The deadly middle: Why veterinary practices’ fee structure is failing
“Not too high, not too low” doesn’t work for fees. Veterinarians’ low self-esteem could bankrupt our profession
We have met the enemy–and he is us. We are destroying our profession by continuing to pile up a monumental deficit in self-esteem. Published studies have documented that from the time of admission to veterinary college, student self-esteem falls further with each year of training. Then graduation tosses the new graduate into the clutches of experienced practice owners who may denigrate his or her state-of-the-art skills.
In many parts of the country, veterinarians and their teams are underpaid and struggling to meet expenses. However, my consulting experience shows that practice owners often have to be dragged into greater profitability. So many want to play zebra, mixing in with the rest of the anonymous herd–trying to charge just enough to get by–not only avoiding the attention of the prowling competitors but failing to provide for their family and themselves the financial comforts so easily in their grasp.
Veterinarians, by and large, adjust their fees only under duress and seldom ask accountants even when the bottom line starts playing Titanic.
Apple just broke new ground with retail store sales of $4,000 per square foot. Tiffany was no slouch at $2,700. Best Buy is struggling at $1,000, and Wal-mart gets $400 for each square foot of store offering the lowest prices in your town, or any town. The solo veterinary practice only gets $320 per square foot. Wal-mart fills its space with shelves and racks. We fill ours with expensive high-tech laboratory, radiographic and surgical equipment. We cannot continue to survive without fee adjustments.
Fear is the destroyer
Is there a reader out there who hasn’t experienced fear at raising office visit fees a few dollars? Did you not expect an avalanche of disgruntled clients storming in to get their pet’s records and transfer to the competing hospital down the street? Did it happen? No! In fact, I can assure you that a 15 percent increase in non-shopped fees across the board would elicit complaints only from clients who would complain even if you lowered your fees. Yet, you and your staff remain like 80 percent of practices, dwelling in the deadly middle – underpaid and struggling.
To most Americans, the middle is the place for not the cheapest and not the best. Do you want that reputation? High prices mean high quality with great service. That’s what clients want when their beloved finned, furred or feathered family member gets sick. Low prices mean low profit, no loyalty.
You need to be slightly above the rest with the perception of being the best in service and quality. The smartest and wealthiest practitioners today give their e-mail addresses to clients with hospitalized pets. They charge fees that are demographically correct without regard to competition, and they correct for inflation quarterly. Rarely is that e-mail abused, but loyalty
You are worth it
Now, don’t get me wrong: Fees must be related to service, and that means good communication. The highest-netting practices have VIP programs with a separate phone number for the best clients — who get no discounts but priority appointments and staff calls after each visit to answer questions. Their clients know that they could go elsewhere to save 10 percent to 15 percent, but they don’t care. They know that their doctor is attentive and available, and they’re willing to pay for that. Remember that only the lead dog gets to have a change of scenery.
Laying off associates is a prime game today made possible largely by very poor fee management. Unless your practice is in downtown Detroit or underwater Mississippi, profits are down because fees have not risen. Gasoline has risen, food costs are up 20 percent, but your fees seem to stay too low too long. Fees lost can never be regained. Fee setting must be proactive. If your quarter is down 10 percent, that money will never be recovered. On the other hand, if you had adjusted your fees before the quarter, the loss might never have occurred.
How long will you be able to retain staff with declining net? Most choose to continue supporting associates and paraprofessional staff while drawing less for owners, hoping for a miraculous turnaround. Here’s a newsflash for you: The economy is not going to turnaround for about five more years.
In most states, I understand the common penalty for shooting a management consultant is 30 days of probation with mandatory classes in reloading ammunition. You may not want to hear this, but it’s the truth: It’s all about self-esteem. It’s all about fair fees for quality service with excellent communication. It’s about enjoying our profession to the fullest with quality equipment and staff. It’s all about the life we worked hard to achieve and that we assuredly deserve.
You can click here to visit the dvm360.com website
Veterinary Business and Management
Two of the UK’s foremost business associations, the Veterinary Practice Management Association and the Society of Practising Veterinary Surgeons have built an exciting two-day programme of CPD for vets, managers, practice owners, nurses and client care staff.
When? – January 24th -26th 2013. Where? Heythrop Park Resort, Near Oxford, UK
There’s a whole lot going on!
- Over 30 hours of top-quality vet business & management CPD
- World Renowned Business Speakers
- 20 Masterclass small group sessions
- Expert Q&A session
- Over 35 business-focused exhibiting companies
- A fun social programme and lots of networking opportunities
- Two hotels on-site offering affordable accommodation
- Purpose built lecture facilities
You can click here to visit the joint VPMA/SPVS Congress website
Motivate Your Clients to Take Action
It’s no secret that many veterinarians are struggling to attract and retain clients. The recent studies and data clearly point out that fact. If you struggle to convey the importance of preventative health measures, or present treatment plans to your clients, here’s a tip or two that might shift the odds in your favor.
I’m a big fan of the Harvard Business Review. Today, I had an “aha” moment while reading the blog post “Rehearsing Your Strategic Story,” which appeared in the Harvard Business Review’s Daily Alert. So why did I find this article intriguing or applicable to veterinarians? Well, here’s one comment in the article from a senior partner in an architectural firm, which caught my attention: “I have never really thought about my client this way before, and it was alarming how many assumptions I had to cross off my list.”
Here’s how this blog post piqued my interest. It inspired me to pose these questions, and to share my perspective on how preparation and awareness before meeting with a client can lead to a positive outcome for you, the client and the pet.
- What, if anything, do you know or think about your client before entering the exam/consult room?
- What techniques do you have for identifying what a client needs to feel, in order to act on your message?
- Do you enter the exam room with the intent to present the information, or is your intent to inform and influence?
Rest assured, I’m not advocating manipulation techniques here, what I am advocating is awareness. Before you enter the exam room to consult with a client, can you list (on paper or in your head) only facts ? not opinions or assumptions, about the client/decision maker? Do you view each of these facts in terms of the action you want that person to take?
For example, if this is a fairly new client/decision maker, he or she is probably going to need something very different from you, before accepting a major recommendation, than a client who has been with your practice for several years. Having the basic facts about the client in front of you, and understanding their needs in relation to your presentation, may make the difference between acceptance or rejection.
In her article, Theresa Norton states, “Simply put it is an equation: Facts relating to the character as supplied in the text of the play + what the character is literally doing in the scene you are rehearsing = what motivates the character in that scene.”
Translation Simply put it is an equation: Facts relating to the client, as supplied in the information gathered in the registration process (new client) or based on your knowledge and understanding (not assumptions) of existing clients = what motivates the client to take action in a specific situation.
5 Hot Tips for avoiding bad debt!
Recent months have seen the introduction of “not for profit” veterinary practices. In reality this isn’t a new business model; once they’ve allowed for a reasonable salary and a return on the capital invested in the business many practices are not making a profit but making a loss.
Public expectations of supposedly “vocational” businesses such as veterinary practices, are high and bad debt can be a real problem with some being owed a significant proportion of turnover.
Bad debt disproportionately affects morale, causes cash flow problems and hits the bottom line; a business thus burdened has less to re-invest in future improvements which could benefit staff, clients, their animals and the business itself, further compounding the problem. This article is therefore devoted, not to the subject of debt management, but to avoiding bad debt in the first place.
1. Get to grips with the problem
Firstly, take a good look at the situation in your practice to gain a clear understanding of the magnitude and nature of your debt problem. Which clients generate your debt; are they from a particular locality or associated with a particular species? Or is the problem more widespread? Using the 80:20 rule, make sure you are fixing the right problem, remembering that it may be your staff or processes, rather than your clients, that are the root cause. Where staff behaviours may be contributing to bad debt, investment in additional training and the development of clear processes may be required to remedy this: Involve staff in the solution; it lets them know how important it is.
2. Be upfront about costs
Raising payment options early in the consultation process is an essential part of professional service. Clients want this information and may be too embarrassed to ask; so make it easy for them to discuss their treatment and payment options, and express the options that you wish them to consider in terms of their needs when explaining them.
Ensure everyone understands your terms and conditions. Each new and existing client should have a copy; they should also be made clear in your reception area, and on your website, brochures, and charter, if you have these. Make sure that partners and staff fully understand your terms and conditions and why their adherence to them benefits everyone. Sharing a breakdown of your costs on a simple pie chart can work wonders!
3. Keep clients informed throughout
As the patient moves through the practice from consent form to discharge, procedures and protocols help to keep clients informed of the developments in treatment and its eventual cost. The management of expectations is an important issue in the development of trust between a practice and its clients so keeping clients informed of changes from a carefully thought through estimate will increase your chance of payment in full, by a satisfied client, at the end of treatment.
4. Have a payment policy and stick to it!
Mistakes happen and you may have to accept a small number of people who cannot pay or will not pay. Practice policies may accommodate the genuine cases but with the remainder, somebody needs to get tough! If you have a problem, making it clear that “….all unsettled bills will be passed to Nasty & Co Debt Collection Services within seven days” may help, but do be careful to avoid sending messages to clients who do pay! If you must use such a negative message, balance it with one that shows you do value your good clients.
5. Incentivise prompt payment
Where you must send invoices (say, farm and equine clients) do make sure that there are incentives to pay promptly, and make sure it costs more to borrow from you than from the bank! This approach works well for the veterinary wholesalers in ensuring you settle your outstanding bills with them. Remember too that invoices are also a means of promoting your practice to your clients. Keep them polite, show your clients you care about your service to them, and make it easy to flag up problems: “If you are not entirely satisfied with our service please tell (x person at this number). If everything was great please tell your friends”: If there is a problem you do need to know.
You can click here to visit the VetPol website
Little Touches – Building Referrals
There are three ways to tackle the task of building referrals to your practice
- Asking each client, customer or patient with a “By the way” or “Incidentally” or “Tell me” and following up with something along the lines of “Is there someone you know who might appreciate the same help that I’ve given you?” You use those three prefacing phrases because it softens the question and produces more amenable responses.
- Having a system whereby you write or email each of your clients, customers or patients regularly to ask is there someone they know who might want your services (along the lines of the famous “I must be stupid” letter and offer a reward as thank you.
- Make them say “Wow!” by doing something that is memorable and has them telling their friends about it. By the way, that’s doing something positive not negative which will guarantee everybody knows about you but doesn’t want your services.
I had an example of real “Wow!” service when I stayed at The Langham Hotel in Melbourne recently (in my opinion it is one of the top hotels in Australia). When I hopped into my car after Valet Parking had retrieved it, there was a bottle of water on the dash with a note.
The photo reveals what it said. I reckon that this touch was magic and the way they made it happen was wonderful.
The question is what do you do in your business to make people say “Wow!” and their dealings with you memorable?
You can click here to visit the Winston Marsh website
8 Ways to Add More Life to Your Years
Experience. Dream. Risk. Close your eyes, jump, and enjoy the free fall. Choose exhilaration over predictability. Choose growth over comfort. Choose potential over safety. Wake up to the magic of life.
Make friends with your intuition. Trust your gut. Discover the beauty of uncertainty. Know yourself fully before you make promises to others. Make lots of mistakes so that you will know how to discern what you truly need.
Learn when to hold on and when to let go. Love hard and often and without reservation. Seek knowledge. Open yourself to possibility. Keep your heart honest, your head high and your spirit free. Embrace your darkness along with your light. Be wrong every once in a while, and be okay with it.
Awaken to the brilliance in ordinary moments. Live the truth no matter what the cost. Own your reality without apology. See goodness in the world. Be Bold. Be Fierce. Be grateful. Be wild, crazy, and gloriously free.
Go now and add more life to your years. Here are few ways to do just that:
- Be you. — There’s no better freedom than the freedom to be yourself. Give yourself that gift, and choose to surround yourself with those who appreciate your decision. Don’t let someone change who you are, to become what they need. Be you in the beautiful way only you can, to become what you need.
- Treat yourself the way you want others to treat you. — The amount of abuse you tolerate in a partner is equal to the amount of abuse you heap on yourself. If you are used to telling yourself that you’re ugly, that you are destined to fail, and that you’re not capable of performing in the world without someone holding your hand, then you will accept, and feel most comfortable with, a partner who reinforces these same negative beliefs.
- Breathe your passion. — It’s not what we do every once in a while that shapes our lives, but what we do consistently. There is a proverb that says, “He who half breathes, half lives.” Writing is my breath, so I breathe it every day. Whatever your breath is, breathe it deeply and consistently so that you may live wholly.
- Act out of love. — Love your life to the fullest. Love is natural. When we do not act out of love, it goes against our very nature. That choice results in emotional, mental, and even physical pain. Love heals the pain that was caused by the absence of it. Always act out of love.
- Make your gratitude list longer than your worry list. — Don’t let a bad moment ruin your day. Think of it as a bad minute, not a bad day, and you’ll be okay. Stress thrives when our worry list is longer than our gratitude list. Happiness thrives when our gratitude list is longer than our worry list. So find something to be thankful for. And remember, pretending to be happy when you’re struggling is just a small example of how strong you are as a person. When it rains on your parade, look up rather than down. Because
without the rain there would be no rainbow.
- Keep your mind wide open. — Make a promise to yourself. Promise to stop the drama before it begins, to breathe deeply and peacefully, and to love others and yourself without conditions. Promise to laugh at your own mistakes, and to realize that no one is perfect; we are human. Feelings of worth can flourish only in an atmosphere where individual differences are appreciated, mistakes are tolerated, communication is open, and rules are flexible. All of us are imperfect, so there’s no point judging each other or ourselves. In the understanding of this truth lies our perfection.
- Take chances. — Take lots of them. Because honestly, no matter where you end up and with whom, it always ends up just the way it should be. Stop regretting things and start accepting them as the teachers they are. Your most significant opportunities will be found in times of great difficulty. Your mistakes make you who you are. You learn and grow with each choice you make. Everything is worth it. Listen to your heart. Continue to follow your path, and be okay with the challenges that lie ahead.
- Let go of old wounds. — Change can be terrifying, yet healing requires change. Sometimes you have to find the good in goodbye. Because the past is a place of reference, not a place of residence. Getting over a painful experience is much like crossing monkey bars on the playground: You have to let go at some point in order to move forward.
You can click here to visit the Marc and Angel website