Is it time to bring the laboratory in-house? Given today’s flattened economic climate and veterinary practitioners’ shrinking caseload, a full lab suite in the office could serve new and existing clients, deliver a higher level of patient care—and allow clinics to tap into the revenue stream flowing to commercial laboratories. Calculating a Return on Investment With a quick keyword search, the Internet delivers dozens of return-on-investment, or ROI, calculators to help determine whether a capital purchase can be financially justified, say industry experts. The majority of the calculators asked for these key figures: Original investment, or initial cost of the item The interest rate (if any) The term of the loan (if any) Number of procedures done How much will be charged for each procedure If the cost of the equipment exceeds the estimated income, clinics may consider sticking with commercial laboratories or adjusting how much they charge for blood work or chemistry panels. “You would have to know how many patients, what your profit margin is, how many times you’re going to run this test during a week or during a year, and figure out whether it is profitable for your practice to have one,” says Ellen Miller, DVM, Dipl. ACVIM, a consultant at Heska Corp. of Loveland, Colo. “And oftentimes, once it’s in the practice, then you use it more.” More veterinarians are considering the investment, reports Cheryl Roge, DVM, director of professional services for scil animal care co. of Gurnee, Ill. “With the economy the way it is now, and with the way practices are being more complete-care facilities, more veterinarians are deciding to bring a full lab suite in-house,” says Dr. Roge, who also does relief work at veterinary clinics. “Rather than just offer hematology or chemistry services on site, many animal hospitals now are finding it extremely advantageous to offer the full array of diagnostics for blood analysis. “I’ve been getting a lot of calls from veterinarians who have had a hematology analyzer or a chemistry analyzer for years, and now they’d like to have the partnering of the two, both hematology and chemistry.” These in-house hematology and chemistry analyzers are relatively commonplace in veterinary hospitals and emergency clinics, says Ellen Miller, DVM, Dipl. ACVIM, who is in private practice and is a consultant for Heska Corp. of Loveland, Colo. The machines are finding their way into general practitioners’ offices, too, she says. “If they do any after-hours work, they should have one,” Dr. Miller says. “If they need quick results, if they see a fair amount of sick patients where they need results quickly, they should have it. It’s almost becoming standard of practice at this point to have an in-house machine.” Define the Need So how can veterinary practitioners determine whether an in-house laboratory will be a good investment? Experts recommend considering the clients’ needs, the equipment’s features and the maker’s behind-the-scenes support. If, after examining their practice, veterinarians choose to bring the added service into the office, Roge says, they will likely see the financial benefits. “So many hospitals now are looking to keep revenue in the hospital, and by doing that great medicine and bringing the diagnostics in-house, their medicine improves and their bottom line improves, too,” Roge says. One of the first factors practitioners should consider is whether they have the client base required to support an in-house system. Miller, whose patients range from surgery patients to emergency cases, says blood and chemistry analyzers are a must in her situation. “In specialty practices with an emergency clinic offering 24-hour care and referral cases, an in-house blood analyzer is not an option, it’s required,” she says. “We often have very sick animals referred to us, and so I need accurate results quickly. I depend on our in-house analyzer. I also use an outside lab for those cases that are not emergencies.” Veterinarians can quantify the need for an in-house laboratory suite by looking at the overall medicine they’re doing daily and examining the cases they see, Roge says. “Do they do pre-operative blood work before surgeries, for example, to make sure they get the results back [from the commercial lab] in time? Sometimes clients have to make two trips to the animal hospital, so with an in-house lab they can do blood work the morning of the procedure and have those results in hand before they start the surgery,” she says. Roge also recommends that veterinarians consider cases in which they would have liked to have the diagnostic information immediately available. “You wouldn’t expect to send your X-rays out and get results at the end of the day or next day, yet we find that to be a tolerable and acceptable thing many times with sending blood out to the reference lab,” Roge says. Goodbye, Cash And clinicians shouldn’t forget to consider their bills—and exiting revenue, Roge adds. “How much do you send out to the reference lab on a monthly basis? How much of each lab bill that the client pays—how much of that stays with you and how much leaves your hospital? With in-house diagnostic equipment, a much larger percentage of that money can stay in house,” she says. Miller encourages peers to keep a tally sheet. “If they’re considering buying one, do a tally sheet for a couple of months,” she says. “Veterinarians should ask themselves, ‘How many times would I have used this?’ And they should write down how many times in that two-month period they would have run tests in-house and not sent it out to a lab. Then they can gauge if it’s going to be profitable.” Even if a practitioner’s client load doesn’t demand in-house testing, the patient potential could be there, says Martin Mulroy, vice president of sales and marketing at Abaxis Inc. of Union City, Calif. “If the clinic is seeing 20 animals a day and only testing three, it could be because the [off-site] testing is inconvenient for both the veterinarian and the patient,” he says, adding that pet owners who get results immediately tend to comply better with veterinarian recommendations. “Veterinarians should weigh the level of care. They’ll be making a lot more money and providing a better level of care and a higher level of service if they offer on-site testing and have the equipment on site.” If the need exists, veterinary practitioners should choose the appropriate equipment. General practitioners will have different diagnostic needs than an internist; a large-animal doctor will require different differentials than, say, an avian specialist; and a veterinarian in a rural setting may need equipment that can go on the road, says Azim Saifee, senior marketing manager at HemoCue Inc., with U.S. headquarters based in Lake Forest, Calif. “Even if they have an office, veterinarians who are field-based need instruments that can go with them,” he says. “If they’re heading off to a stable or a barn, they could make potential treatment decisions while they’re out there. They don’t have to take the sample back to their office or have a commercial lab run it before they can make a diagnosis.” Veterinarians also should keep in mind the expenses, like consumables and staffing, associated with operating in-house laboratory equipment, Miller says. “You have to buy the reagents, the slides and sometimes the cleaning solutions, and that is a big factor,” she explains. “You need to know these things before buying one because that can sometimes be a surprise. After you buy the machine you have to buy a lot more things on a monthly basis to keep it going.” Clinicians should examine the analyzer maker’s level of service and support, Mulroy says. Does the company offer delivery, installation and ongoing training? Does it allow veterinarians and their technicians to test-drive the equipment before they sign the contract? “Do your own research,” Mulroy says. “The local distributor representative may have one opinion. Your friends and associates have their opinions. What you have to do is bring the equipment into the clinic for at least a day or two or three and run patients. You’re not going to buy a car without driving around the corner first. You’d never buy anything along these lines without test-driving it, evaluating it. You could learn a lot in one day.” Roge recommends that veterinary clinics consider warranty plans and contracts. “Be sure they offer good, extensive bumper-to-bumper warranties on the equipment,” she advises. “Make sure they back up any type of claims or promises made and provide the help you need when you need it. Different companies go about their support and training differently, and veterinarians should be comfortable with the company they’re dealing with.” Bottom line, it’s about more than just the bottom line. “The in-house analyzers are going to really help vets,” Mulroy says. “Regardless of what equipment they choose to buy, it’ll help them provide better care out there.” <HOME> This article first appeared in the June 2010 issue of Veterinary Practice News. Click here to become a subscriber.
