A few months ago, the Veterinary Hospital Managers Association hosted a webinar with economist Patrick Luce in which he indicated that 2024 would likely be volatile, with decreased practice revenue and fewer patient visits. So far, his prediction is spot on. He recommended looking at 2024 as an opportunity to build a strong base in preparation for bustling growth in the next five years. That means identifying opportunities to maximize efficiency, staff training, client compliance and prices.
Maximizing Revenue
When veterinary practice owners and managers look to increase revenue, they immediately think of price increases. In 2023, most practices raised their prices by approximately 10%, leaving many clients with sticker shock.
While price increases have their time and place, clients can afford to pay only so much. Though they think of pets as critical family members, many Americans must choose between veterinary care and putting food on the table.
On the flip side, veterinary practices must balance higher staff wages and continual increases in the cost of the goods with their break-even costs and desired profitability.
Before instituting another round of price hikes, consider the following opportunities to maximize revenue.
Tracking Discounts
Some practices give away potential revenue because of missed charges, poor customer service, long wait times and unwarranted generosity. Any discounts you give should be thoughtful and trackable and produce a return on investment. For example, discounts aimed at senior citizens and military veterans should be built to entice those clients to come back.
Giving away products and services for free without a means to offset the loss harms a practice’s bottom line. Stop the hemorrhaging by:
- Preventing inline discounts. For example, you usually charge $100 for a laboratory test, but a team member feels guilty about the cost and changes the price to $50. Depending on the markup, the price might not cover the cost of the service or the overhead associated with it. You can prevent inline discounts by updating the settings in your practice management software to allow only administrators to change prices.
- Creating a client discount code. The code allows pet owners to see the regular price of a service or product, generating appreciation for the discount. Be sure client invoices highlight all price cuts.
- Track discounts monthly and evaluate their total cost, the reasons and who gave them. Investigate unintentional discounts. Did a receptionist or doctor give one to compensate a client for an extended wait time or poor service? Identify and fix the problems. If the reason was a team member’s guilt over what you charge, educate everyone about how much your practice pays to deliver services. Your employees should understand that discounting reduces your ability to compensate them more in wages and fringe benefits.
- Consider an annual discount budget. How much does your practice want to give away in 2025?
Investigate the state of discounts with an open mind. Try to understand how much is being discounted before you implement stricter policies. Accurate data allows practice owners and managers to create solutions that support financial goals, marketing strategies and staff flexibility.
Growing Compliance
Teaching team members to talk to clients about prices is a sensitive subject. Sometimes, clients hear only a dollar amount and don’t learn why or how a service or product will help their pets. Those clients are more likely to dismiss a recommendation before considering its affordability.
Here’s what you can do:
- Build confidence in your team’s ability to deliver estimates by being transparent with them about the costs of providing services. Many of them have no idea how much you spend to run the business. They see the daily revenue, multiply it by the number of days the practice is open, and — poof! — you’re generating $1 million a year. In their eyes, someone is getting rich and clients are being taken advantage of. The reality is that while a practice takes in $1 million, expenses might total $990,000. Team members who know a pet needs a service and how much it costs to deliver are more likely to accept the charge. And when they believe, they provide estimates with confidence.
- Teach team members to communicate prices more effectively. Here’s an example: “Mrs. Smith, I understand your concern about the cost. I was shocked when I bought eggs this past week. I can’t believe how much prices have gone up everywhere.” Take the spotlight off your practice, empathize with clients and offer payment alternatives. When a client asks about payment plans, team members can respond, “Yes, we offer several options. I can review them with you.” (A simple “no” can cause clients to shut down further discussion).
- Offer a spectrum of care. Not every pet owner can afford the best or most expensive veterinary recommendations, but that doesn’t mean you can’t offer a range of options. Get comfortable with satisfying client needs and expectations. That approach is healthy for a practice’s bottom line, credibility and community reputation.
ANOTHER TIP
Consider auditing your medical records to identify missed charges and where you can make improvements. The task is time-consuming, but you can’t fix what you don’t know.