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How vets get paid (and how it affects pet owners and patient care)

Posted Nov 07 2008 8:09am

Would you prefer a vet who gets paid as a percentage of what she charges you?...or one that works on a salary?

Some of you might assume the one on a straight-up salary might be easiest on your wallet: After all, she’d have no incentive to run up your bill. And you might be right. A vet on salary who holds no stake in the practice’s profits tends to offer less (on average) than a practice owner or a vet who works exclusively on a percentage basis.

Some of you might find this information shocking. After all, we’re talking about animal lives here. But this is basic human nature I’m referring to. Countless studies back me up on this.

And it’s not just vets. It’s true across the professions. From the lowliest janitorial job to the highest paid CEO on the planet, the vast majority of people work differently depending on how they get paid. 

So what’s the answer then… you want the salaried vet? Think again (just for a moment, at least).

Choosing the salaried vet may mean you may spend less up front, but this vet also has less of an incentive to perform time-consuming tasks that might make the difference between a diagnosis and no diagnosis. Between the option for ideal treatment and a less expensive (but easier-to-accomplish) treatment.

But she makes money directly off my back, you might say.
It’s unseemly, you might think.

But that’s no different than how a practice owner gets paid. Aligning an associate veterinarian’s income to the goals of the practice by providing direct financial incentives is a very common way to pay vets.

In fact, a base salary with an additional percentage based on performance is the most commonly recommended way to pay veterinarians. This way the associate gets a salary she can count on and she also makes money based on how hard she works. It keeps everyone happy and hard at work—even if they don’t own the place.

Fewer vets get paid the way I do: No base salary at all. A 100% percentage-based income. I’ve chosen this for myself because it means I can have a more flexible workday.

So if I need to pick up my son from school or take him to the doctor I can take an afternoon or morning off at my discretion. No one gets mad if I do this a couple of times a week. That’s because everyone knows that I know where my bread is buttered. If the hospital doesn’t make money…I don’t either.

But how is that good for me? you wonder.

Trust me. You don’t want a slacker vet. But I understand your reservations. In fact, I do believe there are times when 100% percentage pay is bad all around.

Take the emergency vet. In an emergency room situation vets are very often paid on a straightforward percentage of what they charge. In other words, if your bill comes to $1,000, on average they’ll make $200-$250.

Such a powerful incentive to charge more is normally no hazard in a normal practice situation. After all, if you don’t feel my decision-making or pricing is not fair you’re free to go elsewhere the next time. I have a strong incentive to provide a better value for you than anyone else.

Then there’s the issue of a personal relationship. Because I know you personally as a client, we’ve come to understand one another. You trust that I won’t abuse your pocketbook no matter how much you’re willing to spend. And I’d feel terrible if I violated that trust. In part, because I know you.

In an ER situation it’s different. The dynamics are all changed around. Sure, I want you to have a good experience, but if I don’t own the place I’m more willing to charge you more so I can pay MY bills. I don’t worry as much about you because I don’t know you and I’m unlikely to see you ever again. Instead, I concentrate on practicing great medicine and stress less about how you come up with the money to pay for my services.

Unfortunately, a lazy ER vet is easy to find if you don’t provide the right incentives. Pay her a straight amount for every night she works and she’s liable to want to take a nap. The base with bonus model is best in this case.

In fact, excepting cases like mine, where my freelance work pays me some (so I’m OK with taking the no-base risk) and I demand more flexibility from my day job, I believe all vets should probably be paid on this model—unless they own the practice, of course.

Nothing sinister here…just a lot of examples of humans doing their human things and making very human decisions with their limited human brains.

But how do you think it really affects you…?
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