The Bayer Veterinary Care Usage Study published in 2011 showed that pet owners would visit the veterinarian more often if: (1) veterinarians provided a health plan for their pet, and (2) pet owners could pay for routine veterinary services in monthly installments. Wellness plans, sometimes called preventive care plans, satisfy both objectives.
In deciding whether to initiate preventive care plans, one of the most common questions veterinarians ask is: What will be the impact on the practice?
To answer the question, Brakke Consulting interviewed corporate and independent practices that offer wellness plans. The independent practices included Bigger Road Veterinary Clinic in Kettering and Springboro, Ohio; Doral Centre Veterinary Clinic in Doral, Florida; and Lansing Veterinary Clinic, Lansing, Illinois. These practices use a program available from Veterinary Pet Insurance (VPI, currently changing its name to Nationwide) called Preventive & Wellness Services (P&WS), a program I helped design. National Veterinary Associates (NVA), a privately held corporate owner of veterinary practices, has installed Pet Annual Wellness (PAW) plans in 129 of its practices, with more than 40,000 active plans.
All practices found that wellness plans increased visits and revenue, expanded and improved patient care, helped attract new clients and strengthened the practice-client bond. “Wellness plans make preventive care more affordable” was a common theme among all practices interviewed.
Increase in visits
NVA found that professional service visits for those purchasing plans increased 69 percent compared to the period before these clients purchased plans, from a mean of 3.3 visits per year to a mean of 5.5 visits per year.
Lansing compared the number of visits before and after purchasing plans, as well as the number of visits by plan participants compared to non-plan patients. Clients with wellness plans visited nearly twice as often as those without plans, and much more frequently than they did prior to purchasing plans (Figure 1).
Increase in revenues
Both NVA and Lansing found that annual revenue per patient increased significantly for patients with wellness plans compared to those with no plan. In Lansing’s case, clients with wellness plans spent much more on veterinary services than they did in the year prior to starting the plan. They also spent substantially more than those clients without plans (Figure 2).
Similarly, NVA found that the mean amount spent annually per patient for medical services increased 57 percent, from $389 to $613. NVA found that expenditures on nonmedical products and services outside of the plans increased 29 percent, from a mean of $223 to $286. So the total “lift” from wellness plans was $287 per patient per year.
Bigger Road Veterinary Clinic’s experience was similar. Its records showed that clients spent an average of 65 percent more in the year after purchasing wellness plans than they did the prior year.
Sources of revenue growth
There are many reasons why the average spend per patient is higher with wellness plans. Plans include a more robust array of services than the typical client generally purchases a la carte in routine appointments. Lansing clients purchased far more lab work once routine blood screening was included in plans. Bigger Road found it was able to capture vaccinations that had been lost to mobile vaccination clinics and product sales that had been lost to online vendors.
Dental is another growth area. Like many practices, NVA and Lansing include annual oral health assessments and treatments in their more comprehensive plans. NVA’s dental compliance and revenue has increased dramatically under its PAW program (Figure 3).
Wellness plans tend to drive increased visits not only for preventive care but also for out-of-plan medical needs as well. Often the greater use of services such as wellness bloodwork and dental cleanings leads to additional recommendations by the veterinarian. The combination of discounted care and the ability to spread the cost over time results in greater client compliance with those recommendations.
Doral Centre Veterinary Hospital has found wellness plans to be effective tools for recruiting new clients. Doral estimates that it is gaining 30 to 40 new clients per month due to wellness plans alone. Doral found that wellness plans were especially attractive to new pet owners because these clients don’t know what care pets need and they’re nervous about how much veterinary services might cost. Wellness plans give them a pet health roadmap and a way to budget the expenses.
Pricing and discounts
The practices interviewed for this report typically offer 10 to 15 plans, including plans for both dogs and cats. Prices varied. Many “standard” plans were in the $25 to $35 per month range, but some were as high as $45 per month. Premium plans, which typically include spaying or neutering for juvenile pets and dental assessments and treatments for adult pets, typically cost $10 to $15 per month more. Some practices offer a third level, or “advanced” plan, with added services typically recommended for senior pets. Plans sold for dogs far outweigh plans for cats. VPI has found $30 per month to be the sweet spot for standard plans, especially for dogs. At that price, most pet owners find preventive care very affordable.
Both NVA and Lansing discount services 35 to 40 percent. Part of the rationale is that wellness plans provide for a much more comprehensive package of services than clients typically buy, including such things as twice-a-year wellness exams and fecal tests. In addition, clients rarely utilize all the services included in the plan, so some of the discount is “recouped” in unused services. The combination of more robust services, services paid for but not used, and additional outside-the-plan purchases adds up to substantially increased revenue per patient—as well as a higher level of veterinary care.
Bigger Road Veterinary Clinic does almost no discounting, but it does include at no cost a small number of inexpensive services such as nail trims. Yet it has sold more than 500 plans in a little more than a year.
All practices referenced in this article charge a one-time enrollment fee, generally $45 to $50. The enrollment fee helps gain a commitment to the plan from clients, and it helps offset the deferred cash flow due to receiving revenue in monthly installments.
Most plans include free visits. NVA PAW plans include up to four visits per year. Bigger Road plans include three visits and Doral plans five. Lansing offers unlimited free visits.
All the practices discussed here incentivize their staff for selling plans. NVA contributes $10 into a fund shared by the staff for each plan sold; Lansing’s incentive is $5. Doral sets a sales goal and pays a bonus if the goal is met. Each front desk employee has a quota in order to qualify for the bonus. In its first year, Doral signed up 678 patients for wellness plans.
Melissa Garcia, practice manager at Doral, says, “The conversation about wellness plans is one of the easiest discussions about price our staff ever has. The plans sell themselves.”
Selling plans happens primarily at the reception desk. The entire staff, including veterinarians, should be on board and reinforce the importance of preventive care and wellness plans. But the receptionist needs to present the plans before the client sees the veterinarian.
For practices that have no prior experience with wellness plans, they are a major operational change. Setting up wellness plans involves plan design and pricing, changes to the practice management system, team training and marketing. NVA’s experience is that it takes about 60 to 90 days to make a practice fully operational.
“It’s the biggest change you’ll ever make in your practice,” said one practice manager.
In NVA’s experience, while doctor support is essential to the success of the program in the practice, veterinarians are often the hardest to convince. There are four main reasons:
- Doctors fear loss of production income.
- They feel discounting devalues their service.
- Doctors overestimate client compliance for wellness care.
- They are often sensitive to what could be perceived as “protocol medicine.”
Once plans are in place, however, veterinarians usually become staunch advocates. Patients get more and better veterinary care, veterinarians see their clients more often, and production pay goes up because clients spend far more at the practice. At NVA, production pay increased 57 percent for those clients with wellness plans.
Based on implementing wellness plans in several hundred practices, VPI’s team outlined what it considers critical to success:
A commitment and priority on the part of practice ownership and staff. It should be the one major change the practice tackles in a given year.
- Goals for number of plans sold
- Reasonable expectations
- Strong communications and training for the entire team
- A reward or incentive program for plan sales
- Plans built around the practice’s existing wellness standards
- Realistic pricing
- An internal champion responsible for success.
John Volk is senior consultant with Brakke Consulting Inc. in Chicago. This article is adapted from a presentation given at the 2015 American Veterinary Medical Association Convention in Boston.