Is your veterinary practice bleeding money from discounts?
Emily Shiver, CVPM, CCFP, is regional director of operations at the Family Vet Group, headquartered in Chicago, Illinois. Shiver resides in Florida.
Implementing these changes could help your veterinary practice realize thousands of dollars.
alswart/stock.adobe.comWhen was the last time you had the nerve to peek at your discount report? Do you intentionally find a creative way to display it on your profit and loss (P&L) statement? Do you have any idea how much money the practice is “giving away” every month, every quarter, every year? If you answered yes to any of these questions, listen up! These tips will change the trajectory of your practice's revenue very rapidly.
Stop the bleeding
Your first goal should be to stop the bleeding when it comes to discounting inventory items. This will help prevent complete shock on the client's end. Let's face it: Some practice owners are afraid that if you take the discounts away, the clients will scurry away to the practice down the street. That is simply not true. Your clients come to you and stay loyal to you because of the experience you provide them, not because they save $1.20 on every nail trim.
You may argue that you are only discounting inventory items by 10%. Let me provide a reality check: Your markup on therapeutic veterinary diets is 45%. For this example, your holding costs are 10% and ordering costs are 20%. When you give your client their 10% senior discount, your profit = 0! You are giving your clients free food.
Reconsider your markups
Consider looking at your current markups. Perhaps you can lower your markup on long-term medications like thyroid meds, pimobendan, etc. Raise the markup on your short-term medications like metronidazole, amoxicillin, enrofloxacin, etc. You can just explain to clients that although you have removed discounts on inventory items, you have made long-term medications more affordable.
Price your preventatives competitively
Re-evaluate your markups on heartworm and flea prevention. If your practice dispenses 12 months, six months and single-month doses, incentivize your 12-month supplies by lowering the markup on them. It is vital to call your competitors in town and keep a finger on the pulse of the online pharmacies to price yourself competitively. Another tip would be to keep your heartworm prevention in house by utilizing products like Proheart 6 or Proheart 12.
Come to an agreement on services
Run discount reports on your service items daily. Study the trends. Do you have a doctor that takes five radiographs and charges for three? or A doctor who performs a fine needle aspirate and doesn't charge because nothing alarming was found? Or a doctor running diagnostics because he or she “is curious”? Identify these trends and present your doctors with solutions. You can even create a group price or build the cost of the diagnostic by breaking it down into a couple of services.
Rip the Band-Aid off! It is totally worth it. If you have a practice owner who is reluctant to implement these changes, gather your facts and present solutions with projected results. Some practices could realize a $50,000 or more revenue gain easily.
Emily Shiver, CVPM, CCFP, is practice manager at Cleveland Heights Animal Hospital in Lakeland, Florida.