Thomas E. Catanzaro, DVM, MHA, FACHE, Diplomate American College of Healthcare Executives
"While we're here, Doc, how about looking at......"
famous words of a vaccination clinic
In these days of newspaper ads which scream out vaccination prices, the old style practice finds a more discriminating client. The market place has changed. The 10,000 population per veterinarian has dropped to 4000. There is a saturation point, but more important, there are more alternatives for the average pet owner. Almost all pet owners want to keep their pet protected from disease, but only at those facilities which offer an affordable value.
It is not magic. When the pet food supermarket advertises veterinary care given by a licensed veterinarian, with rabies vaccine for $6 and a distemper six-way vaccine for $13, any pet owner knows the cost is less than $20. As I travel around the country, I still find practices that have added the "examination" into the vaccine price and want $60-plus for the same vaccine. There are even areas of the country where parvo vaccine is charged as a separate vaccine although it is in the six-way vaccination. Don't you love the logic of "economic-based" ethics?
First, the examination needs to be called a doctor's consultation. A nurse technician can, and should, give the wellness physical examination during a vaccination clinic. Don't ever let anyone think another staff member can give a doctor's consultation, but don't be silly enough to think a pet owner doesn't know a skilled veterinary nurse can give a decent wellness physical. They see it every time they access medical or dental care. Also remember the other nomenclature previously discussed:
Recommend is now stated as a need
Every need is annotated as a box [ ] (written record) or CR-__ (electronic record) ........ the provider ensures the client response in is recorded inside the box or on the space behind CR-__ (W = waiver, D = Defer, A = Appointment, X= Do It).
Annual becomes "next" in all conversations (www.npwm.com), targeting semi-annual life cycle consultations (possibly more frequent in the elder pets).
Second, almost every study since the 1983 publishing of the Pet Connection, Censhare, University of MN, has shown that when given the option, 75-80 percent of the clients will accept the "needed care" being offered as an additional, value-added, service. The secret is to provide just enough additional information that the client wants to hear more, wants the service, and feels they are being allowed to "buy it" rather than just being "sold it."
Third, let the client buy it! Clients like to buy, they like the "two" yes choices. They need to hear the "need" statement from the expert. When they make their decision, they want to feel good about themselves. The practice that wants them back will validate each client decision, regardless of the economic impact. The practice which "hard sells" lateral products gets their average transaction way above average, but most also cause a return rate way under the area average. In fact, when the "vaccination visit invoice" hits triple digits, the client desertion rate doubles. It is not unusual to see a 40 percent non-return rate in these practices.
Client Relations needs to use "two yes" choices when making appointments: Wednesday or Thursday?, morning or afternoon?, 9:20 or 9:40? Good, we have you and Spike with Dr. X on Thursday morning at 9:40. Oh, you want Doctor Y, that would need to be a morning drop-off, or an afternoon appointment, which do you prefer today?
Early dental cleaning is needed (DG1+), would prefer to drop Spike off later this week, or next week?
The "two yes" choice narratives allow the practice staff to schedule effectively, while providing the needed care for animals.
It is not 'good', 'better', 'best choices' of healthcare; these are economic terms and not good medicine.
The time for lesser care alternatives is when the client defers or waives the needed care, and the animal still is not well (still suffering).
Pet parents (85% of your clients) want to do the "right thing" for their pet!
In the retail industry, the distributors and vendors are seeing a unique movement away from the high-ticket retail line items. Most savvy consumers now look for the product just below the "top of the line," the affordable value. In multiple studies, by both the government and private sector, price is never the number one reason for a purchase, but it is in the top six. The problem is that price is the easiest to compare for an uninformed or inexperienced individual. Look at the success of Wal-Mart and their greeters. This type of "extra high touch" is where the skilled, client-centered, caring veterinary practices can excel. They provide additional information (client education) and schedule a return visit. No client should ever leave a veterinary facility without something in hand which offers additional information to read "if they are interested." The problem is, the hand-out should not replace the one-on-one discussion, it needs to be offered just "for that person at home who may have a question" or "just in case you want to review what we discussed in a less stressful time."
The current taxation programs winding their way through Congress will have a major impact on small businesses. In fact, retrospectively, in 1994, many practices saw an April-May slump caused by a higher tax hit (the beginning of the last Democratic Presidential period). With the pending tax laws and the more liberal Congress, 2008 will be tougher, not easier. Change will become essential. The discretionary income used for pet care is also the same money used for vehicle fuel, movies, dining out, impulse buys, and paying the unexpected bill. In fact, discretionary income is less than 11 percent of the average person's take home pay, and when the price of fuel increases, it becomes a major impact on all discretionary spending. As such, price is the first line of resistance a naive client will address, they understand the small amount of money they have, although they may not understand the pet healthcare need. The client is only avoiding the pain (or embarrassment) of admitting ignorance and wants you to explain why it is worth that much money.
Affordable Value Marketing
There are many ways to address this need for a better explanation, but there are a few items which should be rehearsed with the staff and doctors before a new service or product is added. In the Blackwell text, Veterinary Healthcare Services: Options in Delivery, Chapter 5 discusses "persuasive marketing" in detail. In fact, after reading that chapter, there should be some "role play" exercise, for the entire staff, on a different offering each month, to ensure the practice narratives stay current and crisp. The basic marketing steps are easy:
1. Help the client understand that there is a pre-existing need within the pet to restore wellness.
2. Let the client know that the advances in the veterinary profession can now address this pet need.
3. Explain how your team can better meet this need, how there is a value to the pet in restoring wellness, and how the family/owner will benefit by a pet in good health.
4. Whatever the clients answer, validate it! Do not argue! Make them think that their decision is the best for them at this time. In cases of deferral or waiver, let them speak then share your professional need to re-address the pet's need. Make the next appointment or get a commitment to receive a reminder card in __ months, just to recheck the status.
The USA has moved from 22,000 veterinary practices when the first edition of this text was written to over 28,500 companion animal practices in 2007. In that time, we have leaned (NCVEI, AVMA Executive Summary, Brakke Study) that only two things have been directly related to an individual veterinarian's income production: high self esteem and lo fear of negative evaluation. Interestingly, concurrent research shows fear of negative evaluation increases about 25 percent between first and last year of veterinary school. Lateral research has shown two non-veterinarian factors greatly effect a veterinary practice's income production: low waiting time (12% more income when low wait times are perceived by clients) and atmospherics (see picture above - 17% more income with positive atmospherics). These are areas where the practice team can impact the practice's programs reviewed in this Second Edition.
Reality Check #10
To understand wellness pricing, a practice must understand the true costs of a new program, since most overhead items are "sunk costs"; sunk costs are already committed and paid for, so they are not added to a new program costing exercise if they are not changed. Let's look at early dental cleaning (risk level 1):
Pre-anesthetic Lab (PCV, TP, BUN) - practice's cost about $5.50
I.V. TKO (giving set, catheter, and ~150cc fluids) -practice's cost about $6
Pain management (morphine) - practice's cost about $1.50
Induction (reversible or no tissue residual) - practice's cost about $7
Gas (Iso) Anesthesia, 20 minutes - practice's cost about $2
Total Cost to Practice -- $22.00
If a doctor must do induction according to State laws, that entails "pushing the plunger" and transferring the case to the nursing staff for monitoring. This is negligible time commitment, especially when an inpatient doctor does not have a case load to address.
If the practice books enough dental cleanings each day, another staffer will be needed to do dental cleaning, so we would add $7 to cost (3 DG1+/hr = $21)
Total Cost to Practice (w/new hygienist) - $29.00
If the practice sets the door-to-door price for early dental cleaning (DG1+) at $143, close to what the clients pay for their own dental cleaning to reduce price resistance, and includes two courtesy follow-ups with a veterinary nurse hygienist (7-10 days for dental hygiene and dental diet discussions and 4-6 months for courtesy dental recheck), there is still a 4x profit in the procedure.......and it will likely be a twice a year procedure! At a risk level 2, DG1+ becomes "case management" and the primary provider drives an appropriate healthcare plan. A DG2+ (at risk level 1) takes about twice as long as a DG1+, so we approximate a double fee, about $264 (yet only the time changes, so the direct cost to the practice increases to about $38). DG3+ and DG4+ is oral surgery, and should not be quoted until after X-rays have been taken.
Appropriate Pricing is based on multi-tasking and staff utilization.
The biggest problem with the above is that most practices do not understand affordable value discussions; they only know curative medicine pricing and explanations. When there is a practice price above the common market level (regardless of whom publishes the price), there are five different ways to get the client beyond the price issue:
Explain the benefits rather than compete with prices. Anthropomorphize the need to an experience common to most people.
Protect the price-whiner's ego with non-price extra service. Your staff is already paid for, add people service to the equation.
Sell visions and ideas, not just products or services. Freedom from worry, reducing a later "crisis" fee, or similar healthcare adages.
Create visual images of the client enjoying the pet. Companion animals have a bond which can be imaged by someone who cares.
Train yourself to share the value, not negotiate the price.
"Affordable Value" to a client is the emotional combination of price, quality, and service. It is a perception born in caring and in being cared about. Most clients need an emotional reason to make an investment in restoring wellness. Doctor logic is too cold to understand. If the first comment by the client is that the price is "too high," they are most often fishing for reasons to buy. In that client's mind all prices are too high. Until you take the quiet examination room time to explain the benefits and involve the client emotionally, the price will remain an issue. Share the experience, visualize the outcome, build the positive feeling of "doing right" for that animal they steward, and the practice revenues will soar.