Wellness plans are a hit with pet owners. So why are some veterinary clinics reluctant to offer them?
The interest was evident. Earlier this decade when Brakke Senior Consultant John Volk helped facilitate focus groups of pet owners for what would become the Bayer Veterinary Care Usage Study, he would witness the same dynamic if one of those pet owners happened to be a Banfield Clinic client.
“If there was a Banfield client in the focus group, and we’d talk about veterinarians and care and so forth, the Banfield client would almost always talk about their Optimal Wellness Plan and how they can pay for their veterinary expenses in monthly installments.”
The conversation immediately gravitated toward that, Volk says. “No matter what we had on the discussion guide to talk about, the pet owners wanted to talk about that. ‘You can do that?’ ‘You can pay for your veterinary bill in monthly installments?’ ‘They don’t charge you every time they open the door?’ Those sorts of comments. It was really apparent that there was a high degree of interest. We didn’t even bring it up. A pet owner would.”
Catching on with corporate groups
Pet wellness plans didn’t take long to catch on with more corporate groups. Volk says VCA Animal Hospitals and National Veterinary Associates soon began exploring the benefits of wellness plans.
NVA started with a pilot for wellness plans at select clinics. The plans were tracked closely. NVA discovered that clients who purchased the wellness plans visited more often, and were more compliant.
Visits of plan users increased 69 percent, from 3.3 to 5.5 times per year. NVA also recorded a bump in revenue. Medical services saw a 57 percent increase, from an average of $389 to $613. Non-plan products and services even increased 29 percent, from $223 to $286. Overall, there was a 47 percent “lift” brought on by the wellness plans.
“That convinced NVA that they needed to get them into as many other practices as possible,” says Volk. NVA set up a program, and a team, to help their practices get started.
NVA has seen continued success beyond the pilot program, says Tyler Stroupe, NVA Director of Business Operations. There are currently 107,000 active plans. Eighty percent of those are canine, and 20 percent feline. Among age demographics, 40 percent of the plans are for adult pets, with 30 percent juvenile and 30 percent senior.
“Results can vary by location based on a number of factors, but overall and consistently over time we see increased visitation, revenue, and compliance from our PAW Plan members,” says Stroupe.
The two primary drivers are:
- Increased compliance on in-plan preventive care services;
- Increased visitation and services outside of the plan as a result of a higher level of engagement with the pet and pet owner. “We measure this impact by observing the behavior of our PAW Plan pets before and after plan enrollment to eliminate any selection bias for the population of pets that enroll in PAW Plans,” says Stroupe.
Volk says two things appeal to pet owners about wellness plans. No. 1? They have a plan. “They know what they should be doing for their pet on a routine basis. That doesn’t always come across when they just come in for their annual visit. When they have a piece of paper that says here is what your pet needs over the year, they love having that. They want to do what’s right for their pet. They want to keep their pet healthy.”
The second factor is financial. Pet owners like being able to pay for that plan monthly and work it into their normal expenditures just like they do their car, house or apartment payments.
When Volk helped with the Bayer Veterinary Care Usage Study, pet owners expressed that the fear of the big bill was one of the main reasons that kept them from visiting the veterinarian more often. “They know that the cost of veterinary care goes up every year. They only visit once or twice a year and they know it’s always more expensive from the last time.”
The majority of people don’t have much free cash flow, Volk says. “But when they have a plan and they can pay for that in monthly installments, then that fear of the big bill goes away for the most part. It’s less intimidating to go to the veterinarian.”
Slow slog for independent adoption
However, as appealing as these plans are for pet owners, some aspects of implementation can be intimidating, especially for individual veterinary practices. There are a few reasons for this, Volk says. First, it’s not an easy adoption.
“The practice has to change the way it thinks about running wellness services to clients,” Volk says. “They need to make a commitment to it. It takes a lot of work.” This includes staff training, designing a package of services, pricing, and deciding whether they are going to offer any discounts or free visits. “That’s kind of intimidating to people.”
Logistically, it’s very hard for an individual practice to do a wellness plan program without a service provider, Volk says, because they have to be able to bill clients monthly. “The easiest way to do that is to charge by credit card monthly,” he says. “But individual practices can’t keep credit card numbers. If you keep someone’s credit card number, then you are liable if someone puts charges against it that were not authorized.” There is an industry standard called PCI Compliance, but it’s difficult for individual veterinary practices to meet the standard for being PCI Compliant.
“A corporate consolidator can be PCI Compliant, because they’re a big enough company, and they can handle security,” Volk says. “It’s probably part of what they already do to be PCI Compliant. But an individual practice can’t be PCI Compliant, so they need to work with a third party service provider to do all the monthly billing on their credit cards.”
Even then, another complication may surface. Most of the practice management systems are not set up to handle bundles of services like that, Volk says. “So the practice management systems are not set up for monthly billing for services, they’re all set up for pay-as-you-go billing.”
The route to increased revenue
Craig Fraser, Sales Director, Premier Pet Care Plan, says the two biggest barriers to increased compliance for veterinary practices are cost and busy schedules. “Cost is the reason 1-800-PETMEDS has 10 million customers and are responsible for siphoning off $31,000 in annual flea, tick and heartworm revenue from the average practice,” he says. “Add in the other online sources and the big box retailers and the loss to the average veterinary practice exceeds $75,000 annually. Premier’s manageable monthly payment plan removes cost from that decision and increases customer loyalty to the local animal hospital.”
On top of that, because the basic wellness needs are on a budgeted plan, finances are less of a financial concern with dentals, proper food, grooming and other gold standard medical procedures that may be needed.
“The busy schedule barrier is reduced through automatic customized reminders on the electronic media of the clients choosing,” Fraser says. “Just those two Premier benefits alone have resulted in dramatic improvements in compliance.”
A typical two-doctor practice on the Premier Pet Care Plan will generate about $250 in additional revenue for every pet on plan, Fraser says. “That same average practice will have 20 percent of their total pets on plan within the first 24 months. That represents an increase of more than $130,000 in annualized revenue that is now predictable. And consider the impact predictable revenue has on a small business’ cash flow.”
Premier Pet Care Plans are customized to the individual practices they serve. “It’s their plan, so variations exist.”
However, Fraser says the most successful hospitals stick to the basic components of wellness – vaccines, flea, tick, heartworm and six-month exams. Some practices add blood work and discounts on other products or services. “The key here is covering the basic wellness needs of the pet and giving that pet owner the peace of mind of a manageable payment plan. It’s simple and straightforward for the client and easy to implement for the practice.”
Value-added service for your customer
Volk says it makes good business sense for distributor reps to help veterinary practices find a wellness plan option for their client base. Premier in particular works closely with distributors. “They include products in their plans,” Volk says. “Obviously, it’s up to the veterinary practice what they include in their plans but I know that Premier includes things like heartworm and flea preventives in their plans.”
Fraser says Premier currently works with both distribution as well as GPOs, and they’ve received positive feedback. “Remember, it is in distribution’s best interest to stem the loss of pharmacy business as much as the practice’s best interest. Unfortunately, price increases are masking some of that loss now and short-term quota focus makes it difficult for some to see over the horizon.”
Distributor reps will find product-focused wellness plans appealing because their product sales go up. “The practices get better compliance,” says Fraser. “It encourages clients to go to the veterinary practice to get their medication on a regular basis. It increase compliance and sales for the practice. The distributors really like that.”
When a distributor rep can encourage their practices to consider preventive care plans, and when they can bring in a service plan provider to assist the practice in getting a plan set up, it really benefits the sales of a product, says Fraser. “And, you’re providing a value-added service as the DSR.”
Increasing client “stickiness”
Stroupe says NVA believes that wellness plans will play an increased role in the delivery of veterinary services, as they help address two growing trends in the industry:
- The humanization of pets. “As companion animals shift from pets to family members, clients are seeking increased guidance around preventive and proactive care of their pets,” he says. “Pet owners want to know that they are doing what is best for their companion. Wellness plans offer that solution at each life stage with the goal of extending and improving the life of each pet.”
- The increasing costs of veterinary services. “Clients are also seeking predictability and accessibility when it comes to veterinary services. Wellness plans reward a client’s commitment to compliance and loyalty to their practice with access to discounts on preventive care and the additional benefit of payment options.”
Fraser says he believes that an effective, efficient wellness plan is the key to stopping the loss of veterinary pharmacy business to the online and big box retailers. “Wellness has been shown to increase client ‘stickiness’ to the practice,” he says. “The industry consolidation will continue at both the manufacturer and distribution level, which means fewer players but more competition among those players for market share. Practices with a healthy percentage of pets on plan will remain competitive and vital players in the industry.”
Although Volk says he expected wellness plans to catch on quicker than they have, he does see them as a critical part to the future of veterinary care.
“I think they are going to become the standard of care,” he says. “We know from research studies we’ve done and others have done such as AAHA, that wellness plans are really appealing to pet owners. As practice consolidation continues – and we know the practice consolidators are instituting preventive care plans – I think it’s going to force the independents to have them, or else they are going to be at a competitive disadvantage.”
Stroupe says wellness plans will never be for every clinic or every pet. “However, we do believe that they will service a material number of our clients and pets looking to balance quality preventive care with predictability and affordability,” he says. “In addition, they enable a clinic to evolve their standard of care and increase the overall tide of preventive care education and compliance, while still delivering favorable economics to the practice.”
Brakke Senior Consultant John Volk discussed pet wellness plans in a recent industry webinar, “Hot Topics in Veterinary Practice.” Readers can call the Brakke Consulting office (972) 243-4033 or email firstname.lastname@example.org for more information. There is a $79 fee to view the webinar.
Providers and Resources
There are several service providers veterinary practices can work with to set up wellness plans. These include:
Premier Pet Care Plan, a British firm with U.S. operations. Plans include vaccinations, regular health checks, flea and heartworm treatments all planned in throughout the year, a structured monthly payment plan for cats and dogs, discounts for clients on premium prescription products, covers fixed-cost, non-insurable pet services
exclusive to vet practices. For more information, visit http://www.premierpetcareplan.com/us
Veterinary Credit Plans (VCP). VCP offers a comprehensive financial services platform, an integrated single-source solution for the creation, offering, management and marketing of a full suite of financial tools and programs for the veterinary market, including wellness plans, membership clubs and programs, payment automation, in-house payment plan management, multi-location tools and capabilities, and VCP professional services. For more information, visit http://www.vcp.vet
Petly Plans, by IDEXX. Petly Plans is software that fits into the everyday workflow, so staff members can enroll pets and manage plans. For more information, visit https://www.idexx.com/en/veterinary/software-services/petly-plans/
PaymentBanc, which provides credit services for veterinary practices. PaymentBanc is an alternative to third party financing for expensive veterinary procedures. PaymentBanc gives veterinarians the ability to have an in-office payment plan without creating extra work for staff. PaymentBanc also gives veterinarians the ability to know the pet owner’s credit risk before extending veterinary payment options, according to the company’s website. For more information, visit https://www.paymentbanc.com/veterinary_payment_plans.aspx
VetBilling. VetBilling services generate a recurring revenue stream from professionally managed Payment Plans, Pre-Payment Plans, Wellness Plan billing, Pet Savings accounts, recurring billing and accounts receivable management. For more information, visit https://vetbilling.com
Partners for Healthy Pets also has tools for veterinary practices, including a manual on preventive care plans available free to veterinary practices who may want to try to do it on their own. For more information, visit https://www.partnersforhealthypets.org
Show Independent Veterinary Clinics How to Compete the Wellness Way, By Pam Foster
Here’s an idea to strengthen your customer relationships as a veterinary Distribution Sales Representative (DSR): Help independent clinics foster healthier pets and happier clients while competing more effectively against the local competition.
If you have customers committed to running their veterinary practices independently, you may be hearing that they struggle to compete against formidable practices in their area. There may be a retail chain store clinic down the street or a major corporate hospital nearby, all vying for the same clients.
This means your customers might want to consider doing these three things, with your guidance:
- Make sure they’re offering similar fundamental services their competition offers (so local pet owners aren’t choosing the competition for basic needs).
- Offer something different (and very appealing) that the competition doesn’t offer (you can help practices brainstorm ideas based on what you see during clinic visits in your territory).
- Build strong relationships within the community with a “super-local” approach (again, help your customers come up with ideas based on other clinic efforts that work).
In this article, we’re addressing the first consideration independent clinics should explore with your help: offering local pet owners the same or similar fundamental services as the competition.
Take veterinary wellness plans (aka loyalty plans), for instance. When pet owners sign up for a year of care that includes physical exams, screening, diagnostics, nutrition discussions, and more – plus discounts and other exclusive benefits – they’re more likely to bring in their pets for proper care and remain loyal to the practice.
Plus, wellness plans meet pet-owner demands: “46 percent of dog owners and 44 percent of cat owners stated they would be more likely to take their pet to the veterinarian more often, ‘if I had a payment plan where I would be billed in equal monthly installments,’” according to the Bayer Veterinary Care Usage Study.*
With veterinary clinic wellness plans, everyone wins.
Clients have a clear plan, a fixed payment, and access to the right care without having to guess (or forget) when it’s time to bring in Fluffy or Fido. Patients receive proper screening checks and preventive care throughout the year, and early detection if there’s an issue. Clinics get to improve their consistency of patient visits and compliance with regular client conversations that build loyalty and better care – AND a steady revenue stream from monthly payments and add-on services.
For all these reasons, most (if not all) corporate veterinary practice groups offer wellness plans to clients.
With independent practices (your dream customers) you even win because:
- You’re helping your customers compete more effectively for local business, and
- More client visits turn into more consumable purchases and potentially more equipment needs from the practices in your area.
What’s not to love?
Starting the conversation
When you’re visiting clinics, bring up the subject of wellness plans and see if there’s an opportunity for you to help your customers establish a plan.
If you need facts, statistics and other information to help clinics justify a wellness plan, show them the Today’s Veterinary Business article, “Wellness Plans Make Great Business Sense” by Wendy Hauser, DVM. She pointed out (with details on each benefit) that wellness plans:
- Help increase the number of client visits per year
- May set you apart from neighboring hospitals
- Are client-retention tools
- Enhance the quality of patient care
- Help manage client financial limitations
Who else wants these benefits for their practice?
Probably many of your customers, don’t you think? It’s just that they may not have been able to focus on a wellness plan or they weren’t sure where to start.
You can steer them in the right direction by showing them ways to establish a wellness plan, including third-party vendors who can help (see sidebar on page 43).
Another great piece for client education is the AAHA article that spells out, to pet owners, “What a Wellness Plan Can Do for Your Pet (and Your Pocketbook).” This article encourages pet owners to ask their practices about wellness plans. Wouldn’t it be great if your customers all offered them?
Make a commitment to do all your customers a big favor by exploring the many benefits of wellness plans with them.