Supporting your Local Veterinary Hospital

Support Your Local Veterinary Hospital

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 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 couldpurchase 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.


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 jobto 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 whatis 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 heartwormpills 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


Michael Richards, D.V.M. co-owns a small animal general veterinary practice in rural tidewater Virginia. Dr. Richards graduated from Iowa State University's College of Veterinary Medicine in 1979, and has been in private practice ever since. Dr. Richards has been the director of the PetCare Forum...