"We have always done it that way"
When the only tool you have is a hammer; all problems are approached as if they were nails.

The landmark R.K. House & Associates report of the 1990s showed most Canadian practitioners that they were undercharging, and explained most of the issues in accounting terms and ratios. The AVMA/AAHA Mega Study of 1999 showed good news and bad news, but only the negatives received the major attention.

There are many ways that money appears in a veterinary hospital, and without it, nothing else can occur. In fact, without it, the front door gets locked by the bank and it can never swing again. This section is designed to allow the reader a method to reassess the habits and bias of the years that have gone before. Many perspectives shared herein are from the three-volume text series Building the Successful Veterinary Practice and can be applied to any practice by leaders.

The major problem in veterinary medicine is that we are a young profession, and we are defining the business as we go. The first companion animal hospital was built in 1929, and the American Animal Hospital Association was started in 1938. This means most all practice owners learned from some guy who was in a farm practice and decided to see the smaller companion critters. That is why we call it "small animal medicine". Look at the following habits and traditions, and the alternatives, and you may start to understand:

 We have routinely scheduled one doctor in one room with a single column of clients, yet physicians use four to six rooms per doctor, and dentists are double that number. Now think of the old-time veterinarian, in his truck, doing one farm at a time.

 The smart practice has started to schedule two or three consultation rooms concurrently, but out of phase, for a doctor-nurse (technician) outpatient team. In four hours, a full day's companion animal workload is possible, thereby allowing time for the equine and producer clients in the normal workday, instead of late into the night.

 If you believe that we can practice smarter, and understand that "staff produces the net", while the doctors produce the gross, review "High Density Scheduling" in the VCI® Signature Series Monograph Zoned Systems & Schedules for Multi-doctor Practices for some alternative methods. It includes a CD, containing possible scheduling options.

 We have routinely charged anesthesia by the animal size, yet isoflurane only costs $6 per hour to use. Now think of the value of the cow in the chute, the veterinarian and his/her black bag, and the cost per kilogram to make her well. What else are you hanging onto?

 If you want to see the new perspective, consider this sequence, with each item/procedure deserving its own fair price:

 Anesthesia "risk level" assessment at admission, included in exam.

 Pre-anesthetic blood screen, which varies with age and physical condition.

 Pre-surgical pain management, which varies with age and physical condition.

 IV TKO (To Keep Open), a slow IV drip to maintain hydration and allow quick access in cases of anesthetic misadventure.

 Induction, which is less than $20, but covers most overhead.

 Initial maintenance, not by weight, but for thirty minutes minimum.

 Risk level of anesthesia and monitoring required.

 Continuing anesthesia maintenance, by the minute.

 Post-surgery pain medication.

 Post-surgery hospitalization.

 Then the follow-up plan.

 Traditionally, practices have made pre-anesthesia blood screening voluntary, IV supportive therapy during surgery an exception, and always say, "But what about the price????" Yet, progressive practices put these quality care items in the bundle, and over eighty-five percent of the clients say "okay".

 In quality companion animal practices, the blood screen is mandatory now.

 In progressive practices that worry about animal pain and rapid recovery, supportive IV therapy during surgery is mandatory. VECCS states that eighty percent of all surgeries deserve fluid therapy during the procedure.

 The full, traditional, pricing is secondary to the "need" of the patient and the "need" of the provider in quality care. Compromising professional standards is a liability. A surgical IV is a butterfly and few hundred ml of fluid, a very inexpensive cost at above the traditional two-point-five times mark up when at $10.

 We have always charged hospitalization cage and run space by the animal size, almost like a feedlot operation.

 The value is in the time, process, and people involved, not the kibble in the bowl. Set the fee schedule so the treatment demands set the charges:

 Day care cases level I hospitalization, are forty percent below current level.

 o.d./b.i.d. cases, level II hospitalization, is the current single level.

 t.i.d./q.i.d. cases, level III hospitalization, are fifty percent above current level.

 IV cases, level IV hospitalization, also post-surgery, are double the level II.

 ICU./CCU cases, level V hospitalization, are double-plus.

 Yes, this can be used in bandaging, as in no joint, one joint, two-joint, with an appliance, or supportive wrap, or without. Start rethinking your habits!

 We have always been afraid to sell our knowledge, and instead, have routinely sold "things", such as vaccines at major inflation markups, the cost of the "exam" instead of the doctor's consultation, etc.

 Producer veterinarians have started charging for their time, even on the telephone, with clients.

 Producer veterinarians have started to use software computer systems, to manage the husbandry for their clients, and charge for this service.

 Producer and farm veterinarians charge by the mile to get to a client, yet specialists, who travel between companion animal practices, usually do not.

 Ambulatory veterinarians have added a driver, and in turn, besides less accidents, have added about fifteen to twenty percent more net to the daily fees.

 When the pendulum swings, why do the companion animal veterinarians always wait for the "other guys" to change first?

 We have always managed companion animal practices by expense comparisons. Yet, the traditional veterinary software has been developed to be like very fancy cash registers, only tracking income factors, and a mail merge for client mailings.

 Without expense-to-income relationships, you cannot determine net!

 Program-based budgeting provides program and procedure factors to manage practices, the things that make the front door swing!

 The new veterinary software systems, in Windows® technology, will track healthcare delivery, in picture and word, and the better systems will also have automatic data download capabilities to existing spreadsheet programs for easy practice use

Now let's look at one simple "continuity of care" example, with fees, and use it to compare where your practice has positioned itself.

First premise: Every animal that comes into the companion animal practice deserves to have its teeth graded, and we recommend using the four pictures and descriptions on the back of a common vendor handout brochure. This is so the client can take the picture home to the family for further discussion.

Second premise: The staff explains the grades in terms of "pain" and "bad breath", not periodontal disease and gingivitis, which is doctor talk that confuses most clients.

Third premise: The doctor endorses the nurse technician as the dental hygiene counselor, thereby releasing the doctor to the next case and allowing the staff to continue the care and client education process. So how does this work in a real practice setting? Here is an example:

 We have always charged one rate for dentistries, but look at what our staff must do in each case, when we grade teeth. It is not like floating teeth in horses.

 The value is in the time, process, and people involved (the dollar values are only starting examples), and grades one (early dental cleaning) and two (late dental cleaning) must be set on the community standard, since dental care is becoming a commodity (quotable) item. Concurrently, dental cleaning is a staff function, and the dentists have taught your clients that a dental cleaning by staff is about twenty-five percent the cost of the same time spent in the dentist's restorative chair:

 $134 -- Grade 1+: White incisor teeth, mildly red gums, a little molar brown color; a condition usually medically ignored, although "red means pain!" and "brown teeth" mean "bad breath", as well as bacteria cascading to the kidney, shown by a positive ERD in most cases. This is the beginning of bad breath, and the client must be told about the bacteria, not just the plaque! This is only a twenty-minute procedure.

 $254 -- Grade 2+: Brown teeth on full arcade, and where many practices have probably set the current cleaning fees. Bad breath and pain are very evident. Tell the client about the pockets of bacteria under the gums, which means up to twenty-five percent detachment of gingiva! This is a thirty-five to forty-minute procedure. X-rays are required for all cats with dental neck lesions and late grade 2 arcade, and are an extra charge.

 $400 -- Grade 3+: Oral surgery. Tartar/calculus build-up, twenty-five to fifty percent gingival detachment, really bad breath, a lot of pain, and a very hard mouth to clean. About an hour procedure time. X-rays required.

 $550 --Grade 4+: All of the above, and problems down into the bone, over fifty percent gingival detachment, with major infection and systemic concerns. This oral surgery procedure will be a major correction, over an hour procedure, with extensive X-rays, and protracted medical care program.

 And if this system is used, and if the dental grade is recorded in the medical record every time, the number of dental procedures will increase, the quality of healthcare will be enhanced, and most importantly, the other people in the practice will know what was said previously and start from that point, when talking with the client.

So yes Jack and Jane, more money does matter, but it comes from quality healthcare delivery and new perspectives, not just charging a higher fee for the same things. Liquidity must be captured from the work we do. It is not just the average client transaction (ACT) or revenue per visit (RPV), but rather, it is the number of visits per year per client. It is setting the expectation for the next contact, or scheduling the next visit, not just selling some extra pet food or shampoo.

Veterinary medicine is a fee-for-service business, products are only supportive, and in companion animal practice, we generally treat patients that are considered "family members", as shown in the original family value research published in The Pet Connection, CENSHARE, University of Minnesota, and more recently, from the Pfizer survey of 38,000-plus veterinary clients. We deal in "needs" of the patient, the client, and the provider.

So as you look at the accountant's figures, please remember, these people have never palpated a cow, never stood at the exam table, or never counseled a client in grief. They know to whom you wrote the checks and for how much, but they don't know how to schedule the return visit, how to ask about the other companion animals at home, or how to pass a case to a staff member for sequential monthly weights, parasite prevention and control counseling, sequential laboratory screen, or dental hygiene follow-up. Accountants do not know how to generate healthcare delivery income. They deal in expenses, so the "financial reports" seldom match income centers to expense centers, thereby hiding "net income" evaluations from the practice. In reality, as consultants, who have dealt with thousands of practices, it is always far easier to increase income by fifteen percent than it is to reduce expenses by three percent.

Veterinary practice is a business, which means timely reports of the cost of delivering a specific service, which then allows rational decisions about what fees to charge. You do not set fees by comparing your practice's habits with others, who are stuck in similar ruts. Use the AAEP Fee Survey, AAHA Fee Guidelines, the www.ncvei.org "Exam Room Internet System", or VPI reimbursement schedules. Remember, these are "risk sharing" tables, at fifty percent for Standard and eighty percent for Superior of expected costs, without hospitalization.

Quit using a hammer to make the fees increase. Think increased visits per year, many with the nursing staff. Become innovative and creative in your quest for healthcare excellence, using established professional benchmarks. Call a veterinary-specific consultant, who subscribes to the "Code of Ethics" posted at www.avpmca.org, the national consultants and advisors organization. Start using the professional knowledge at your fingertips and in your heart, and challenge the old habits that have gotten you where you are today!