Veterinary Economics

The first study was commissioned from “Big Four” accounting firm KPMG by the American Veterinary Medical Association, the American Animal Hospital Association, and the Association of American Veterinary Medical Colleges, and was designed to get everybody singing out of the same hymnal as far as raising prices was concerned.

Why was KPMG chosen?

Well, one reason might be that KPMG had already established a lucrative business running around the country explaining to human doctors, medical groups and hospitals how to jack up prices through concerted programs designed to “maximize billing.”

Doctors and hospital managers were told how to maximize testing, how to upcode, how to disaggregate tests so they could be billed separately, and how to choose treatment regimes based on how much money they made for the doctor or hospital.

The fact that much of this advice crossed the line into illegality for which KPMG and its clients were nailed for hundreds of millions of dollars, was not too germane to the veterinary profession. After all, veterinarians operate with little regulatory oversight. And in a world without laws, there are no law-breakers.

The KPMG study was entitled “The Current and Future Market for Veterinarians and Veterinary Medical Services in the United States,” and its purpose was to frame a rationalization for raising vet prices and determining how high -- and how fast -- they could be raised.

"There has never been a clinic that has priced itself out of business," one CPA told a panel of vets. Later, in the same presentation, the CPA noted that "Practices that charge more will make more money and work less hours."

As for the notion that perhaps some clients might not be able to afford a steep price hike: never fear. Income and willingness to pay have no relationship to each other. Or, as one CPA put it, "People can afford anything they want, just not everything they want."

And what if customers complain? Well they should! As this same CPA told his audience: "Peter Drucker said 25% of clients should be complaining about your prices." So if you are not getting a lot of complaints about pricing, then you are not ripping off the rubes enough!

And for God's sake, don't offer discounts to your customers: "Discounts are bad. There is no way you will make that up in new clients. Discounts do not increase client satisfaction and satisfaction is all people remember about their trip to the vet."

In fact, you should be ripping off your most loyal customers the most. "Over the years people pay more if they keep coming to the same practice. Bills can be increased 80 percent between years one and three. Exploit the trust."

Charge more for all services, including the ones that are not needed: "Perform more services and charge more for services rendered."

Do a lot of expensive diagnostic work: "[You are missing opportunities if] lab work is not more than 10% of gross income. It should be more than 30%. You should require all pets to have a preanesthetic [lab] exam. The lab work brings in money and any diseases that are unmasked also bring in money."

Make sure customers know they are just there to pay the bill: "Don't let the client make choices about animal health. Your job is to offer the best only. Use the weight of your authority and knowledge."