In 1977, eighty-eight percent of the U.S.A. veterinarians opposed advertising, and today, most are doing it (but say they don't like it). Why is that?

In 1976, the U.S. Supreme Court vindicated a Virginia pharmacist of alleged unprofessional conduct for advertising prescription drug prices.

In 1977, the U.S. Supreme Court held that it was unconstitutional for a state to prohibit truthful newspaper advertising of routine legal services by lawyers (Bates and O'Steen v. Arizona State Bar Association).

These two actions, one on products and one on services, set the stage for the reversal of the traditional advertising ethics embraced by the veterinary profession and other healthcare professionals. In 1978, the Bates decision caused the American Veterinary Medical Association (AVMA) Judicial Council to publish new guidelines, each reversing long-standing prohibitions:

 No false or misleading advertising, instead of none at all.

 No restraint on directory listing type or format.

 Fixed-fee advertising for specific routine services permitted.

 Specialty listings permitted for board-certified members.

 Advertising of services available permitted.

 Credit or bank card advertising.

 Calendars and greeting cards permitted.

 ID tags permitted.

 Names on vehicles permitted.

 Promotional mailings permitted.

The court's specific rebuttals contain important logic in understanding why the profession is where it is today, particularly in price and coupon wars:

 A ban on advertising is essential to maintain professionalism. It is in the public's interest that they be informed of available routine services and fees for such services.

 Advertising is misleading, because of the inherently individualized nature of professional services. Only routine services lend themselves to advertising. Non-routine services should not be advertised.

 Advertising leads to increased overhead, the cost of which will be passed on to clients. Advertising will possibly reduce professional service costs through price competition.

 Advertising will reduce the quality of professional services. Professionals willing to cut quality will do so, regardless of advertising.

These were the thoughts of the judges on the U.S. Supreme Court, and the rebuttals to the lawyer arguments. The judges were potential veterinary clients, as well as the nationally accepted legal experts. They believed advertising was commercial speech, as well as truthful print advertising, and as such, was protected under the First Amendment. The Court also adjudged that the Sherman Anti-trust Act did not apply to state regulations concerning veterinary advertising, but it did apply to advertising constraints by national, state, and local veterinary associations. It was not the Bates case, but rather the Justice Department, that decided the U.S. Supreme Court rulings also applied to electronic media. This was where the Federal Trade Commission (FTC) got their power to ensure state licensing for medical, dentistry, veterinary, pharmacy, etc. Boards came into compliance.

The first veterinarian in any community to advertise usually incurred the wrath of their professional colleagues. Word of mouth has always been adequate. Right? Before the days of competition, this was a true statement. However, with multiple practices now within similar driving distance of the home, how should animal owners differentiate between the surrounding practices, or how should a reputable veterinary practice differentiate itself from the other practices in the area?

 The first fact is, no practice can control community advertising or the colleague down the road.

 The second fact is that in the "lack of knowledge", all buying or selling decisions are based on price sensitivity.

 The third fact is that the only thing any veterinarian has control over is the performance of the staff, within local and state wage and labor constraints; the practice philosophy, within the scope of the state practice act and its own core values; and the degree of client-centered service to be offered, within resource limitations.

Discounting Prices

Some communities have seen their veterinarians open the Pandora's box of advertising, and no one can get it closed. The extra net is being eroded by advertising and discounting. There is one national consulting firm that advocates coupons and discounting to such a level that they will not publicize net gain, only gross income changes, since virtually all the net is to be reinvested in more advertising, plus their consulting fees. Some of the newest "practice assistance" companies are only discounters, requiring the practice to discount more than their net earnings per client, just to receive new clients from the company's "advertising referral" programs. This will cost the practice lost net for every new client they gain. Have you wondered why virtually every Pet Club that has started in the past decade and that says, "If you discount to our members, we shall refer to you", has ceased to survive? The "discount or die" has rapidly been replaced with "discount and die"!

The discount or coupon logic is an attempt to increase trade. Let's look at a simple table of the alternatives available in the discounting market and what sales increase is required to maintain current levels of profitability in an average general companion animal practice. Pure net is usually approximately nine to fifteen percent, and computed after reasonable rent, clinical compensation, and appropriate return on investment has been paid):

Table 6: Discounting Market and Sales Increase Required

Now it is easy to see why the ethical consultants on the lecture circuit tell you that a ten percent discount means you need to at least double your business to remain at your current level if income. It also tells you why the less-than-ethical promotions only speak of changes in gross revenue potentials. In some cases, the practitioner will say, "My net is forty percent, so this does not apply to me." In most every case, this person has not yet deducted his or her own clinical salary from the net, and, in some cases, has not deducted a fair rent from the net either.

The above table assumes a fair clinical salary for each healthcare provider, all family members who work in the practice are paid, a return has been paid on tangible asset investment monies, and a reasonable occupancy expense, has been deducted, before stating the actual available practice net.

In today's "low net per procedure" veterinary market, there are not that many "free floating" clients available, nor is the practice built or staffed to handle that increased workload to balance a deep discount. The only way to make a total discount operation profitable is to severely limit overhead, such as in a mobile house-call practice, slash daily at any waste, such as with "shoot and scoot" vaccination clinics, or make someone or something else pay for the overhead, such as extra ancillary services or tenants within your facility.

Some practices equate advertising with Aladdin's lamp, a magical source of new clients, but have never put together a team to retain them as return clients. Three wishes and it is all gone!

We do know of two practices, out of twenty-two hundred-plus visited in the past decade, who spent the time to train their teams to capture and bond clients on the first visit. Those teams got over a sixty percent return rate in the following sixty days, following the first visit. In these cases, a reduced cost, or free, first office call was the beginning of a relationship, not the gimmick of the month.

The fee-based "professional marketing" will level out, eventually. Time, limited net, and bad experiences will cause each practice to re-evaluate their promotional position. In the healthcare setting, we know from lateral research that it costs about six times more to get a new client than it does to get an existing client to return for more services.

The rate of practice closure has increased, such as the ten percent failure rates in Colorado Springs, Toronto, and Oregon, which also almost closed Oregon's veterinary school a few years ago. Interestingly, the failed practices were most often the heavy advertisers or discount practices of the area. This should tell the profession something, if the players are willing to watch, learn, and conduct self-assessments, such as break-even analysis.

Professional advertising takes an advertising professional. Some practices have staffs that are adept at getting the clients to decide to "buy," but most just try to "sell" their services and products. This is not usually perceived as client-friendly. This is probably one of the most significant reasons that human healthcare facilities primarily advertise services and market niche needs, while veterinary practices offer spay and neuter discounts, why dentists stress personal telemarketing, but veterinarians use post cards, and why most of the veterinarians have the worst net in the healthcare field. Most veterinary clients deserve better than what is being done today.

Affordable Pet Care Sources

As any veterinary practice calibrates its fee schedule to a national standard, such as the AAHA Fee Survey® for their region, the American Association of Equine Practitioners (AAEP®) fee survey, the Veterinary Pet Insurance (VPI®) reimbursement schedule, or even the NCVEI Exam Room® web site, available to AVMA and AAHA members for free, one thing usually becomes very obvious. The practice's prices have been too low. The most recent information from VPI® states that reimbursements are only about sixty percent of the established indemnity reimbursable rates.

Care Credit® takes a different approach, where they pre-qualify a client and issue a credit line in increments of ninety days, one hundred eighty days, or even one year, same as cash. The client who wants to "charge" care should be offered this option, since if they are "turned down" by Care Credit®, your team members are not the "bad guys". However, you have been alerted to a potential accounts receivable problem if the practice allows them to use your money for free. The "merchant fee" cost to a practice of taking the Care Credit® credit card for the ninety-day period is about the same as American Express. The actual benefit is that many pet parents, with marginal discretionary dollars, would have not done the procedure unless the ninety days same as cash was made available, especially during the holiday season, when most have been "maxing out" their existing credit cards. The time it takes to pre-qualify a client for Care Credit® is usually less than thirty seconds on the telephone. So, it is always a great idea to ask, "How are you planning to pay today?", when the client initially accesses the veterinary practice, especially for urgent care, when they are first-time patrons.

Pet insurance is becoming better known, especially with the advent of wellness care reimbursement. There are two nationally respected pet insurance companies. These are based on "property insurance" coverage for pets (indemnity insurance), with no discount or practice payments. Pets Best® and VPI® offer over $200 of wellness care reimbursement to the owner for less than $100 per year premium. The wellness reimbursement basically pays the client wellness care reimbursements, which exceed the total premium for animals under five. These two insurance companies are making the miracles of modern veterinary medicine available at affordable prices, and should be the answer to price-sensitive clients, rather than designing an internal discount system that requires net to be lost.

In the next budget cycle, consider becoming professional in all the professional marketing efforts of your practice. Practices that are melding the use of Care Credit® money with the VPI® or Pets Best® reimbursements, which are usually received before the first Care Credit® payment is needed, are finding that pet healthcare is now affordable at the higher fees needed to promote veterinary medicine as a career to staff and doctors.

Help the veterinary medical profession by helping yourself and your practice. Learn to market niche, not just undercut prices. Instead of saying, "Our clients cannot afford that", so the patient suffers, start saying, "How can I help my clients afford that!?" so the patient never suffers. Consider developing a practice-specific line of veterinary healthcare services, not a line of discounted services and coupons. Include methods of payment, as well as methods of delivery. The sequence is often developed as follows:

1.  The doctor discusses the left hand column of an "estimate", which we call a healthcare plan for obvious reasons, while the OPNT runs a travel sheet through the computer to get a pre-printed healthcare plan. AVIMark® allows the practice to change the name in the written document, and with the 5.0 update, Cornerstone® allowed the change also.

2.  The doctor closes the discussion of services needed, and wellness value of each service, with, "Is this the level of care you wish for Fido today?" In marketing, this is called a "trial closure", since it is not yet a commitment to buy anything.

3.  If it is a positive reply, the doctor turns to the OPNT and says, "Let's get the paper work signed and schedule Fido for an admission." Then the doctor departs the room.

a.  The OPNT presents the healthcare plan, a computer-driven estimate from the veterinary software, now with the costs following the services discussed by the doctor, and presents the hospital admission consent form (see the AVMA Directory, page 117).

b.  She waits for signatures, and then asks, "Will this admission be better today or next week for Fido and you?"

4.  If it is a negative reply, as in, "We cannot afford this today", the doctor turns to the OPNT and says, "We are deferring care for Fido for a week, while we try symptomatic care. Let's schedule a follow-up call for this symptomatic treatment, and a recheck visit to ensure we have restored wellness." Then the doctor departs the room.

a.  The OPNT presents the healthcare plan, again generated from the veterinary software, now with the costs following the services discussed by the doctor, and asks if they want to look at alternative payment methods today or next week, when they return.

b.  The OPNT waits for a reply, and then states, "Let me get our practice manager in here so she can explore alternatives with you today."

When we discuss "needs" there is no "optimal care", no "recommended care", no "alternatives". It is needed care and we do not confuse the client with unclear words. When a client defers care, or asks for symptomatic care, a caring practice increases the surveillance until wellness is restored. This is called being a patient advocate, respecting the human-animal bond, as well as the practice's mission focus. Differentiate yourself and your practice by caring enough to be the best in whatever you stand for, not just the cheapest!

Affordable pet care is an extension of the charter "to do no harm", the first rule of medicine. It is a commitment to help the client find alternative ways to pay for the needed care before the crisis occurs. We have discussed veterinary pet insurance as one option, and Care Credit® as another. Some practices establish a working relationship with a local bank that wants more business, to assist clients on a case-by-case basis. Some practices do extend credit to established and preferred clients, but add an initial billing fee, as well as a monthly percentage to each bill they send. Some practices take "hold checks" or "hold credit card slips", never post-dated and just held per verbal agreement. And then there are those practices that do not have a credit policy, and try to make different decisions on different days, based on different doctors in different moods. This is called "frustrate the staff, while building accounts receivable".