Vet360 Vol 4 Issue 3 June 2017 Vet360 - Page 4

BUSINESS Article reprinted with the permission of VETERINARY MEDICINE, Jun 15, 2017 VETERINARY ECONOMICS is a copy- righted publication of Advanstar. Communications inc. All rights reserved. The Skeptic’s Guide to Veterinary Wellness Plans Here are straight-up answers to six questions you may be asking yourself about bundled preventive-care-service plans. By Tom McFerson, CPA, ABV VETERINARY ECONOMICS Reviews from veterinarians are decidedly mixed about wellness plans—those preventive-care-service bun- dles for which clients pay a monthly set fee. In the right veterinary practice with the correct implementa- tion, they can be a roaring success. In the wrong sit- uation they can land with a loud and costly thud. And how do wellness plans impact the value and salability of a veterinary practice anyway? Thinking about wading into the wellness plan pool? Consider these six burning questions. 1. Do wellness plans really improve cash flow? Once a veterinary practice has committed to wellness plans, trained the team, educated clients, implement- ed the framework and given the system a chance to mature, then the answer can be yes. One of wellness plans’ more appealing aspects is the potential for steady, reliable cash flow. There’s comfort to be taken from a large chunk of practice revenue hitting your bank account at the beginning of each month, quar- ter or year. And remember, steady cash flow means less risk, which translates into higher practice value. But this raises a related question … 2. Am I just giving my best clients a discount? That is the central debate, in my opinion. Are the cli- ents most likely to enroll in your wellness plans also the ones who would pay full price for the recom- mended menu items anyway? Possibly. That’s why it’s important to analyze which clients (A-, B- or C-level) are enrolling in and using your plans. Are you giving away your upside? Speaking of analysis … since wellness plans first arrived on the scene, and veterinary software systems have come a long way in this area. Billing for different plans (gold, silver, bronze) with varied renewal dates (monthly, annually) has become more efficient and re- liable with each passing year. But confusion can still arise when you’re assessing how your wellness plan system is performing at a given time. Is your practice financially ahead of the game or behind? On a given day, do your wellness clients owe you money, or do you owe them services? This can be a thorny issue when you’re selling a practice with a large wellness component. Is the buyer assuming a large liability to existing wellness clients? While we’re on the subject of thorny issues … 3. How difficult are wellness plans to administer and assess? 4. How does associate pay get calculated with wellness plans? Administration challenges can spook practice own- ers and potential practice buyers alike. It’s been years This can be a big sticking point with employed veterinari- ans. For example, say an associate is paid 20 percent of his vet360 Issue 03 | JUNE 2017 | 4