Do you want your fees controlled by the government?

"PET owners are being hit with dramatically different vet bills for the same procedures.”

This major metropolitan newspaper article begins with:"PET owners are being hit with dramatically different vet bills for the same procedures.” and mentions “regulation”, “regulated”, and “unregulated”  four times in the first few paragraphs.  

If you were one of the newspaper’s readers, would you jump to the conclusion that the government should step in and regulate veterinary fees? How about if they threw in some nice government subsidies to help:

“Government subsidies might have curbed the cost of human medical advances, but pet owners have been left struggling to foot spiraling vet bills.”

The veterinary response was to:

Blame advanced technology:

"attributed rising costs to advancements such as the rise in MRIs, CAT scans and chemotherapy for animals."

And the advent of specialty clinics:

“Animal specialists now exist for dozens of conditions, with vet surgeries able to refer pet owners to specialists in cancer, dermatology, internal medicine, diagnostic imaging and a range of other fields.”

But look at the fees the clients were complaining about:

• Vaccination
• Desexing, and
• Caesareans.

"Shop around!!! I did a phone call regarding immunisation for my cat. The difference in prices with the 7 vets I phoned was up to $70! You can't blame that on technology, immunisation is basic care."

Honestly, since when does a vaccination require a specialist? How often have you used a MRI, CAT scan, or chemotherapy to administer a vaccination or castrate a dog?

The clients have a legitimate question

Why are they being charged different amounts for what appears to be a similar service? It needs to be answered or the slippery slide to government regulation and control of fees will begin. Babbling on about technology and specialists is an ineffective diversion that only creates more confusion.

The veterinary response

Several veterinarians responded to the article with two main themes:

Don’t have a pet if you do not want to pay the fees.

"Pets are a luxury item...don't like vet bills...get a different hobby....I hear boats are pretty cheap:)"

"Pet ownership is a choice, like choosing private education for your kids."

"If you can't look after a pet properly, or can't budget for health costs then DON'T HAVE ONE."

Is this really the best response? Do you really want less pets in society? Pets ultimately use the services that generate the fees that pay your salary? If you were a client of another business and you questioned the bill – how would you feel if you got that response. Imagine paying to get a flat tire repaired, you question the bill, and the repairman says – well don’t drive your car. How would you feel?

(The response from other pet owners discussed below was to get pet insurance. It is constructive suggestion on how to help manage high costs that pop up unexpectedly and it is much more caring and less insulting then saying"don't have a pet")

The client does not understand what we are doing or why it costs so much.

"A cat desexing can vary enormously in cost to the clinic depending on the quality of suture material used, the aneasthetic gas used, pain relief used etc. Please compare apples with apples, not apples with oranges."

"Every business has different operating expenses and different standards of care. The last "Discount Vet" in Brisbane was shut down, due to dodgy work practices and using cheap materials = dead patients."

This group of responses have clearly identified the problem. Well done! Now we need to find the solution.

The response from other pet owners - Get Pet Insurance

"health issues can be managed with pet insurance"


"Pet insurance is the only way to go. Both of my 12 year old Weimaraners passed away last year. The vet bills leading up to this were horrific. I am talking mega thousands. I wouldn't consider a new puppy without pet insurance. And yes, we notice the cost because human medical care is either Govt subsidised or covered by our private insurance."


"I took out pet insurance. I would like to think that if anything big happened to him I would like to be able to afford to treat him for it, and the insurance covers upto $8000 per condition, per year."


"Get pet insurance. People are spending more on their pets. Many years ago, it was simply unheard of for a dog or cat to have chemo, surgery, hospitalization and c-section."


"I now see the need for pet insurance!"

What is interesting about these suggestions from pet owners is that:

• they seem very happy with pet insurance and are prepared to pay for it
• they have seperated the routine wellness costs that are generally managable from the much more expensive sick/critical care
• with pet insurance they are less worried about the veterinarians fee and more concerned that their pet is cared for properly.

My take away from this is there will be much less dispute about fees if:

• veterinary clinics correctly allocate their costs between routine wellness services versus sick/critical services
• veterinary clinics do a better job explaining the value of the services they have delivered and why they are important, and
• veterinary clinics help their clients manage unexpected veterinary bills by recommending they have appropriate pet insurance.

So lets get to the crux of the question.

Question: Why are there such huge differences in the fees for what the client perceives to be the same service?

Answer: Because the services are not the same

Action: Make sure your invoice clearly describes the value you are delivering when they visit your clinic.

Background: Over the past two years, RxWorks has been introducing Performance Pack to its clients on four continents around the world.

Performance Pack

Performance Pack has two key objectives:

• To help you determine a fair fee to charge your clients based on your costs to deliver the service, and
• To help you explain the value of the service you are delivering.

We can definitely attest to the fact that the majority of veterinarians we work with will go out of their way to make sure they do not overcharge their clients. They are much more likely to forget to charge for something or to be providing a service at far below its true costs. These missed charges and under charges mean the veterinary clinic cannot afford to pay their staff the same as other professions with similar qualifications. The responses to the articles had numerous vets complaining about their income as proof of this.

When we started showing clients Performance Pack, we were often shocked at the difference in what was being charged for services with the same or similar names. Take vaccinations for example – some clinics include a physical exam in the cost of the vaccination but do not mention it. Clearly that would cost more than a fee for a vaccination where the physical exam is charged separately. But to a Pet Owner – both fees are called Vaccination and the amounts are very different.

Take another example. Spaying a dog is a major piece of surgery, but for population control reasons many clinics heavily subsidize the fee they charge for a spay. They do not break out the true costs and show the discount the client has received as a professional courtesy – so the client does not realize how costly a spay really is.

Then the client comes in for a minor surgical procedure and is charged a much higher fee. The client rightly says – this does not compute. This is much less significant surgery then the spay, why am I being charged so much more? The reason is that the clinic has not properly described the services they have provided and the value of those services.  

Most of the veterinarians we know are unbelievably fair in the amounts they charge their clients – they are just really poor at communicating what they have actually done on their invoice. If your clinic is in this situation, then give your RxWorks Practice Advisor a call and they can show you through Performance Pack.

This is really a win win situation. You may be surprised to discover a lot of your clients are much more willing to pay your fees if they understand what was done, why, and the value of the service provided. Even though they may be paying more – they may be happier because they know they are getting good value for their money. Everybody likes to know they are getting good value. That extra money will let the veterinary clinic pay their staff salaries more comparable with other careers.

Call your RxWorks Practice Advisor if you would like to see some examples of how well the invoices generated with Performance PAck explain the services you are delivering.

Performance Pack will also help you calculate the cost of the services you deliver from the ground up, so you can ensure that you are not over charging your clients.

Question: Why is this article talking about MRIs, CAT scans, and chemotherapy – when the client is complaining about the cost of vaccinations and desexing? These have nothing to do with each other.

Answer: The client is right – the cost of one should not affect the price of the other.

Action: Make sure you are not using your wellness procedures (like vaccinations and desexing) to cross subsidize expensive diagnostic equipment. Make sure you are recomending pet insurance to your clients as a tool to manage unexpected sick/critical care.

Background: When calculating the cost of your fees, Performance Pack allows you to allocate costs to specific services or as a general overhead applied to all services. Electricity might be a general overhead that you allocate across all services including vaccinations. MRIs, CAT scans, and digital x-rays are example of costs that you allocate to the specific services that use them – you definitely do not want to allocate those costs to vaccinations.

Why?

Two reasons:

• Fairness – why should a client wanting a vaccination pay for an MRI? and
• Competitive Advantage. If you over load your wellness procedures like vaccinations with unrelated costs, you risk pricing yourself out of the market. You make your clinic particularly susceptible to competition from vaccination clinics.

Performance Pack helps you determine the effect a new piece of imaging or diagnostic equipment would have on the fee you charge for services that use that equipment. You can then decide if that is economically viable or are you better off referring those patients that need that specialized equipment to a specialty practice? It helps prevent you putting yourself in the situation where you have purchased a piece of equipment that cannot be economically justified in your clinic and leaving yourself in the situation where you have to raise your other fees to make up for the mistake. Raising those other fees can compound the problem if it makes you uncompetitive and you lose clients.

This analysis may also help your clinic decide what services it should be providing in house and what services are referred to a specialty clinic. Economically both you and the client may be better off by making an appropriate referral. For example, to recoup the cost of the necessary equipment, you will need to charge more per digital x-ray if you are only doing 10 a week compared to a clinic doing 100 digital x-rays a week.

Far from being a villain, specialty clinics may turn out to be part of the solution in reducing overall costs. And if the client has pet insurance, they will be able to afford it.

Question: Would government regulation make veterinary services cheaper

Answer: No. There is ample evidence around the world that it is the unregulated and unsubsidized human medical services like cosmetic surgery and Lasik eye surgery that are dropping in price while other more regulated medical costs are increasing rapidly.

Action: Communicate the value of your service better.

One last point for veterinarians who feel they are underpaid. Communication may seem relatively unimportant compared to medical science – but other countries have found it is essential to having happier clients and earning more.

At the start of the last decade in the USA, the earnings of veterinarians versus other professions had been falling for several years and they were having problems attracting good people to the profession. A number of studies were conducted to find out why earnings were so low and what could be done about it. As a result of those studies, a number of initiatives were launched to help veterinarians communicate better with their clients. As those initiatives took effect, veterinarian earnings started rising compared to other professions. So if you want to earn more – communicate better. And yes, it is a learned skill that you will need to focus on as you did with your medical studies.  

This segment appeared on television shortly after the newspaper article referenced above.

Bookmarks