The skeptic’s guide to veterinary wellness plans
Reviews from veterinarians are decidedly mixed about wellness plans—those preventive-care-service bundles for which clients pay a monthly set fee. In the right veterinary practice with the correct implementation, they can be a roaring success. In the wrong situation 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, implemented 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, quarter 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 clients most likely to enroll in your wellness plans also the ones who would pay full price for the recommended 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 …
3. How difficult are wellness plans to administer and assess?
Administration challenges can spook practice owners and potential practice buyers alike. It’s been years 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 reliable 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 …
4. How does associate pay get calculated with wellness plans?
This can be a big sticking point with employed veterinarians. For example, say an associate is paid 20 percent of his or her production. Due to the potential monthly vagaries of the wellness plan, how much the associate produces versus what the client actually pays can vary widely. How does the practice owner reconcile these numbers in an equitable way? The answer to this will determine just how desirable a workplace your practice is for future associates—which can influence a potential buyer’s interest.
Along those same lines …
5. Do wellness plans make your practice less desirable to a potential buyer?
Opinions seem to differ on this question. As in real estate, a home with a swimming pool can eliminate certain buyers from the market and seal the deal for others. A wellness-plan-driven practice has the same potential. On the one hand, a healthy, profitable practice should have plenty of potential buyers to choose from. On the other hand, a practice that uses this operational model may, justified or not, frighten off some potential buyers, including corporates.
Which leads us to our final question …
6. Is there a stigma attached to wellness plans?
If there was one, it appears to be dissipating. In the end, high-quality medicine, satisfied clients, a happy staff and healthy profits ought to be the goals of every well-balanced practice owner. Operationally, how he or she gets there should be considered secondary.