Over recent years veterinary practices have started experiencing increasing financial pressure because of clients either postponing routine appointments or stopping attendance altogether. Although it has been 10 years since the global financial crisis, the scars remain. Despite steady gains in international markets during 2017, the world is still experiencing sub-par economic growth, with resulting high levels of public, corporate and consumer debt. This global financial squeeze has placed ongoing financial pressures on households and widened the gap between wealthy and financially challenged pet owners, which is having a direct impact on standards of care in the veterinary industry. Corporatisation and the growth of online retailing are also placing increasing pressure on veterinary practices’ margins. All these factors mean that client retention and recall effectiveness remain essential to the practice success. Despite this, the understanding of the impact of reminder and recall success on overall practice performance remains poor.
Henry Schein Veterinary Solutions regularly and systematically collects and analyses data from the industry and gathers anecdotal feedback from frontline staff and practice owners. This helps us identify those aspects of practice operations that most affect efficiency and profitability and also to gain insight into why and how the best performing practices outperform the rest. The Henry Schein Veterinary Solutions Australian Veterinary Research Annual Survey canvassed 336 practices in 2016 and 254 in 2017 with questions designed to provide insight into practice operations. Specifically, they were designed to get a gauge on practice marketing, how they handled recalls and reminders and how this impacted client retention.
This white paper outlines the results of our research and the conclusions as to what ‘Best Practice’ processes might constitute.
Section One – Setting the scene
Reminders and recalls play a pivotal role in the successful and efficient working of veterinary practices. The relevance of reminders and recalls to clinical, operational and financial outcomes makes them a key performance indicator (KPI), with consequences for a number of different aspects of practice performance. In particular, they assist with client retention and returning patients to the practice for additional appointments.
Successful patient outcomes remain a cornerstone of the veterinary industry, with routine attendance, monitoring and prevention being critical factors in the delivery of excellent standards of care. However, increasing pressure on household finances in recent years has created a gap between optimum and essential care, which in turn has resulted in longer intervals between visits.
Significant numbers of clients continue to avoid routine examinations or postpone treatments for their pets, bringing further pressure to bear on beleaguered practices. More worrying is that practices report difficulties in re-engaging with clients who have missed several routine appointments. Statistics underline the importance of reminders and recalls as a mechanism for ensuring clients keep returning for appointments and also as the first line of defence against the problem of becoming ‘lapsed’ in the first place.
WHAT ARE REMINDERS AND RECALLS?
REMINDER. These are a message sent to a client that has a current appointment. Ideally, all customers should be booked for their next appointment at the conclusion of their previous one, as reminders are more successful than recalls in ensuring patients return for their next appointment.
RECALL. These are a message sent to clients who do not have a current booking but are due for a follow-up appointment. In this case, customers should be sent a series of communications to prompt them to return. These can be more successful if targeted around a meaningful date, for example, 12 months after their previous visit and when they are due for an annual checkup.
Section Two – Current state of the veterinary industry
There is a general acceptance that the veterinary market is becoming increasingly competitive, particularly concerning pricing challenges from online channels. Additionally, veterinarians tell us they are increasingly encountering pet owners who seek treatment advice from pet stores or the Internet.
For privately owned practices, corporatisation is a further worry, with the 2016 IBISWorld report forecasting that Australia’s four largest veterinary enterprises will account for approximately 18% of total industry revenue by 2020.1
Notwithstanding corporatisation, other practices operating in close geographic proximity remain a concern for many. The IBISWorld report commented: “Veterinary practices compete with each other on the quality and range of services and facilities provided, including opening hours. Customer loyalty appears to be relatively low in practices in the cities. Industry competition is increasing due to an increase in the number of practices, which limits pricing increases and reduces profit.” In the face of this competitive environment, the proposition of retaining existing clients and increasing practice appointments remains a high priority for veterinary practice owners. In our survey, 25% reported that they find attracting new clients ‘challenging’.2
Our research data and anecdotal evidence show that existing client retention continues to be a significant concern. More than 30% of practices surveyed experienced a reminder success rate of less than 70% in the previous 12 months.1 Separate Henry Schein Veterinary Solutions research also reveals that less than 50% of new clients return the following year and 60% of existing clients may not have visited the clinic in 18 months or more.
Worryingly, the survey data also revealed operational weaknesses with respect to other behaviours:
With the average transaction value for a typical Australian practice being $150, losing just one appointment a day can cost over $54,000 in revenue per year.3 This calculation does not take into account the time, and money wasted making numerous follow-up calls to schedule and remind clients – as well as money lost through no-shows.
This demonstrates that the effective management of recalls and reminders can deliver a very healthy return on investment when considering the average transaction value versus the cost of messaging and minimal staff input if a practice is using an automated process.
Another concern highlighted in our survey is that a significant 45% of practices do not measure Key Performance Indicators (KPIs) at all (including reminder statistics). This means that affected practices do not have real targets against which to measure business performance and success.
Section Three – Reminder/recall effectiveness
Only a small percentage of veterinary practices are diligent in sending out appointment reminders to their clients. 20% of practices surveyed in our 2016 Australian Veterinary Research Survey send between 250 and 500 reminders per month. Another 19% send 100-250 reminders monthly, and even more alarmingly the same percentage send less than 50 reminders monthly.
Also of great concern is that 14% of the 336 practices surveyed said they do not know how many reminders they send out monthly and the same percentage indicated they do not monitor recall effectiveness at all. Another statistic from the study was that 44% of practices indicated that they send only one appointment reminder regardless of success – presumably (and mistakenly) confident in the belief that just one will do the job of luring clients back for a follow-up.
Another telling statistic is the admission by 20% of practices that “we do not worry about performance, so long as the practice is reasonably full”.
The fact that such a large percentage of practices fail to monitor reminders or recalls, or worry about how their processes are performing, highlights that the veterinary industry lags behind other sectors in giving this essential administrative function the attention it deserves. With the best intentions, veterinary professionals are notoriously guilty of not always operating their practice as a business. Greater profitability supports improved patient care, which makes it clear why it should be front of mind for all practices. Smaller independent practices not adopting this mindset are particularly at risk. Large corporates with a business focus are entering the market in more significant numbers. They are generally efficient and effective practices which are in a prime position to drive inefficient local practices lacking business acumen out of the market.
Our research confirms that the process followed largely determines the effectiveness of a reminder/recall system, its impact on the number of practice appointments and client retention. Combining the gathered data and global marketing trends we have identified the processes used by top performing practices. This forms the base of what we refer to as ‘Best Practice’, which includes tasks carried out before, during and after the reminder and recall processes.