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Developing common sense strategies for fiscal responsibility
Using an interactive template to plan service protocol changes

DVM InFocus

Significant assumptions To design this model, we assume that the average patient's life expctancy is 14 years. The template allows for your customized planned vaccine frequency and pricing over a single patient's life.

The starting point for data input is the practice's current fee schedule for services used as part of the regular annual vaccine protocol. You will also need to use your current recommended vaccine and wellness protocol year by year, spanning ages 2 through 14 for a typical canine patient.

The horizontal axis of the model is formatted by ages 2 through 14. The vertical axis is a listing of each specific service typically provided each year as part of the wellness and vaccination program currently in effect. We have listed some typical service descriptions but have also left blank spaces for you to add services used in your own practice. For each service, list the normal fee charged. Spread each service charge out over the years, inputting a fee for each year the service is recommended. Do not make any fee changes for the typical annual increase that would normally be expected in veterinary practice operations. For the purposes of this template, we assume that the annual increase in a fee for service would approximate the discount rate of a present value to the current time. Specifically, a $30 office call today might be $100 14 years in the future, but discounted back to present value, it would still be $30.

Next, total each column of fees charged for vaccines, physical examination and any other typical annual procedures for a healthy patient. Establish a grand total of all 14 years added together. You have now completed step one.

Proposed protocol In the next template, input a list of all services to be provided under the proposed wellness and core vaccine protocol change. Theoretically, you have already passed through the philosophic debate and come to a conclusion about standard vaccine protocols for the next six-month to one-year span. As always, protocols can be customized to meet the needs of the animal, and also address new scientific data and researched guidelines and manufacturer's support of revaccination timing. The recently published American Animal Hospital Association Canine Task Force Guidelines become a reasonable starting point, summarizing current issues and providing a resource of supporting literature. A veterinary practice can then customize its vaccine guidelines to meet the specific needs of each patient.

Use a highlighter to mark each applicable block for a particular vaccine. Consider staggering or staging vaccines to enhance probability of annual care continuity. An important education communication issue will be that of increasing client appreciation for the importance of annual physical examination.

Using the practice's current fee structure, determine the grand total of revenues realized for an adult canine patient seen for ages 2 through 14. Compare this new tally with the grand total previously computed. Use the exact same fee structure you used in the first model. The computed difference between the two grand totals is the estimated income loss on a per patient basis.

For a real eye-opener of potential revenue loss, research practice records for the most recent 12 months of client activity to determine the estimated number of adult canine patients that were seen for annual vaccinations. Multiply this number times the revenue loss calculated above on an individual patient basis to determine the total potential lost income.

Now drive revenues Do not get discouraged! Changes in product and service mix have been an ongoing fact of veterinary practice existence. Evolving ideas about vaccine protocols are no different than the introduction of parvo vaccine years ago, recommendations for less frequent heartworm testing more recently, and loss of dermatology income after the introduction of incredibly powerful flea preventatives in the mid-1990s.

First, ask yourself what you can reasonably change in terms of pricing for vaccines and office/wellness examinations. Hopefully, you have already made a conscious decision and taken action to separate the physical examination and annual office call from vaccine pricing. Such segregation gives you the greatest flexibility in moving the practice toward one that is not reliant on vaccine income at much more than 5 percent to 7 percent of gross revenues. Certainly, moving your practice toward 10 percent or less of vaccine-related revenues would be an admirable goal.

Time, knowledge and expertise become your stock in trade, like Abraham Lincoln's. Factors such as potential elevated legal status of animals, extra time for consultation about customized wellness and preventative programs, and requirements of informed consent will all lead to higher office call fees. Challenge yourself to consider an office call fee at least 25 percent higher than what you currently charge as part of the annual wellness strategy. Start tweaking your fee schedule in that direction.

Secondly, consider vaccine pricing. Vaccines still have a high level of perceived value in preventing devastating and potentially lethal diseases. Rather than giving the vaccines away, consider adjusting vaccine prices upward if you have maintained the status quo for the last decade. Many practices have, from the standpoint of being a perceived shopped item among the client base.


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