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The economics of telehealth

Do you know who your clients are calling after hours? You can concede the business to someone else or you can take an active role in meeting their needs.

The economics of telehealth
Providing after-hours triage care can improve client service, team morale and job attractiveness.
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While the telehealth conversation has largely centered on telemedicine and whether a veterinarian can diagnose a case through digital tools, after-hours triage care — nights, weekends and holidays — is an important but often overlooked consideration for practicing veterinarians.

The American Association of Veterinary State Boards recently voted on a new model act of practice — visit http://bit.ly/2Dce0mo — that might change when and how a veterinarian-client-patient relationship can be established. In the meantime, an opportunity exists today for practices to use telehealth tools that are within existing VCPR requirements.

Using an after-hours triage service can help veterinarians maintain an appropriate work-life balance, retain clients who do not need to visit an ER or specialty service at that moment, and provide peace of mind to pet owners.

The public’s desire for “service on demand” raises a number of interesting questions:

  • Is there an unmet need in the veterinary profession to provide after-hours triage care?
  • If such a need exists, what solutions exist and how are they different than telemedicine?
  • How can after-hours care be monetized, and what would be the economic impact on a practice that provided it?
  • Would the practice be better or worse off if these activities were done in-house?
  • Who should be allowed to practice triage without the existence of a VCPR?
  • What other non-financial benefits could a practice generate by providing the service?

Let’s tackle each question.

1. Is there an unmet need in the veterinary profession to provide after-hours triage care?

Today, most veterinary clinics when closed use an answering machine to refer clients to a nearby emergency facility or prompt the caller to leave a message. In many cases, measuring how many clients hear the automatic response and hang up versus how many leave a message is difficult. It’s also hard to know how many clients never call because they don’t think their situation is an emergency.

Pet owners without medical training often cannot accurately judge the level of care that is necessary. They can only judge the client service they received. Dr. Philippe Moreau, in a presentation to the World Small Animal Veterinary Association World Congress, asserted that clients’ No. 1 expectation of veterinarians was kindness and compassion, followed by availability.

Many practices are not aware they typically receive up to 15 after-hours calls per doctor per month. Assuming a four-DVM practice, that would mean clients tried 60 times to reach out and potentially were sent elsewhere.

I believe the use of answering machines to refer questions to an emergency facility can lead to suboptimal outcomes for general practices and emergency facilities alike. General practices lose a valuable opportunity to engage in client service while emergency hospitals are frequently burdened with non-urgent issues that might impact their standard of care.

2. What solutions exist and how are they different than telemedicine?

In the absence of a VCPR, general advice and emergency triage are the only options that can be provided to a pet owner. The practice of emergency triage involves a spectrum of providers — from Pet Poison Hotline to dedicated after-hours triage providers.

In every situation, important factors should be considered, such as:

  • What are the limitations to the advice being dispensed?
  • Does this create additional liability for my practice?
  • What criteria should I use to evaluate after-hours options?

3. How can after-hours care be monetized, and what would be the economic impact on a practice that provided it?

The economics of providing after-hours client care using a third party is nuanced due to VCPR limitations and limitations on what information can be provided.

Because of this, the monetization of triage care is best achieved indirectly rather than upfront.

Best results are achieved by:

  • Offering the service for free to existing clients and tracking the number of new appointments generated by being available after hours.
  • Using the service to attract and convert new clients.
  • Raising exam fees. Clients are often willing to spend $2 to $5 more on an exam fee if they get free after-hours support in return.
  • Incorporating the service into a wellness plan.

A four-DVM practice grossing $1.5 million to $2 million a year from 6,000 active clients might see upward of 60 clients reach out with questions after hours each month.

Based on my experience, we can assume the following:

  • 60 percent of the calls are non-emergent.
  • 80 percent of the appointment requests later walk in the door.
  • 5 percent of after-hours calls are from potential clients.
  • The average transaction size per client visit is $125.
  • The lifetime customer value is $1,250 per new client.

This typical practice would see 28 new appointments in the course of a month, two new clients and $7,500 in new monthly revenue, leading to $90,000 in additional income over a year’s time.

What if a practice wanted to offer telemedicine on top of providing an after-hours triage service? Assuming the chosen platform allows the practice to charge clients directly for services rendered, the formula to understand the bottom-line impact is:

Total practice profit equals [the number of remote consults multiplied by the marginal revenue per consult] minus the flat fee per month.

Therefore, suppose the following:

  • Platform A has a flat monthly fee of $75 per month.
  • Platform A charges a 10 percent transaction fee for every consultation.
  • Practice B charges $50 per telemedicine consultation.
  • Practice B sees an average of 10 clients a week remotely (40 a month).

We can determine the total practice profit this way:

[40 consults multiplied by $50 per consult] minus [40 consults multiplied by a $5 consult fee] minus a $75 flat fee per month.

We can therefore see the practice would generate an additional $1,725 in profit if it saw 40 clients through a telemedicine platform over one month. We also can see the practice needs to do at least one consultation a month or else it would lose money given the flat fee structure.

4. Would the practice be better or worse off if these activities were done in-house?

Many practices that try to take calls after hours use a rotating staff schedule. In this case, they should factor in the cost of providing the care internally — How much do I have to pay my DVMs and veterinary nurses to be available after hours? — and assess whether nighttime work can affect daytime performance.

It is important to note that an in-house approach cannot be done low tech at scale. Technology needs to be developed to track, monitor and record every call, integrate with medical records, and allow for appointment scheduling. Furthermore, consideration needs to be given to caller time zones and for variations in how other hospitals want triage practiced for clients if the practice is part of a larger group.

5. Who should be allowed to practice triage without the existence of a VCPR?

I believe only licensed DVMs or licensed veterinary nurses under the supervision of a veterinarian should be allowed to practice emergency triage.

6. What other non-financial benefits could a practice generate by providing the service?

Asides from the economic imperative to provide after-hours triage care, practices typically benefit in two intangible ways:

  • Improved client service. This builds trust, loyalty and awareness. Retaining clients is cheaper than acquiring them.
  • Improved team morale and job attractiveness. Remember that burnout is a real issue and that turnover is expensive.

In summary, veterinarians have to balance many interests when running a practice, including:

  • Providing the best medical care possible for patients.
  • Providing the best client service possible.
  • Ensuring the practice generates a profit.

I hope I have shown that these interests don’t necessarily have to compete with each other, that after-hours triage is distinct from telemedicine and that telehealth can be a useful tool for improving how client service is delivered.

Innovation Station guest columnist John Dillon is founder of GuardianVets, a provider of after-hours telehealth consults on behalf of veterinary practices. Innovation Station columnist Dr. Aaron Massecar contributed to this article.

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