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Selecting a buying group...

by
01 June 2013, at 12:00am

JENNY COULBURN describes how the practice in which she is a partner went about choosing a buying group and how joining a group has saved the practice not just money but time as well

WHEN I first decided I wanted to become a vet, the last thing on my mind was sales and marketing. Yet the economic pressures facing vets today can sometimes mean that veterinary practice management issues take as much – if not more – time than actually treating animals.

Whilst many vets enthusiastically embrace the practical challenges of running their practice, the nitty-gritty of marketing, selling and keeping track of accounts was not something I relished.

Nowadays, vets are increasingly taking advantage of numerous external practice management services, but knowing which to go for can be daunting.

It is no secret that in order to run a successful practice, vets need to attract and retain customers and there are various ways of doing this.

It is no longer enough to rely on a reputation for excellent staff and facilities, we need to make sure that people know what we do. At Meadow Lane, we advertise and market our practice through our new website, www.meadowlanevets.co.uk, and by using social media to drive traffic to our site.

Investing in training

In order to ensure we continue to offer the best service possible, we invest in staff training to help our team of vets, nurses and administrative staff acquire new skills, which include communication skills and selling techniques.

Although we have an active client base of several thousand, like any business we need to constantly reflect on what we do and whether we could do it better. I realised I was spending a lot of time on the phone to suppliers, trying to negotiate better terms on costs, but as a small independent practice without a huge monthly spend I was finding it increasingly difficult to compete with “the big boys” – the larger corporate practices – on price.

In 2011, we decided to join a buying group because ultimately if customers cannot afford your fees, they are going to go elsewhere. Practices need to price their services and products high enough to make a profit but low enough to remain competitive.

In order to maintain a healthy profit margin, we had to reduce our costs and one way of doing this was by joining a buying group.

Larger practices have more clout with manufacturers because they buy more and therefore are able to secure better discounts. An advantage of buying groups is that they are able to negotiate better manufacturer rebates as a result of consolidated purchasing power, and we were keen to capitalise on the cost savings which can be achieved by joining a buying group.

Finding the right group was more complicated than we thought though, because there are so many to choose from, and it was important to us to ensure that not only was the fee structure right for us but that it would not compromise the way we wanted to continue to run the practice. After a lot of research, we opted for the Premier Vet Alliance (PVA) buying group membership of over 350 practices.

Retaining option

Firstly, having worked with particular products and built up good relationships with suppliers, we wanted to retain the option of opting in or out of the numerous discounts they had negotiated, which many groups wouldn’t allow.

As with many veterinary practices, the invoicing relationship with our wholesaler is critical and as a result of joining PVA that relationship hasn’t changed. PVA works to simplify the very complex and time-consuming task of reconciling the various manufacturer monthly or quarterly rebates we used to receive.

PVA gave us a free evaluation beforehand to give us an idea of the savings we could make. What we liked about the evaluation was that unlike with some other buying groups, these projected savings were based on our actual previous 12 months’ spend and so they were both realistic and accurate.

Other groups base their analysis on just one month’s spend whilst others look at quarterly expenditure, which does not give a true picture of potential savings.

Reducing costs

Since the whole point of joining a buying group was to reduce costs, we didn’t want to pay out large amounts up-front, which would affect our allimportant cash flow. Nor did we want to pay excessive administration costs on products that the buying group had not negotiated terms on.

There is no advance payment requirement with the PVA buying group, although we did pay a one-off joining fee. The fact that there is no fixed percentage management fee, which with some buying groups can mean that any purchasing savings are counterbalanced by the fee, was another plus. Instead, membership of the buying group is just £250 a year, regardless of spend.

Time is money, and the other big benefit of joining the buying group has been the time savings I have made on administrative issues.

Our PVA practice support manager is responsible for liaising with manufacturers and ensuring our rebates are correct. PVA calculates and collates all rebates on our behalf and then sends us a single payment every quarter.

We are regularly updated of any new manufacturers joining the group, and this all combines to save us a huge amount of time and stress. The threemonths’ free trial was another advantage as we were able to sample the benefits before having to commit ourselves.

Lastly, membership of the buying group has probably saved us around £6,000 a quarter, but the most significant benefit is that it has allowed us to pass on these savings to our customers, enabling us to remain competitive and so retain and increase our client base, without which we could not survive.