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Issue: 63 - Mar 14, 2014
Are You in a Race to the Bottom?
By: Jan Miller
Veterinary Best Practice

Early in the year is a good time to remind everyone of some of the operational pitfalls that can get you squarely in a race to the bottom.  Here is a list of practices or non-practices that can land you in trouble:

  1. Discounting. If you aren’t using discounting for a very specific and time limited purpose, don’t do it. Nothing says more about you (owner) and your practice than your fees. What are you saying with yours?
  2. Giving up on starter patients. You know what I mean: spays, neuters and vaccinations. So you think you can’t compete with the so called low cost clinics? Well you are wrong. Furthermore, when you allow these clients to take their pets elsewhere you are passing on the best opportunity to bond with the client and develop a lifelong relationship with the pet. So what if you have to adjust your pricing to compete? You don’t have to come in lower than the low cost clinic; you simply have to come in near them. Your clients aren’t dumb. They know what they are getting with a low cost clinic. Most of them would prefer to go to a full service veterinarian. If the low cost clinic you think you are competing with also offers other services, chances are very high that the fees for those other services are equal to or higher than yours, but they are getting the starter patients you are passing on. 
  3. Not knowing what your front office is saying to clients and prospective clients. I know you are thinking that you do know. Well, I’m here to tell you that often times you don’t and if you did know you would be horrified. In my consulting practice I make a lot of “shopper” calls for my clients, probably approaching 1,000 so far. I estimate that I am surprised (not in a good way) about 50% of the time with the things I hear.  These are just some of the responses I hear  to my questions

Q:  I was looking for your website but couldn’t find it; can you tell me what it is?

A:  Just a minute (holds phone away as they ask a co-worker) does anybody know if we have a website? (Returns to phone)  Uh, I don’t know if we have a website.  Can you call back later?

A: We don’t have a website, can you believe that?

A: We keep trying to get the owner to get one…

A: Yes, it’s www.what’s in a (note: the practice name is something like Friendly Animal Clinic or something else that has nothing whatsoever to do with the website name)

Q: I was wondering what you charge for a spay?

A: Why do you want to know??

A: We are not allowed to give out that information.  Would you like to make an appointment to talk to the doctor about it? The appointment is free.

A: We are really busy right now, can you call back later?

A:  Can you hold for a minute? (Someone who acts like they are the manager picks up the phone) Hello, can I help you?

Q:  Yes, I was wondering what you charge for a spay?

 A: Where are you calling from?

For more information about how ineffective management of shopper calls can cost you a lot of money, please contact me.

  1. Not reviewing your financial reports monthly and being able to identify early red flags or opportunities. New clients, gross margin and operating margin are invaluable metrics regarding the financial health of your practice. Know what they are and what any changes indicate.  Understanding why things go well is just as important as understanding why things are going poorly.
  2. Not differentiating yourself. Do you know what a commodity is? It’s a product or service that has no qualitative or differentiating characteristics (think bread or milk). Most veterinary practices are seen by clients as commodities… that is, you are all the same. When something is seen as a commodity, the only way to compete with other commodity providers is on price.   Ultimately, no one wins in a price war. Find a way to differentiate yourself:  wellness plans, payment plans, pet health insurance, specialists, and retention strategies for outstanding staff, different hours or days of operation from your competition.  Find something that makes you stand out from the crowd.
  3. Allowing your competition to set your fees. Of course there are some fees that require you be competitive.  However, for the most part, your fees need to be determined by your costs and desired profit margin.  Everybody’s costs are different. For example, if you think that calculating staff costs for a procedure simply entails adding up the hourly rates of those involved (LVT hourly rate = $15 x 2 hours of procedure time equals $30 of staff time) you are not going to come close to covering your expenses. How do you account for all of your overhead expenses like rent, utilities, insurance, office supplies, etc..? You must include a factor for overhead expenses in every single fee.
  4. Allowing someone other than you (practice owner) to create your practice culture. Every practice has a culture. As the business owner if you are not deliberate in communicating your expectations of behavior and performance, and reinforce them at every opportunity, rest assured that someone else will do it for you. Who is the person most likely to do that? It will be the employee with the strongest personality on your staff. The person with the strongest personality is frequently your most troublesome employee. I talk to practice owners who do not like to deal with human resource issues. In fact, some who flat out refuse and hand it off to anyone who is willing to take it over. If you are not directly involved with developing your practice culture (your brand), don’t be surprised at the culture you get.  

As always, call or email if you have questions!