Thursday, November 16, 2017

The Anatomy Of A Vet Bill

Mr. Malloy was the type of jovial older guy who wore a camouflage coloured cap and red suspenders over an expansive gut. And the type of guy who loved cracking lame jokes. You know the type. Kind of annoying, yet also kind of lovable.
One day he was at the counter paying his bill when he said, "Holy Dinah! A hundred bucks? You gotta be kidding me? I must own a wing of this hospital by now!"
At the other end of the counter Mrs Chu was paying her $1500 bill and quietly exchanging knowing smiles with the receptionist.

If we had a hospital wing for every client who felt they had paid for one, we would be the size of the Pentagon by now. (Besides, veterinary hospitals generally don't have "wings"...)

But I get it. For a lot of people veterinary medicine is expensive.

Some in my profession push back against that statement and say that we just need to look at dentists and plumbers bills to see that we are not that expensive. No, dentists and plumbers are also expensive, just like us. A lot of modern life is expensive. For many people living paycheque to paycheque (47% of Canadians in 2017) a surprise $500 veterinary bill (or dental, or plumbing, or whatever) is difficult to manage, and a surprise $2000 bill is a potential financial catastrophe.

So now that we have established that veterinary medicine "is expensive", why is it expensive? The number one reason is that we have rapidly evolved to a point where our standards of care compare favourably to those for humans. The arguments about the rightness or wrongness and the whys and wherefores of this evolution are best left for another post, but the fact remains that we now practice close to "human level" medicine and consequently have some "human level" expenses. There are no special veterinary grade sutures, catheters, pills, computers, rent or education for that matter. In fact, for many of our supplies we pay more as we don't have access to the volume discounts the human hospitals do. It is interesting  to note that Americans complain about veterinary bills less often than Canadians because they know what human health care costs.

There are many scary expressions in a practice owner's lexicon - "audit", "lawsuit", "burst pipe", "crashed server" - but one of the scariest is "overhead". The others are avoidable, but overhead is unavoidable and in some practices it can gobble up almost all of the revenue. In my clinic I have calculated that it costs us $400 an hour to keep the lights on, the doors open, the supplies stocked and the non-veterinary staff in place. This is before any veterinarian gets paid. During the busy season this is easy to cover, but in the doldrums of January when you can hear the proverbial crickets in the waiting room you may see me obsessively watching the bank balance and line of credit. I might even be chewing my fingernails...

So, where does your money go? In our practice on a very broad average, for every dollar you spend about 25 cents covers veterinary salaries and benefits, 21 cents to staff salaries and benefits, 27 cents for variable costs like drugs, supplies, lab charges etc., and 15 cents for fixed costs like rent, computers, utilities, accounting, maintenance etc.. This obviously varies enormously from service to service, and it also varies a bit from year to year. Our veterinarians are on salary, so the 25 cents doesn't go straight to them, but in some practices vets are paid a percentage of their billings.

The mathematically astute among you will notice 12 cents missing. That is the theoretical "profit" or, more accurately, "return on investment", that is divided among the owners (there are seven in our practice) when we have kept a good eye on our overhead. I discussed this in a previous post, but in brief, those of us who own practices have to take out substantial loans to buy them, or, in the case of a new clinic, build them, so this money helps slowly pay those loans off. I suppose a theoretical non-profit clinic would be able to lower it's prices by that 12% and would have to somehow fundraise to build, expand etc.. It still would be expensive. Veterinary medicine is expensive. But - and forgive the self-serving nature of this comment - it is so worth it. What price can you put on health and love? Especially in a world where people are apparently buying thousand dollar smartphones...

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