What wellness plans can be for your veterinary practice

Is your herd of clients drifting? Do they move very sloooowly to call your office for fear of the cost of visits? If so, your patients are missing out on needed care, and your practice finances are likely affected, too. A wellness program can eliminate the barrier, encouraging clients to bring in their pets sooner and more often. It can also attract clients and their pets year-round, even during your slowest months. That amounts to better care and more revenue, a bit of a—well, a cash cow.

Photo by Getty Images/Image Zoo

The recent Bayer Veterinary Care Usage Study confirmed that clients want pet care plans that allow complete yearlong healthcare with monthly payment options. (See "Sticker shock" for more from the study.) Bundled wellness plans, or wellness care packages, provide both. More important, they free clients to visit your veterinary hospital without hesitation.

Consider the benefits

Veterinary industry benchmarks show varying hospital visit frequency rates. These rates range from 1.2 to 2-plus visits per patient annually. Wellness plan patients at my practice, Yelm Veterinary Hospital in Yelm, Wash., visit, on average, two to three times more often. Some visit as often as eight times per year, with most coming in three to four times per year. This gives us the opportunity to provide terrific patient care and excellent preventive medicine.

So why do wellness plan participants visit their veterinary hospital more often? One of the biggest reasons I've found is that they're free to simply ask questions. My wellness plans, like most others in the market, offer unlimited visits (aka "healthcare examinations") during office hours. And clients take advantage of that benefit. Some just need a little education about what's normal for their breed. They can make an appointment without worrying about paying for the office call; it's already part of the package. And, of course, the more they visit, the more tightly bonded to the practice they become.

Clients love the plans for other reasons as well. Wellness packages allow pet owners to spread out the costs of pet healthcare and accommodate their own financial cycle. Also, they can provide savings on some urgent care needs. For example, if a client hasn't used a preventive laboratory test or radiograph service in a given year and the pet experiences an acute problem, the wellness plan benefit can be used for the pet's immediate diagnosis and treatment needs.

The benefits to a veterinary practice are numerous as well. One major plus is that wellness packages help offset the seasonality of our business cycle. These plans include comprehensive exams, which you can schedule during slower times, such as the post-holiday period in January and February, when clients are otherwise less likely to come into your practice. During the comprehensive exam, patients may present with other medical issues that can be resolved on the same visit. Any client reluctance to pay for additional services is usually softened with discounts, ranging from 5 percent to 20 percent depending on the plan. This helps the pet and boosts hospital revenue. Strategically scheduling these exams can even help a hospital avoid layoffs in slow seasons.

The real power of these plans is evident when many clients sign up. Let's say a practice charges $30 a month for its wellness plan and has 375 clients participate. That's $11,250 per month, or $135,000 per year, plus sign-up fees. The plan is set up to auto-deduct the fee from clients' checking or savings accounts on the first of the month, so the practice sees revenue without fail before the door opens that day, regardless of the season or the weather.

Of course, some practitioners worry that wellness plans are just discounts in disguise, and they think that discounts are inherently harmful to a practice. While it's true that in most plans the total medical value of all services is discounted about 40 percent to 50 percent, there are a couple of things to keep in mind.

First, in some cases, clients don't use all the included services. At my practice, up to 40 percent of clients on plans don't take advantage of all the care in a year's time—even though we call to remind them. This mitigates the discount considerably.

Second, even if a client brings the patient in for recommended medical care, the cost of goods is small. Other than lab tests, most wellness items are services, resulting in a lower cost of goods sold for the practice.

Create your wellness plan

To get started, you'll want to develop several types of packages. Wellness plans can include preventive care services, such as lab tests, vaccinations, radiographs, dental care, and elective surgery. Which services are included depends on the package. For example, a minimum-care plan might include vaccinations, heartworm or feline leukemia tests, fecal exams, annual deworming, and interstate health certificates. A premium plan could include all of this plus dentistry procedures and urinalysis. Packages can also be created for pets according to age. Those under 6 months old will need an ovariohysterectomy or castration, and those more than 5 years old benefit from lab tests twice a year, a chest radiograph, and electrocardiograms. Each plan has a different monthly fee. (Look at my "Sample wellness plan" to see what these packages might look like.)

No matter what level of plan, the package should include at least one comprehensive health exam—I recommend two—requiring a drop-off appointment. Drop-off appointments let us spread out our day's wellness exams and avoid crowding nonwellness patient visits. When the patient goes home, the client is given a multi-page printout describing what's normal or abnormal in each system area. In my practice, we've found that most clients really appreciate these reports. Most say they've never seen such detailed explanations before, even when they've received patient report cards in the past. These comprehensive exams include much more than the usual exam visit, and the report reflects that.

Plan your Package's pricing

At my hospital, wellness plans are priced at $18 per month for the most basic level and up to $39 per month for the geriatric plan. Pet insurance studies have found that clients resist monthly payments exceeding $40 to $45, so we keep wellness plans in a similar range.

In addition to the monthly fee, we charge a one-time sign-up fee of $69 for most packages. The fee helps pay for bookkeeping and provides up to $20 for a staff incentive to educate clients about the plans. The incentive system determines how much and how many staff members benefit from educating a client. For example, if only one staff member educates the client and the client signs up, the incentive is $20. If four staff members educate the client, each gets $5 incentive pay.

Our wellness package clients pay the sign-up fee up front and either prepay the monthly fee or elect to have it withdrawn from their checking or savings account every month. We don't accept mail-in payments or recurring payments on credit cards. Clients sign a one-year contract, with automatic renewal if they don't cancel. More than 80 percent of our participants continue on the plan year after year.

Veterinarians for decades have been of the opinion that wellness plans are not good for practices because they're merely another way of discounting fees. But at my practice, wellness plans have increased our financial outlook considerably. Maybe in these new economic times, the profession needs to take a fresh look at what bundled wellness services can do for clients, patients, and practices.

Simply put, wellness plans meet the highest standards for patient care. They meet clients' needs by spreading out the cost of care. They allow veterinary team members to earn incentive compensation. And they bring consistent revenue into the practice. What's not to like about a cash cow, especially when patient care improves and clients become more satisfied with your practice?

Dr. Karl Salzsieder, JD, of Salzsieder Consulting and Legal Services in Kelso, Wash., is an accredited valuation analyst and a Veterinary Economics Editorial Advisory Board member. He is also owner of Yelm Veterinary Hospital in Yelm, Wash. Send questions and comments to ve@advanstar.com