Revenue growth for VHMA practices in February 2023 remained at pre-pandemic rates (6.0%), with the average 12-month growth at 5.8%. February revenue growth for non-VHMA practices was higher than for VHMA practices (7.2%), although the 12-month average for non-VHMA practices was lower (5.1%). The number of workdays in February 2023 and 2022 was the same. Patient visit numbers continue to decline (-0.9% for both VHMA and non-VHMA practices in February 2023 and -1.6% (VHMA)/-1.7% (non-VHMA) over the last twelve months. The number of active patients declined in February 2023 with a corresponding increase in lapsing patients—could this be due to the inflation issues all consumers are dealing with?
New client numbers continue to decline (-9.3% for all practices), although at a lower rate in February 2023 than previously. As noted in previous months, most of the data captured here are from “traditional” veterinary hospital models; it does not include data from alternate care models such as mobile vaccine clinics, pop-up clinics seen in pet stores or other retail locations, and the newer de novo practice types. We don’t know if the decline seen here is across all practice types or if there is some movement of pet owners from more traditional to alternate care providers of veterinary services.
The economy continues to send mixed signals; as I write this (Friday, 3/10/23), we saw both a strong jobs report and the closing of a bank in CA which sent the stock market spiraling downward. It’s tough to know where the economy is going. Inflation continues to be a challenge that many practices struggle with, which is exacerbated by the difficulty in finding employees, driving the cost of compensation packages upwards.
In January of this year, I did a webinar for VHMA called “Maintaining Your Profitability During the Times of Inflation”—it’s available on-demand. I thought I’d summarize some of the key points discussed during the session here as well.
One of the first actions practices think of during times of significant inflation is to increase practice fees more than they normally would, and we can see that has happened in many practices. The graphs below show reported fee increases from the VHMA Insiders’ Insights reports through 2022 (2023 info will be available soon!)
And while this is certainly one of the easiest options to maintain profits, pet owners continue to be concerned about the cost of veterinary care and some are making choices to reduce or delay the care they provide, not just because of the cost of veterinary care but because of overall price increases and the related impact on their household budgets.
So, what else can practices do to maintain or improve profits outside of large fee increases? Other pricing alternatives can be very effective such as setting prices at a level that increases volume, revenue, and profits and the use of strategies such as Good-Better-Best Pricing. The VHMA has many resources addressing pricing strategies—see here to access: https://www.vhma.org/resources/value-basedstrategicpricing
Making clients more aware of the alternative payment options offered by the practice can also make it much easier for the pet owner to provide the desired care and improve profits. “Alternative payment options” can include third-party payment plans such as CareCredit, pet insurance, and pay-by-month care plans. Virtually every practice offers some of these alternatives, but a surprising number of pet owners either aren’t aware of these options or don’t use them. Sometimes they don’t use them due to personal choice, but sometimes the lack of awareness and understanding leads to non-usage.
The first step is to educate clients about the need for payment alternatives. There is no point in talking to clients about these choices if they can’t see why it’s important. Interesting clients in payment alternatives means talking to them about the need for future veterinary care—both preventive care and care when the pet becomes ill or injured. Talking to clients about money can be awkward, particularly when we seem to be saying, “save some money to spend with us!” And yet, we are doing clients a disservice if we don’t help them understand how they can best plan to take care of their furry family members. The Partners for Healthy Pets (PHP) (www.partnersforhealthypets.com) has a great video entitled “Preparing the Client for Future Health Care Costs” that demonstrates how to have these kinds of conversations with clients—this can be used as a script template and in staff training. PHP has many other useful practice training tools as well, and all are available at no cost to the practice.
While practice owners don’t want either themselves or their staff to function as insurance salespeople or credit card vendors, those who work in practices already regularly recommend to clients products and services not carried in the practice. Examples include obedience training, pet daycare centers, groomers, pet sitters, and a wide variety of dietary and other products. Doctors and staff take the time to understand those products enough to be comfortable with the recommendations and help clients understand the options because they think they are of value to the client in taking better care of their pets. Why is it any different with financial products that allow clients to provide more comprehensive care? Not only do pets benefit from the improved care; veterinary practices benefit because clients who have the financial ability to pay for better care help us practice the kind of veterinary medicine we want to practice and improve the profitability of the practice.
In order to effectively recommend these payment options, veterinarians and their staff must, first of all, understand the products themselves. Recommendations to clients are most helpful when they include not only a general recommendation for a kind of product but a recommendation for a specific brand, along with the reasons why the practice thinks this product is the best one, and a company the practice has had a good experience with. This is no different from medical products; clients don’t just want to know that their pets should be on a heartworm preventative; they want to know which brand your practice recommends and why.
Remember, too, that words matter when talking to clients—comments such as the following aren’t going to encourage clients to consider your advice!
- “Here are some brochures about pet insurance to read at home when you have a chance”
- “You might want to think about this new wellness program we have”
- “You probably don’t want another credit card, but here’s some info on this veterinary one”
Other tips for successful communication include:
- Don’t just hand out brochures—talk to clients about options and the things they need to consider in making the best choice
- Incorporate factual information and stories on the website, in newsletters, and on social media
- Focus on 1-2 companies you are comfortable with and can recommend to pet owners
- Practice this communication in your team training meetings—The Partners for Healthy Pets (www.partnersforhealthypets.com) has some excellent videos that can be used as part of this educational process
The power of programs like these is that they make it more possible for clients to visit the practice and provide great care for their pets. As with any program that has costs associated with it, the strategy must increase traffic and the purchase of services; in addition to marketing the program effectively, the use of the program must be tracked over time to see if it actually increases revenue, profits, visits and the amount of care provided to patients.
Improving productivity and efficiency is another way to maintain or increase profits. In the past practices could solve many problems simply by hiring more people, but that just isn’t true anymore. Job candidates don’t exist in previous quantities, and there are changes in employee expectations regarding pay, work hours, and culture.
There are many areas practices can focus on to improve efficiency and productivity; some of these include:
Technology:
o Medical—diagnosis and treatment
o PIMS
o Medical records
o Inventory
o Accounting
o Management analysis
o Client communication
o Client education
o Marketing
o Accounting
o Administrative—appointment scheduling, client refills
People: doctors and staff
o Hiring
o Training
o Communication
o Time management
Processes:
o Outpatient workflow
o Inpatient workflow
o Boarding workflow
o Inventory
o Efficiency/Productivity
In addition to the actions discussed above, there are many more practices can take to maintain and improve profits—we’ll talk more about these next month.
➤ Download Insiders' Insights - KPI, March 2023 Report
➤ VHMA Members can access the dashboard to drill down by region, species, and practice size filters, access the interactive KPI dashboard
Karen E. Felsted, CPA, MS, DVM, CVPM, CVA of PantheraT Veterinary Management Consulting, www.PantheraT.com, provide data review and commentary.
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