Consider Fee Structure Changes to Improve Your Veterinary Hospital’s Bottom Line
Many veterinary hospitals continue to have full appointment books, and some hospital owners are struggling to keep up with the day-to-day demands of seeing patients. It can be challenging to set aside time for business management. However, taking the time to review key items, such as pricing, during busy times can have a very large impact on the hospital’s bottom line. Here are a few suggested items you can review to ensure that your hospital is capitalizing on the increased demand from pet owners:
- Evaluate overall pricing structure. As hospitals find themselves booking general wellness appointments over a week out, there may be an opportunity to consider implementing a fee increase across the board. For many hospitals, the demand for appointments remains high even after a 2-3% pricing adjustment is made.
- Analyze margins on the most common services. Analyzing every margin can seem like an overwhelming task, so we recommend prioritizing the review of pricing margins based on the services that are the most prevalent in the hospital. Since these services make up a larger portion of revenue, making small changes in these areas will have the largest impact on the profitability of the hospital.
- Review the costs being utilized to calculate mark-ups in your practice management system. Since many vendors have now provided their increased costs for the year ahead, it’s critical that hospitals make sure that these updated costs have been entered into the practice management system. It’s also important to review the impact of potential increases in labor costs to ensure that appropriate profit margins are being earned on services.
- Assess pricing on an ongoing basis. Many owners tend to review the hospital’s fee structure once a year. However, pricing is an area that should be reviewed on an ongoing basis throughout the year. By making fee changes throughout the year, you will be able to obtain an understanding of the price elasticity related to various services. If a particular increase is not well received by pet owners, you still have the option to make additional changes.
By reviewing the fee structure in place at your hospital now, you’ll be able to benefit immediately while the hospital is at its busiest. For more tips on how to maximize your bottom line, please contact KSM’s veterinary consulting team.
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