Kristi Fender is a freelance writer and editor in Shawnee, Kansas, with a long history of covering animal health and veterinary medicine. She is the former news channel director of dvm360.com and editor-in-chief of dvm360 magazine.Read Articles Written by Kristi Fender
It’s safe to say that no veterinarian went to veterinary school because they dreamed about selling products someday. Rather, these future practitioners longed to stop the bleeding, mend the broken leg, ease the pain and protect the human-animal bond. However, pharmacy and retail sales are an important part of veterinary practice, even today in the age of Amazon and Chewy. Reports of the death of this veterinary income stream over the past 10 to 20 years, it turns out, have been greatly exaggerated.
Here’s how two successful veterinary practice owners have looked to retail to solve common clinic challenges, employing strategies that not only help pets get the care they need but ensure the health of their business as well.
Getting Clients to Comply with Optimum Care
Jeff Rothstein, DVM, MBA, co-founder of the Mission Veterinary Partners hospital group headquartered in Ann Arbor, Michigan, has been a proponent of wellness plans in his practices for 25 years. These plans bundle all the wellness-related products and services a pet needs throughout the year — parasite control, vaccinations, diagnostic screening, dental care, and so on — into one package, for which the client pays monthly.
While there are at least a dozen reasons this approach makes sense, he says, at the top of the list stands one simple fact: It provides patients with best medicine. Plus, it doesn’t overwhelm clients with all the nitty-gritty details about what goes into keeping their pets healthy.
“Clients for the most part want the expert’s opinion, and they don’t always need to know about every single vaccine and flea product and test,” Dr. Rothstein says. “We used to try to educate about all these things, and that takes up a lot of a 20- or 30-minute appointment. Plus, they start to tune out after 10 minutes, and if you give them 10 options, they’ll choose six.”
With wellness plans, a veterinary nurse or receptionist simply explains to the client, “Here are all the things Dr. Rothstein recommends for your pet for the year,” and the client only has to say “yes” once. “You get wonderful compliance and you’re not taking an inordinate amount of time,” Dr. Rothstein says.
And after two-plus decades of experience with wellness plans, Dr. Rothstein has noticed an interesting phenomenon. While veterinarians might assume that wellness packages are an option only for a practice’s “A” or possibly “B” clients, that would be a mistake.
“A lot of your ‘C’ clients are potentially interested in simplifying their pet’s healthcare,” he says. “And when you get a client like that on a wellness plan, all of a sudden they become an ‘A’ client.” A wellness plan lowers the barrier to entry when it comes to being a top-notch pet owner while triggering a mentality of investment in and commitment to the pet’s lifelong health. What’s more, about 75% of wellness plan customers choose to stay on them for the life of the pet, Dr. Rothstein says, and once they’re on a plan, they don’t want to leave for another practice that doesn’t offer wellness packages.
Making Veterinary Care Affordable
Dr. Rothstein explains that the primary value of a wellness plan to clients is that it budgets out the cost of preventive care and makes paying for it convenient—no discount necessary. “We call this a ‘budgeting’ plan, not a ‘low-cost’ or ‘discount’ plan,” he says.
While offering a small discount would not be unreasonable — many labs and product manufacturers will offer your practice a lower price if your volume ramps up, which you can then pass along to clients — this is not a necessary component of wellness plans, and many veterinarians choose not to include any discount on the total package. Again, the value is in helping to fit veterinary care into the client’s budget, which means wellness plans are perfectly suited for younger pet owners.
“Younger clients want top-notch care, but in that age range they aren’t the best savers and they may be earlier in their careers,” Dr. Rothstein says. “They want everything but they don’t have the finances, so being able to budget it out makes a lot of sense.”
Bottom line? “When done correctly, wellness plans can really benefit a practice and help it grow,” Dr. Rothstein says.
Steven Wolchinsky, DVM, who owned Rocky Gorge Animal Hospital in Laurel, Maryland, for many years and recently sold to NVA, also believes in making veterinary care affordable for clients. He has a different solution, but one that in some ways provides the same result. The client communication app his practice uses includes a feature that allows pet owners to split the cost of a high-ticket item into 12 monthly payments with no interest.
“If a client wants to buy a year’s worth of heartworm or flea-and-tick product, that’s really expensive,” Dr. Wolchinsky says. “People don’t want to spend $400 or $500 a visit. But for $40 a month now they can get the best care. It’s best medicine, and people aren’t worrying about what they have to do to pay for it.”
Maintain the Profitability of Your Business
Dr. Wolchinsky is a fan of Chewy. The online pet retailer’s excellent service and lightning-fast delivery speed make for an exceptional customer service experience. But he is adamant that he will not let Chewy — or Amazon or Walmart — take his pharmacy business.
“The second my client goes to Chewy, I’ve lost them for good,” he says. “Here’s the thing: You never want Chewy to touch your clients. And the only way to do that is, one, you have to have the service and technology they do, and, two, you have to be cost-competitive.”
Dr. Wolchinsky uses a technology platform that allows clients to order products one day, have them approved by the veterinary team immediately, and receive them on their doorstep the next day. His vendor charges 5% of that transaction, which allows him to stay competitive with his product pricing.
“We make a ton of money on pharmacy because we know how to compete,” he says. That means departing from the old-school veterinarian mentality that products should be marked up 150%. “What’s 150% of zero?” he asks. “I’d rather have 50% of what I’m actually selling. It’s a no-brainer.”
Dr. Rothstein also believes that veterinarians need to maintain their pharmacy and retail sales despite the popularity of these retail giants. After all, pharmacy revenue still accounts for 25% to 30% of total practice income in a strong practice, and financially savvy business owners don’t just let that go on a whim. “Why would you give up profit?” he says.
“You have to be innovative, and you have to be lean and mean in what you carry, but it’s not that difficult to grow your pharmacy business if you focus on it,” Dr. Rothstein continues. “We have actually seen a growth in our pharmacy business in the past year, not a decrease. We’ve been helped by our industry from a marketing standpoint, with advertisements on TV about ‘Is your dog itching?’ and so on. Clients really do value these products, but it’s up to us to get a share of that market.”
Dr. Rothstein says parasite control products and arthritis and allergy medications are among his top priorities to stock in-house; for the rest, he sends clients to his partner online pharmacy, encouraging them to enroll in autoship for pet food and other ongoing product needs.
Maintaining these product sales and the associated practice profitability not only helps a practice thrive today but it also builds its value for an eventual practice sale, Dr. Rothstein says. Valuation is based largely on profitability, so strong retail sales can help veterinarians reap a better price for the business they’ve built over the years.
And last but not least, practice profitability helps team members get paid at a level that’s closer to what they deserve.
“Our practices are thriving, which means we’re able to share the profits with our team members and get closer to offering them a living wage,” Dr. Rothstein says. “If we can run a healthy business, we can pay people better and offer better benefits. All of this makes veterinary medicine more viable as a long-term career. We have a responsibility to help make that happen.”
With a loyalty program, clinics reward longtime clients and set themselves apart from competitors.
As practice manager for Minnehaha Animal Hospital and The Pet Doctors Animal Clinic in Minneapolis, Minnesota, Patti Christie, CVT, CVPM, is constantly on the lookout for opportunities to set her clinics apart from other practices in the area. When she heard about a loyalty program that would reward clients for purchasing products and services, she thought it might do exactly that.
“It sounded like a really good way to engage our clients,” Christie says. “It was a way to say, ‘Hey, we appreciate that you’re coming here to buy your food and other things when you could go elsewhere if you wanted to.’”
The loyalty plan provider Christie ultimately went with doesn’t charge practices — there is no cost to the clinic except what it rewards back to plan members. The program does, however, charge pet owners a $15 annual membership fee. But clients who sign up receive a free nail trim from Christie’s clinics, which is a $15 value. So ultimately it’s a wash.
Loyalty plan members at Christie’s hospitals receive 5% back on services and 3% on products and pet food. So, if they spend $500 on a dental, they get $25 in points to use toward a future purchase. Christie says the program was easy to set up and implement, with a website interface for the clinic team and an app clients can use to track their points.
“The biggest hurdle I’ve had to help my staff overcome is adding one more thing to talk about with clients at the front desk,” she says. “It can be crazy-busy. But knock on wood, I’ve got a wonderfully engaged front desk staff right now — I call them the dream team. Once we start having clients back in [after COVID restrictions lift], it will be easier to pick up on the marketing again.”
One of the clinics Christie manages, Minnehaha Animal Hospital, has a 40-year history in the community and a well-established, loyal clientele. These longtime clients have been the most receptive to and appreciative of the loyalty program since it was rolled out. (Christie notes that at The Pet Doctors, which skews younger, clients are more interested in monthly wellness plans.)
Clients can spend their loyalty points after they receive them or let them accrue. And a pile of points can lead to better patient care. “If someone comes in for their heartworm preventive, they might say, ‘Hey, I’ve got $120 in points!’” Christie says. “Maybe they would have only bought six months’ worth of product, but if they’ve got this money, now they can buy the whole year’s worth.”