Have you reviewed your reference lab agreement recently? Maybe it’s been a little light reading before bedtime to ward off insomnia? It’s okay if you haven’t; most veterinary practice owners perused it briefly before signing and haven’t looked at it since. Unfortunately, that lackadaisical approach is something our good friends at Antech and Idexx are counting on. See, embedded within many, many, many laboratory contracts these days is an auto-renewal clause. Fail to notify them a year in advance of the agreement’s expiration that you’d like to shop around, and you become locked into another term at rates you don’t get a voice in setting.
Now, we’ve read a lot of lab agreements in our careers, and despite our best efforts, we fail to understand how the auto-renewal serves the veterinary practice well in any way, shape, or form. Yes, the lab guys may balk and scare you with having to pay list when the agreement expires, but let’s be honest, neither of them is going to let that happen. Such is the beauty of the competitive duopoly they are engaged in. Therefore, with the future profitability of your practice in mind, one of the best things you can do today is dust off the agreement, find the reference to the auto-renewal language, and inform them of your intent to opt-out of the renewal. By doing so, you provide your practice with optionality on lab pricing in the future. You can once again pit them against each other for compelling pricing (even if you don’t intend to switch, but don’t tell them that). We understand that negotiating with either of them is about as much fun as a root canal but trust us: if you stay a prisoner to one or the other in perpetuity, it is your bottom line that will suffer in the end.
How a veterinary practice consultant could help…
Opting out of an autorenewal is absolutely a DIY activity. However, wringing the most out of any veterinary lab contract starts and ends with actionable analyses of the data in your practice management system. Understanding insights such as the following can make your veterinary practice more profitable without impacting your day-to-day:
- Which labs are actually being run, internally and through reference and are the codes in your veterinary practice management system accurately setup
- Whether you are appropriately pricing your labs relative to the true cost of running them
- Whether your clinical team is ordering wellness diagnostics consistently across the group
Our team of consultants is well-equipped to help with exactly these types of projects at your request. Click here, to learn more about our veterinary Analytics capabilities.