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Dealing with a discount leak
Price breaks for staff family members, hardship clients and rescue organizations are costing Dr. Reed's veterinary practice. His brilliant idea? Staff members should pay a percentage of the discount. Hold on, says his hospital administrator.
There's a (revenue) hole in my bucket, dear Liza, dear Liza ... (moodboard / stock.adobe.com)
Dr. Reed owns a busy, successful five-veterinarian veterinary hospital in a big urban area, and he's constantly on the lookout for ways to control expenses while not compromising medical care or staff quality. Recently, his hospital administrator brought a disconcerting expense line to his attention. Courtesy discounts given to staff family members, hardship clients and certain organizations were becoming a financial burden. Dr. Reed had no issues when one of his veterinarians requested a fee discount for a family member or an indigent client. However, his doctors were no longer using enough discretion when requesting these courtesies.
Dr. Reed met with his hospital administrator and suggested a new experiment to offset the discounts: shared responsibility. For example, if a staff member's mother brought a dog to the clinic and received a 20% courtesy, Dr. Reed would shoulder 10% of the fee reduction and the staff member the other 10%. He felt this would lead to less abuse of the courtesy discount policy and a better understanding of how much these courtesies affect the hospital's finances. While agreeing that the hospital's courtesy discounts needed some squeezing, the hospital administrator did not agree about the experiment to encourage team members to think more about the hospital's finances.
“They come to work,” she told Dr. Reed. ”They do their job, they get paid.”
Yes, the clinic's financial success benefited everyone, the hospital administrator argued, but the staff didn't need to participate so blatantly in the facility's internal financial management. Why not just decrease the courtesy percentage offerings or discontinue one of the courtesy offer categories?
Dr. Reed considered his administrator's suggestions and changed course. He called a staff meeting to discuss the need for clinic discounts to be reduced in the interest of fiscal responsibility. He explained that he'd adjust the percentage of discounts offered and eliminate certain select organizations they'd discounted in the past. Finally, discounts for clients in critical situations would be scrutinized more carefully before approval. Dr. Reed strongly believed-and told his staff-that the practice needed to meet specific financial goals before certain discounts were offered. Unless this was accomplished, the well-intentioned discount policies would be undermined.
Do you think Dr. Reed is being shortsighted and not fully appreciating the positive benefits of a prudent courtesy discount, or do you think the practice bottom line takes priority over all else? Email us and let us know at email@example.com.
Dr. Rosenberg's response
Dr. Reed's practice is part of the community and doesn't exist in a vacuum. It may be true that courtesy discounts aren't scrutinized carefully enough in his practice. However, it's highly unlikely these discounts are the cause of the practice's financial issues. Reasonable courtesy gestures for the staff, the community and the needy should be factored into practice overhead. It's important never to underestimate the value that these gestures have when it comes to generating a positive public image and maintaining overall client loyalty.
Certain overhead considerations are often overlooked and not properly budgeted for-courtesy discounts, inclement weather and routine state and local regulatory audits are just a few. Often, when a clinic starts to experience some financial stress, the first response is to be penny-wise and pound-foolish. There are many ways to make a practice more financially efficient. Cutting back on reasonable courtesy discounts should not be at the top of the list. These gestures generate a lot more goodwill and financial reward then Dr. Reed and many others think.
Dr. Marc Rosenberg is director of the Voorhees Veterinary Center in Voorhees, New Jersey. Although many of the scenarios Dr. Rosenberg describes in his column are based on real-life events, the veterinary practices, doctors and employees described are fictional.