Setting fees - it's a state of mind and economics

So why do we have such poor self-esteem? Is it getting worse?

Only eight years ago, an AVMA-sponsored study showed that measuring self-esteem in veterinary students was a losing proposition. With each year of study, the self-esteem of tested students decreased. It is a good thing that the curriculum is only four years or we might all graduate as simpering wimps.

Somewhere in the Bible is a parable about a man whose two sons were named Sickly and Weak. Surprise, surprise — they grew up to be sickly and weak. Why not? We are the products of our own estimation of our worth.

Our profession is gullible. Just let any client tell a veterinarian that his/her fees are too high and you can bet that the next needed increase in fees will be postponed until the phantom image of bankruptcy looms.

We supply almost 3,000 veterinarians with fee schedules keyed to their actual local demographics. We know these fees should be handed to a tech for input into the computer with two simple words of instruction: "Do it!"

Yet we also know that at least half of these fees will be surveyed and reduced by the micro-managing practice owner, destroying any chance for a great and fair profit from clients who can well afford the local fare, so to speak. In fact, 54 percent of clients earn more than their veterinarian, according to the Internal Revenue Service.

JAVMA(Feb. 15, 2008 ) had a special 10-page report that we will only summarize here. Please read the entire report. You have it. It's in the 12th journal down from the top in the pile behind your desk.

Go over this study with your staff. Give them the evidence that four out of five clients are not price-sensitive, and that even two-thirds of those who are will obtain for the pet whatever the client is assured it needs.

Summary

» Some 94 percent of clients coming in the door are not afraid of the cost if quality service comes first.

» Trust is derived from explanations of needed services. Clients buy from those they trust.

» Detailed medical history and examination forms used for every patient, every visit, and sent home with the client, verify your recommendations.

» Lower price does not mean better compliance.

» Safety is foremost. Blood testing should never be optional. Pain prevention is never optional.

The report is the culmination of discussions on "How companion-animal practices would maintain growth amid ongoing struggles with static service growth and poor compliance."

The study examined consumer willingness to undertake veterinary care for sick pets and to maintain wellness programs involving ongoing exams, vaccinations, preventive dental care, products and services.

The authors sought to reveal detailed data about the relationships between owners and their pets and the impact of those relationships on the care those pets received.

The key to our interest is the perceptions and attitudes pet owners have toward veterinarians and the price awareness and sensitivity of owners toward purchasing veterinary products and services.

Services studied were:

» Routine physical examinations and testing

» Combinations of common vaccines

» Preventive dental care

» Spaying or neutering

» Heartworm medications

» Flea and tick prevention

Bonding with clients

There were two major statistically valid findings that relate to a veterinarian's productivity:

FIRST: The veterinarian's ability to bond with his or her client advances communication and has the most influence on the level of care.

It's not enough to recommend services.

It's the degree to which a veterinarian explains the reasons for the recommendations that drives the client's perceptions of the value and the quality of the care.

The client must be convinced that the veterinarian sells them only that which the pet needs.

(This is a cogent argument against selling pet-shop items.)

The main reason cited for non-compliance with a veterinarian's recommendations was that the clients felt (a subjective emotion) that the recommended treatment was not necessary.

This is a matter of trust. No other factor will have a greater influence on your client.

SECOND: Most owners with a strong pet bond seek out the highest quality care, are less sensitive to price and more willing to follow a DVM's recommendations. These owners were largely indifferfent to the price as long as there was a perceived need.

The study found:

» 38 percent wanted the highest quality of care for their pets without a concern for the cost.

» 43 percent took price into account in their decision-making process but were likely to spend whatever it took to get needed care for their pets.

» Only 19 percent were price-sensitive and not always able to afford needed services.

Add it up: Four out of five, or 81 percent, were less concerned about price than their veterinarians. Only one out of five might not be able to afford the best in pet care.

Out of the 19 percent price-sensitive group, "68 percent ... were still willing to spend whatever they were convinced was necessary to keep their pets healthy."

Demand vs. fees

The JAVMA study went on to create demand vs. fee curves to show the percentage of pet owners who would buy various products or services and at what price.

All the fee-sensitivity demand curves were similar in that they were steepest at the lowest (unprofitable) prices, but leveled out in mid-price range to indicate price indifference, suggesting that most pet owners would "buy each configuration regardless of price."

For every price point, the percentage of owners was highest when the services (vaccinations, heartworm medications, flea and tick products, and spaying and neutering) were provided by full-service practices rather than Internet sites, vaccination vans and spay-neuter clinics.

Again, trust trumps price.

Lowering your price does not bring about higher levels of confidence, the study showed. It found:

» "The pet-care industry has educated most pet owners that dogs and cats should get an examination once a year, if not twice.

» "In contrast, many pet owners were not aware that their pets should receive regular dental care.

» "Because lowering prices would have little impact on encouraging more frequent or additional preventive dental visits, the industry and veterinarians should continue to concentrate efforts on educating clients about the benefit of annual dental cleaning and twice-yearly physical examinations."

Blood and urine tests

» "For preventive dental care and spaying or neutering, pet owners were more likely to choose options that included hematologic and chemical analyses before surgery, even at higher price points.

» "These findings suggest an opportunity to include blood workup consistently before surgery, not just offer it as an option.

» "Pain management before, during and after spaying or neutering was always desired.

» "Owners consistently chose spay or neuter configurations that included administration of pain medication over those that did not feature pain control. It is critical to communicate clearly to pet owners to assure them their pets will not feel pain while in the hospital."

Are you listening? Is the message getting through? Despite the slowdown/recession, most clients want their pets protected regardless of cost.

Don't you want to convene a staff meeting right this moment to assure your staff that good medicine is still the object of your practice? Do it!

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 112 Harmon Cove Towers Secaucus, NJ 07094; (800) 292-7995; Vethelp@comcast.net fax: (866) 908-6986.