Making money from veterinary care: production based compensation

While the veterinary industry’s goals (normally) track with clients’ in matters of patient welfare, they diverge when it comes to the cost of this care. Most veterinary practices are set up as businesses, meaning that they need to return a profit, and ideally a good one, in order to stay afloat and adequately motivate their owners. This motivation is necessarily passed on to their employees, in so much as veterinarians bring in the revenue and are beholden to that practice’s cost-saving efforts.

It’s hard to reconcile the idea of the virtuous, animal-loving veterinarian and the human being behind them who has bills to pay and dreams of financial liberties to aspire to. How much profit should we find tolerable, and how should think about the way veterinarians are incentivized?

Some practices offer production based compensation, meaning that veterinarians get paid a commission of their sales of medication, diagnostics, procedures, etc. The more items billed out by the veterinarian, the more money they and the practice will generate. But the quantity of these items does not always equate to the quality of patient care (just look at how we’ve motivated cardiac surgeons in the human field and how we’re beginning to realize that not all bad backs need expensive surgery). Therefore, while this practice adequately motivates veterinarians from the business’s perspective, it risks excess client and patient suffering (through extra costs and dubious benefits and/or unnecessary stress and trauma, respectively). One benefit I do see in this practice over its alternatives is that it may mitigate veterinary laziness, since they don’t get paid for what they don’t produce.

Other practices offer set salaries, meaning that services rendered by veterinarians are not tied to their income. The benefit here is that we can remove the conflict of interest between the client/patient needs and the veterinarian/practice needs. The downside to this practice as that it doesn’t weed out lazy/unmotivated veterinarians.

The best scenario is the one that guarantees the best patient outcomes. I don’t think that it’s too naive to believe that practices can simply solve this by hiring veterinarians who are generally motivated to help patients get better. Their salary does not need to be tied to what they produce in terms of billable items, but ideally, to what they produce in terms of patient response. I’m an advocate for set salaries coupled with bonuses (financial or otherwise) based on health outcomes. Reducing our dependency on production based compensation also motivates us to address the underlying problem of why veterinarians may be ‘underperforming’ or lazy: they are either burnt out, or do not enjoy their job. Neither of these attitudes are solved with money, and neither of these have a place in the practice.

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