VetCentric gives veterinarians a hard pill to swallow while altering business model in response to authorities ruling their original business model a kick back for writing prescription.
November 23, 2008
By Tim Kirn
For The VIN News Service
The change in the payment method used by VetCentric, Inc., for prescription medications and supplies has alienated many veterinarians.
For some it even seemed a betrayal by a company they saw as an ally, one that early on was an alternative to PetMed Express and that allowed veterinarians to make some profit off drugs and products without the hassle and costs of overhead.
Speaking with the VIN News Service, company officials freely admitted they may be to blame for the negative fallout because they failed to adequately publicize the reason for the change in the firm's payment processing system. The Maryland-based company was ordered to do it by the state's Board of Pharmacy.
The change in processing orders "was strictly in response to the policy of the regulatory agencies," said Ted Root, president and CEO of VetCentric, Inc., Glen Burnie, MD. But, "the way the company implemented the required fix cost us a tremendous amount of good will in the marketplace."
Before the change, veterinarians wrote a prescription and sent the client to the internet to fill it with VetCentric. The clients paid VetCentric, usually with a credit card. At the end of the month, VetCentric sent the veterinarians a check representing the mark-up they had specified for the given products, plus a 2% sales profit.
But then, about 18 months ago, the Maryland Board of Pharmacy reviewed the business model and decided it was too close to paying veterinarians an incentive to prescribe. The Board told VetCentric they should change the process or they would be in violation of state regulation.
"We cannot send a direct payment to a practice in exchange for the prescription process," Mr. Root said.
So, instead, VetCentric asked those who used the pharmacy to take the payments themselves and to set up internet merchant accounts that the company would debit and credit weekly.
When VetCentric announced the change in the system late last year, it did inform some veterinarians about why it was making the change, and a few veterinarians who talked with the VIN News Service said they knew what had happened.
But Mr. Root, who has been VetCentric president only two weeks, said he thought the company later became more guarded and obtuse about what it said. The company got the idea that veterinarians might become nervous if they were told they had been a party to a transaction now considered to be against the law.
Some veterinarians who had used VetCentric have gone along and opened an internet merchant account. Mr. Root said that about 100 veterinarians did so in October, though he did not have figures on the number who have opened accounts overall.
Daniel Heder, DVM, of Edgerton, Wisc., is one of those with an account. He said he was dismayed when the switch was made, but he had no alternative but to cooperate.
Opening his account took about two weeks, but now using it is quite simple and convenient, he said.
"It's a few extra keystrokes on the computer every morning to check the account and that's about it," he said. "I think it is very streamlined and it has allowed us to offer a wider array of products. We can offer just about everything."
The VIN News Service found a number of veterinarians who have chosen not to continue using VetCentric, however.
Bree Montana, DVM, of King's Beach, Calif., said she balked immediately when told she would have to open an account to continue using the service.
"I told them that what I need maybe is a hole in the head more than I need that kind of hassle," she said.
She used VetCentric mainly for compounded medications. But, she has since found a very good compounding pharmacy right in her area.
"I don't have any problem with VetCentric," she added. "I just don't have any reason to use a service if it is not convenient for me."
One veterinarian said her practice made a little money using VetCentric before the switch. But, they found it was losing money after opening an account, because of charges, and then they had a very difficult time closing out the account.
"Closing the account took us months," said Brenda Johansen, DVM, of Waukesha, Wisc. "It took my office manager at least 20 calls [to VetCentric] to get it closed."
"The whole company just seemed to undergo a huge change - and not for the better for us," she said.
For one veterinarian, Matthew Ehrenberg, DVM, of Woodland Hills, Calif., the whole situation recalls previous actions by companies who said they were committed to dealing only through veterinarian practices and then went back on their word, such as Hill's Pet Nutrition, Inc., with Science Diet. Now he is worried VetCentric is going to take his clients who used the service and do direct marketing to them, cutting him out.
"I have just not wanted to have anything to do with them anymore," he said. "I thought VetCentric was a good compromise, but, not now. All I need is more accounts to get screwed up and then I have to spend hours on the phone straightening them out."
Mr. Root said the company has no intention of sidestepping veterinarians - "We are completely committed to our partnership model with the veterinarian."
He also said the company is presently looking at a new version of the internet merchant accounts model that might work better for veterinarians. But, the other method has not yet been fully explored and so he could not give any specifics.