Veterinary Medical Care is a Good Value
I occasionally hear the following concerns, “sometimes I believe I’m spending more on my pet’s health care than on my own” and “I have heard your hospital is extremely expensive”. Though I believe that our clients benefit from our practice philosophy of bringing ultimate integrity and abject honesty into our daily interactions with them, sometimes those on the outside may erroneously feel a certain thing about a particular practice that is mostly based upon mis-information or hearsay. So let me clarify a few key points about the cost of veterinary care.
Relatively speaking, veterinary care is a great value! The cost of veterinary care has risen very little over the last 20 to 30 years, especially when compared to the cost of human health care or almost any other services (i.e. Dental services, legal services, extended health services). Veterinary fees are a reflection of the costs of maintaining suitable facilities, equipment and support personnel to provide the level of care that is expected in animal medicine today. Remember, too, the original cost of the animal has no bearing on the cost of services delivered. Annual veterinary care is a cost that should be factored in to the decision to own a pet.
One reason you sometimes feel you are paying more for your pet’s health care than for your own is because you pay for your own health care through your federal and provincial taxes. If you consider that more than 40 cents of every tax dollar you pay goes towards health care, it may help to show the value you’re receiving for veterinary care.
Most veterinary facilities have a before-tax overhead of 70-75%. After tax (assuming a corporate tax rate…apologies to all of the accountants out there for the oversimplification) there will be between 15-20 dollars left over as profit (on a $100 expenditure) out of which a return on investment must be removed (for replacing equipment and hospital facility in the future). This would leave about 10-15 dollars as true profit. A modest profit margin for any endeavour requiring the high degree of financial risk involved in opening, and operating a veterinary hospital.
Now some folks will comment that one particular facility is overpriced when compared to another. We hear this from time to time about our services. This is a complete misconception.
Imagine two people discussing what they spend on groceries, each shopping at different stores. The first person shops at a store that has a wide array of items (i.e. organic produce, fresh seafood, fresh meats), while the other facility stocks a very limited range of good and focuses on bulk goods and carries no fresh meats or seafood and only processed foods. When the second shopper hears about what the first spends on groceries, they might conclude, “that store is extremely expensive compared to where I shop”. But if one takes into account the availability of a range of goods that the first person can buy that are not even available to the second, one can see that the second shopper’s view of this store is erroneous and skewed. A veterinary hospital that can provide in-hospital laboratory services, digital ultrasound services, digital xray, endoscopy, a full range of orthopedic surgical services, and complete dental services compared to a bare-bones facility that can only provide basic preventative health care and must refer their clients elsewhere for all these other services may appear to be more expensive. They are not. A person going to the bare-bones facility may not ever be presented with an opportunity to have a broad range of services provided. And thus like the second shopper, they might think that this hospital is cheaper but it really isn’t. If one were to compare the cost of the services provided by both, one would see that the cost differences would be marginal at best. How can I say this with confidence? The overhead to run veterinary hospital facilities is relatively fixed and thus the amount of revenue that each procedure must return is in essence relatively fixed.
The fixed nature of the overhead structure for all veterinary hospital facilities tells us a thing or two about facilities that might purport to have fees on particular services or procedures that are lower than expected. The first assumption one has to make as a consumer is that all businesses exist only if they are profitable. As noted above, the profitability within veterinary medicine is relatively fixed. So if a product or service is being offered at below “the going rate”, this can only be done so if the facility is doing so at a loss. If this is true, the loss must be made up for by increased pricing and profit margins on other procedures. The only other way to reduce the costs without reducing the modest profitability is to cut overhead by reducing staff wages and cutting the cost of providing the service (“cutting corners”). As my grandmother used to say “there is no free lunch in life” and “you get exactly what you pay for.”
When I hear people say things like, “I hear you guys are really expensive”, it drives me crazy. I would hope that these folks might be able to think critically about what they are actually getting for their veterinary medical dollar when they are at our hospital. We have endeavoured to have a facility that is second to none in equipment, services offered and excellence of personnel. My hope is that people would recognize that when they use our services, we are able to readily offer procedures and solutions to their pet’s medical issues that simply will not be available at other facilities. This does not make us more expensive. I fully believe that with this exemplary level of service option, you will be in a better position to choose from an array of treatment plans that you would simply not otherwise have. This will help you to be able to make a choice for treatment that best fits your budget and desire.
Posted by: Dr. Mark Steinebach