to be delivered over the whole year, so that the (animal) gets the needed care, but the clinic also gets its money a little faster.”
"Make sure everybody in the practice knows how to talk about [the plan], and think about how you are going to introduce it to your clients,” Felsted suggested.
"It makes sense to start talking to clients when they first bring those puppies in, so they understand they have some payment options. You want to educate your clients early on. You don’t want to wait until they are in your clinic with an emergency.”
Practice manager Schubeck, whose practice has offered in-house credit for three years, followed that model when her practice began offering wellness plans last year. Her staff first offered them to clients bringing in puppies and kittens, a natural transition because they were used to recommending a series of vaccinations and procedures for young pets, she said.
From there, they began offering plans for all pets under seven years of age, and then finally added a senior plan.
"If you bite it off one client group at a time, it’s easier for the staff to manage,” said Schubeck, who estimates about 20 clients per month start a wellness plan or utilize in-house credit.
"As a practice manager, I’m watching every dollar. Offering [financing options] really reduces my stress because I know those clients are not out there looking around to save $5, they’re loyal to us.”