Blogs

VHMA Insiders’ Insights Commentary October 2024
Brittany Yost, CVPM, CCFP
Senior Manager, Customer Implementation and Engagement

Insiders' Insights: Navigating the VHMA Key Performance Indicators Dashboard - Practice Health

In today’s ever-evolving veterinary landscape, understanding client behavior is crucial for sustaining and growing your practice.  This quarter, we’re going to take a look at KPIs that reflect the overall health of your practice.  Active patient, lapsing patient, and new client count trends reveal significant shifts that merit our attention.  As financial pressures continue to mount for many pet owners, coupled with the rising costs of veterinary services, it is crucial that we closely monitor these metrics and explore various strategies to respond effectively.

Understanding the Change in Active Patient Count, Change in Lapsing Patient Count, and Change in New Clients Charts

Similar to other charts we’ve reviewed this year, there are filtering options available at the top of the charts.  These filters allow you to tailor your analysis by practice size and region.  You may also filter the Active Patient Count YOY and Lapsing Patient Count YOY charts by species.

• The metrics included in the charts indicate the percent change in active patient counts and lapsing patient counts, not a percent increase.
• Blue bars and trend lines represent the percent change for VHMA practices, while gray bars and trend lines depict the percent change for non-member practices.
• VHMA practices showed a smaller percentage change in active patient counts compared to non-member practices. However, they had a larger percent change in lapsing patient counts until March 2024, when non-member practices began showing a higher rate of change.  All practices have experienced a negative percent change in active patient counts, lapsing patient counts, and new client counts throughout the last twelve months.
• Hover over any bar or data point to view more detailed information.

Where are our clients going?

Financial strain poses a significant challenge for many Americans today.  According to a recent MarketWatch survey, 66% of Americans feel they are living paycheck to paycheck.  This issue likely resonates with many of us, and while it’s tempting to assume it primarily affects lower-income earners, the survey reveals otherwise.  Financial struggles span across all demographics—gender, income level, and generation.

Adding to this pressure, veterinary service inflation has risen by 8% in the last 12 months—1.6 times higher than the national inflation rate—making it more difficult for clients to afford care for their pets.  Media coverage on this issue is shaping public perception about why we’re seeing these price increases in the industry.

A recent article in The Atlantic titled, “Why Your Vet Bill is So High,” points to corporate consolidation as a key factor.  The article claims that as large corporations acquire more veterinary clinics, there’s increased pressure on veterinarians to recommend additional diagnostics and treatments, which ultimately leads to higher bills for clients.

Similarly, The Wall Street Journal article, “Why You’re Paying Your Veterinarian So Much,” highlights how changes in the human-animal bond are contributing to rising costs.   As people grow more emotionally attached to their pets, they are willing to spend more on their care, which has led veterinary medicine to increasingly resemble the big business model of human healthcare.

While these articles bring important issues to light, there are other perspectives that aren’t as widely publicized.  In an anonymous response to The Atlantic article, a veterinary professional explained that many people don’t understand just how high the overhead costs of running a veterinary clinic are.  Lab machines, x-ray equipment, dental equipment, surgery suites, and a full pharmacy are essential and costly.  In human medicine, these services are spread across multiple offices; in veterinary medicine, everything is housed under one roof.

Furthermore, veterinarians often graduate with significant financial burdens.  According to data from the American Veterinary Medical Association (AVMA), the average student debt for veterinary graduates in 2023 was around $186,000.  More than one-third of new veterinarians carry $200,000 or more in student debt, while fewer than 20% graduate debt-free.  

These articles also fail to highlight the fact that the higher caliber of medicine that veterinary hospitals now offer has significantly improved the quality of life for pets.  Dr. Rena Carlson, former president of the AVMA, emphasizes this point: “Veterinary care has become more sophisticated, at the same time pets are living longer.  This is a very good thing, of course, but it also means more veterinary care is needed over the span of an animal's lifetime.”

A recently proposed bipartisan bill could provide some financial relief for pet owners.   The People and Animals Well-being (PAW) Act would allow pet owners to use pre-tax earnings from health savings accounts (HSAs) and flexible spending accounts (FSAs) to cover up to $1,000 in veterinary expenses or pet insurance.  The bill has no spending cap for service animals owned by veterans or people with disabilities and is endorsed by organizations like the AVMA, the Human Animal Bond Research Institute, and MetLife.
New York Congresswoman Claudia Tenney, who introduced the bill with North Carolina Congresswoman Deborah Ross, shared, “Our pets and service animals are cherished members of our families, and it’s essential that owners have the ability to pay for quality care.  This legislation will help veterans, and all pet owners afford veterinary care for their beloved pets and service animals.”

Understanding the Bonding Rate Chart

• Bonding rate refers to the percentage of new clients who return to a practice within 18 months of their first visit.
• The blue trend lines indicate the bonding rate for VHMA practices, while the gray trend lines represent the bonding rate for non-member practices.
• VHMA practices have historically achieved a higher bonding rate than non-VHMA practices, and that trend has continued over the last twelve months.  VHMA practice bonding rates have ranged between 65.4% and 67.5% throughout the last 12 months, while non-VHMA practices have fluctuated between 62.5% and 64.7%.
• Hover over any bar or data point to view more detailed information.

How can we increase the bonding rate and retention in our practices?

Pet ownership in the U.S. is a deeply personal experience.  With 76% of Americans owning a pet, it’s clear how important animals are in people's lives.  For 98% of pet owners, their pet is considered an important member of the family.

As veterinary professionals, this deep emotional connection to pets gives us the opportunity to build strong client loyalty—not just by meeting their expectations, but by forming meaningful relationships.  It is crucial that once we welcome a new client into our practices, they continue to return for their pet’s care.

Customer Satisfaction vs. Cient Loyalty

While often conflated, customer satisfaction and client loyalty are fundamentally different concepts.  Customer satisfaction centers on meeting basic expectations.  For instance, a client may bring in her dog for an annual wellness appointment, wait a reasonable amount of time, and leave with her dog vaccinated.  In this scenario, the client's expectations are met, resulting in satisfaction.  However, satisfaction alone does not guarantee a long-term relationship, as clients can find this experience at virtually any veterinary clinic.

Loyalty, on the other hand, delves much deeper.  It represents a relationship that transcends a mere transaction.  Imagine this same client realizes her dog is due for vaccines and, without any consideration regarding where she’ll take her dog, schedules an appointment with the veterinarian who has cared for her dog since puppyhood.  This is the vet who remembers the dog’s nickname and inquires about the client’s family.  It is this personal connection that transforms a satisfied client into a loyal one, fostering a lasting bond that benefits both the client and the practice.

Loyalty Programs: Strengthening Client Bonds and Boosting Retention

An emerging way to strengthen clients’ ties to practices is loyalty programs.  These programs are becoming a popular way to enhance client relationships and improve retention in veterinary practices, and with good reason.  Research shows that increasing client retention rates by just 5% can lead to a profit boost of up to 95%.  Loyalty programs have become prevalent across various sectors including retail stores, coffee shops, restaurants, and now veterinary hospitals.   But the big question is, do loyalty programs really work in the veterinary field?

Every veterinary practice has a mix of high-level, mid-level, and low-level clients.  High-level clients are deeply committed to their pet’s care. These are the clients who keep their pets up to date on vaccines, purchase preventatives from your clinic, and follow your recommendations.   Low-level clients are those you rarely see. They might skip routine care and only bring their pets in when there’s an urgent health issue.  For these two groups, a loyalty program may not significantly change their behavior.  High-level clients are already engaged, and low-level clients are not as responsive to incentives.

However, mid-level clients are where a loyalty program can have a huge impact. These are clients who might bring their pets in for sick exams but go to vaccine clinics for routine care.  They may buy one bag of food from your practice but purchase future bags elsewhere.  For mid-level clients, the opportunity to earn rewards can be a powerful motivator to consolidate their purchases and visits with your practice.

A 2023 study conducted by Vetsource on first-year loyalty program members analyzed the spending and transactional behavior of clients before and after joining a loyalty program.  The results were telling:

• Clients who joined their practice’s loyalty program spent an average of $385, (net any rewards the practice credited) more in the year after joining, marking a 36% increase in spending.
• Clients who did not join the program spent an average of $5 less, resulting in a 1% decrease in spending.
  In terms of transactions:
• Loyalty program members completed 1.5 more transactions, a 19% increase compared to the previous year.
• Non-members generated 0.3 fewer transactions, a 5% decrease.

These figures highlight the significant impact loyalty programs can have, particularly with mid-level clients who may be on the fence about where to spend their money on pet care.

When implementing a loyalty program at your practice, simplicity is key.  Clients are more likely to engage with the program if the rewards and incentives are easy to understand and redeem.

Here are a few best practices to consider:

• Keep the rewards straightforward.  Avoid complicated point systems that may confuse clients.  Simple stamp and reward systems work best.
• Use third-party software.  Managing a loyalty program manually can be time-consuming.  Consider using specialized software to streamline the process.
• Draw inspiration from successful programs.  Think about loyalty programs you personally enjoy and adapt elements from them to fit your practice.
• Use the program to influence client behavior in specific areas. For example, if you want to increase dental services, offer a reward for $50 off a pet’s next dental cleaning.

Loyalty programs not only drive more visits and spending, but they also provide valuable insights into client preferences and behaviors.  By understanding what motivates your clients, you can tailor your services and rewards to strengthen their loyalty even further.

Building client loyalty requires more than meeting expectations; it involves creating meaningful, personal connections. Loyalty programs offer a tangible way to foster these connections, driving both client retention and revenue growth.  By implementing a thoughtful, simple loyalty program, veterinary practices can strengthen relationships, boost client satisfaction, and improve practice health for the long term.

With active patient counts, lapsing patient counts, and new client acquisitions on the decline, maintaining a strong connection with your clients has never been more critical.  Financial pressures and challenging media coverage surrounding the veterinary industry only add to the complexity, but by fostering trust and building lasting relationships, you can help secure the loyalty and satisfaction of your clients.

Would you like to compare your practice’s performance head-to-head with other VHMA member practices and the national average in one convenient KPI dashboard?  VHMA members can receive this report for free!  Not a VHMA member?  No fear, you can still sign up for this dashboard for only $41/month.  Learn more here.

Sources

“Congress considers bill helping with costs of veterinary care, pet insurance.” AVMA News, 19 September 2024, https://www.avma.org/news/congress-considers-bill-helping-costs-veterinary-care-pet-insurance.

Data on file at Vetsource. 

Hauser, Wendy. “Short Distance Relationships.” Today’s Veterinary Business, October/November 2024, pp. 56-58.

Henderson, Rebecca. “Paycheck to Paycheck Statistics: 66.2% of Americans Report Struggling Between Paydays.” MarketWatch Guides, 9 August 2024, https://www.marketwatch.com/guides/banking/paycheck-to-paycheck-statistics/. 

Nolen, R. Scott. “Veterinary salaries rise in 2023, educational debt holds steady.” AVMA News, 1 November 2023, https://www.avma.org/news/veterinary-starting-salaries-rise-2023-educational-debt-holds-steady. 

Olen, Helaine.  “Why Your Vet Bill Is So High.” The Atlantic, April 2024. https://www.theatlantic.com/ideas/archive/2024/04/vet-private-equity-industry/678180/.

Ross, Kelly.  “Bill would extend US tax break to veterinary care.”  VIN News, 11 September 2024, https://news.vin.com/default.aspx?pid=210&Id=12276334&f5=1.

Thomas, Katie, “Why You’re Paying Your Veterinarian So Much.” The New York Times.  23 June 2024. https://www.nytimes.com/2024/06/23/health/pets-veterinary-bills.html