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Supporting your Local Veterinary Hospital
A lesson in Veterinary economics
It really is a Hospital
also see About Vets
also see Problems with Your Vet
A lesson in Veterinary economics..Q: Greeting,
Great web site, we enjoy it. As a dog lover, and am owned by a german
shepherd and siberian huskey, I am very careful to be current on their
shots and exams and monthly heart worm medication. After my vet kept
raising his price for Interceptor each time I purchased it I began to
compare cost to mail order Interceptor. It required a prescription but
the savings amounted to about $10.00 per package of 6. With two dogs
this added up. I am a senior citizen on a fixed income. So, I asked my
vet for a copy of prescription to send away with my order so I could
purchase Interceptor by mail. Of course my pets will still see the vet
regularly. The vet charged $6.00 for each prescription and marked, NO
REFILL. This means only a 4.00 saving. I called around my area and the
rest of the vets say they will absolutely not give copies of
prescriptions for heart worm medicine or any medicine. This is more than
upsetting. They charge for their services and are well paid I think. A
routine exam with fecal check and blood work costs $100. per dog. Do you
have any thoughts on this? I have been told that the state Vets assn.
recommends that the vets charge for prescriptions but encourage them not
to do it at all and to discourage mail order purchases.
Thanks for your feedback and letting me get this off my chest.
Sandra
A: Sandra-
Well, I have really mixed feelings about the issues raised in your letter.
So I'm going to put the short answer in the next paragraph and then a long
explanation in the paragraphs that follow that is certain to ramble on and
require some thought and probably make some people mad at me. Please feel
free to read only as far as you feel the urge to.I think that veterinarians should not charge for prescriptions for
medications that the client picks up at the office or are given as part of
an office visit. I think it is fair to charge a fee to cover postage and
handling when a client insists that the prescription be mailed to them,
which several of my clients insist on. I do not know the practice acts or
Board of Veterinary Medicine decisions in all, or even most states, but I
would be surprised if a board actively discouraged the writing of
prescriptions for medications. It is my understanding that some states
specifically prohibit charging for writing a prescription. It would be a
good idea to call the Board of Veterinary Medicine in your state and find
out what the policy really is. In theory, these boards are for the
protection of the consumer as well as the veterinarian. In reality most of
them tilt one way or the other. You might as well find out which way the
board leans in your state.This is a lot bigger issue than it appears, though. The existence of
mail-order pharmacies is a relatively new thing and only one of the ways in
which the relationship between veterinarians and their clients is changing
right now. Veterinarians are losing their traditional ways of making money
and are in a scramble to figure out what to do about it. Some are clinging
to the old ways ferociously. Refusing to write a prescription for
medications is one way of doing that. Other vets are jumping off the
traditional ship and selling medications in catalogs, buying into
veterinary medical offices in pet store chains and forming pet health clubs.A simplified short history of the way veterinary medicine developed might
help to understand what is happening. Until the early 1980s all
veterinarians received intensive training in both large and small animal
medicine. They received training in large animal medicine because it fit
the traditional role of the veterinarian, which was to help an ensure an
adequate and safe food supply and to treat the animals with work to do,
such as horses. Of course, cars and trucks sort of eliminated the need for
beasts of burden and pets began to be perceived as animals that contributed
to the well-being of a person or family. This perception gradually grew in
strength and was bolstered by the disappearance of a lot of the farm
related work. Veterinarians could honorably specialize in dog and cat
medicine by the 1940s or 1950s but the really good years of dog and cat
medicine were the 1960s and 1970s. Good vaccinations became available for
many of the really bad diseases affecting dogs. There was enough money to
be made in vaccinations that it was possible to purchase hospital equipment
and to do complicated surgical procedures at prices that are amazingly low.
All it took was to put some of the money from the vaccinations into the
hospital equipment and salaries. Veterinarians could afford to repair sick
and injured patients at subsidized rates. For some reason it never occurred
to veterinary clients to really wonder how veterinarians could afford to do
an ovariohysterectomy for $75 when it cost $8000 for the same surgery on a
human. For many veterinary hospitals vaccinations produced 60% or more of
the profit while representing about 25% or less of the day's work. The
transfer of money from vaccination profits to cover surgical costs and
hospital costs could be looked at as a form of health insurance or a health
maintenance agreement. Unfortunately, it was an agreement that most vets
understood was occurring and most veterinary clients didn't.I think it is a true statement to say that veterinarians either have the
lowest self esteem, are the stupidest business people or are the biggest
bleeding hearts among professionals. At almost every continuing education
meeting some vet will say that a procedure is justified for the pet's
health but the client won't pay for it so if you want to do it anyway
you'll just have to eat the charges and then admits doing just that. We
work on patients with a definable economic value. It might be 20 cents for
some owners and it might be "everything I own" for others, but it is
definable. We spend a good part of our days figuring out what each of our
patients is worth to its owners. When the owner won't care for a pet
properly we often cut the fees and work on the pet anyway, just because
it's the puppy or kitten that gets hurt, not the client and it is our job
to see that the puppy or kitten is OK. At least that's what we tell our
spouses and our accountants when they ask why we do it. When we don't do
it, because it has been a bad day or because we have looked at the practice
check book recently and realize that we really do have to have $3000 to pay
a pharmaceutical company tomorrow we feel guilty. Maybe only a little, but
enough to make the job stressful. It has only been recently that the
discussion of a patient's economic value has even been allowed to surface
in human medicine. Negotiating over the value of a human life in cash,
today, in the physician's exam room isn't a day to day experience yet.So veterinarians don't make as much money as physicians. Big deal. But what
is happening to the money they do make? There was a high profit in
vaccinations. Someone always tries to figure out how to make a killing
whenever there is such an opportunity and Drs. Foster and Smith and others
have decided to do just that. Vaccinations could be sold through catalogs
because they weren't regulated by the FDA and there was a high
profitability. Clients were surprised and sometimes outraged to see that a
vaccine that their vet charged $30 for sold for $2.98 in a catalog. They
didn't think about the examination that went with it because vets didn't
charge for the exam, they charged for the vaccine. They really didn't think
about the fact that their vet only charged $300 to fix a fractured leg
because they thought it was expensive based on what they thought the dog
was worth instead of really cheap compared to what it cost to fix their
son's broken leg - especially if insurance through work payed for it and
they never had any idea what the cost was, anyway.Well, some people made a whole lot of money selling vaccines to the public.
So what was another profitable item? Heartworm prevention medications. And
here a new factor entered the equation. The pharmaceutical company spent a
lot of money figuring out how much you would spend a month for heartworm
pills for your pet. They knew the vet was going to approximately double the
price of the pills and they asked a bunch of people what they would pay for
the convenience of a once a month pill versus a daily one. Then they halved
that figure, noticed that it gave them a healthy profit and sold it to vets
for that price. People would pay it. Pricing by demand was never pushed to
the limits it has been with the monthly heartworm pills, monthly flea
products and the new pain-relievers for pets. Vets went along. After all,
they were going to make a good profit on the medications. Another
opportunity for easy money to be made. If a person only has a warehouse to
pay bills on instead of a veterinary hospital it is possible to sell the
medication for less and still make a healthy profit. Sure, there are early
fights with state regulatory boards and the FDA but the laws generally
favor consumers in situations like this and somehow that usually gets
defined as "less cost = good for consumers", regardless of other less
obvious factors. It looks good to the consumer because the consumer still
doesn't understand that where their vet is making money and where their vet
is losing money or breaking even but supplying services essential to the pet.At this time, or in the very near future, vaccination income will no longer
support a veterinary practice. It will be harder to sell big-ticket
pharmaceuticals with a high profit margin. Veterinarians are not going to
leave the profession in droves because it isn't human nature to give up on
years of training in specific job skills and look for another job. So
veterinarians are simply going to raise the fees for professional services
to the range they probably should have been all along. This is will make
emergency care and major illnesses too expensive for many pet owners.
Either pet insurance (or HMOs) will become a prominent player in veterinary
medicine or veterinary medicine will become the loss leader for large pet
stores or even possible pet pharmacies.The odd thing about this is that when it is all said and done, instead of
just the veterinarian and the client there will be a third player in some
form. The veterinarian and the client and the insurance company or the
veterinarian and the client and the pet pharmacy. Or perhaps two new
businesses -- both the insurance company and the pharmacy. Veterinary
clients will end up paying the vet more and then paying for medications
separately, which will add to the cost.It is too late to stop this process. As you point out in your email, right
now you can save money by buying your medications elsewhere. Whether you
chose to or not, many people will chose to. Ironically, I think it is good
for the veterinary profession and bad for the clients. Veterinarians will
have to face the fact that they have to charge for their professional
services or they have to chose a new line of work. They will do one or the
other. Clients will eventually be paying three or even four people for the
same service they used to get by paying one person and it will cost them
more because each of those people will want to make a living.I know that veterinary prices seem very high to many pet owners. Often,
they seem very high to me. But I know what I take home at the end of the
day in salary and I know that it is far less than people with similar
training and similar abilities who treat humans instead of pets. I also
know it is less than many other jobs in the community requiring less skill
and less dedication. I know how much worry there is associated with running
a small business and I know how stressful it is to spend the day
negotiating whether with clients over the health care of their pets. There
are many days when I question whether or not it is all worth it. I don't
know the answers. I do know that there is a lot of frustration and that
veterinarians are not always handling it well.I hope that this gives you some idea why the vets in your area are so
difficult to deal with over this issue. There is a lot of confusion and a
lot of concern about what the profession will have to do to continue to be
able to care for pets in a manner that allows most of them to get the care
they need. I don't think that their solution, charging for the
prescription, is correct, but I do understand very well why they feel the
urge to do so.Mike Richards, DVM
6/1/99
Perhaps you have never really considered how a veterinary hospital is funded and what that
means for your pet. Human hospitals are supported through government assistance, including
programs such as Medicaid and Medicare, tax-relief if they are non-profit and other subsidies.
They often have auxiliary organizations providing equipment and volunteer help. Veterinary hospitals
are not usually eligible for non-profit status. They are not supported through government assistance,
third party insurance payments or community donations in most cases. Veterinarians provide the
entire funding for their hospitals through the profits from pet owners who use their services and
through accepting much lower average salaries than physicians, despite having nearly identical
college requirements and skills. Veterinarians subsidize almost all surgeries, extended hospital
stays and especially spay/neuter procedures through the profits from other areas of the hospital,
including vaccinations and medications dispensed. When you send your money to catalog
companies you are hurting your pet's chances of having the best medical care. There will be
less money available for equipping a hospital. Less money for continuing education. Less money
to purchase current medical references. Your support of our veterinary hospital is necessary for
all these needs. Your pet benefits directly from money you spend here. Can the same be said
for a catalog company?Mike Richards, DVM
Last edited 02/15/08
