Are rebates a help or a headache?

Veterinarians opine about manufacturer promotions

Published: July 23, 2014
By Phyllis DeGioia

VIN News Service photo
A rebate may be an effective enticement to buy, but the process for claiming the discount may be onerous.

Whether it's on pet foods, veterinary drugs or flea collars, Dr. Meghan Ellis loves rebates.

A private practitioner who owns a combination clinic and pet-supply store in Sanford, North Carolina, Ellis isn’t talking about receiving rebates herself, but helping her clients and customers get them. As a businessperson as well as a doctor, she believes passing on cost savings to patrons is a way of bonding with them. And that good relationship keeps them coming back.

Although some rebates require the veterinarian to provide the discount to the client upfront and apply to the manufacturer for reimbursement or credit, Ellis doesn’t mind.

"When we do an invoice, the rebate work is all done by the time we send the client to check out," Ellis said. "... It works out really great for us because we look like rock stars."

Not everyone shares Ellis's enthusiasm.

In a discussion about the pros and cons of rebates among members of the Veterinary Information Network, an online community for the profession, some veterinarians expressed a dislike of rebates because of the staff time they require — time seen as an uncompensated payroll burden.

Dr. Brooke Cory of Cold Lake, Alberta, rejects almost all “deals” from manufacturers because her clinic is very busy. “I can’t be bothered to have one more thing to keep track of,” she wrote.

“Doing all this stuff takes time. … If your staff has some down time, it means you can take care of this extra stuff at ‘no cost’ because your fixed costs (overhead, payroll) stay the same whether or not you do it,” she continued.

“If your staff is too busy, you would, theoretically, have to hire more staff to take care of the extra work, and your fixed costs go up without increasing your revenue directly. You may increase revenue indirectly by increasing client retention and spending, but that is difficult to measure…”

The perception that rebates are a hassle isn’t uncommon, even among the consumers who presumably benefit.

Navigating a rebate

According to an MSN Money article “Are Rebates Worth it?” manufacturers who issue rebates bank on some customers misplacing the rebate form, filling out the paperwork incorrectly, forgetting to mail the claim, mailing it after the deadline, or losing the check.  

Dr. Byron Farquer, a practice-management consultant based in Oakdale, California, views rebates as a benefit to manufacturers at the expense of practitioners. "Rebates and coupons are short-term, adrenaline(-boosting), feel-good deals, but these are programs designed at the core to increase sales of the product ... The whole system is dependent on leveraging free labor."

His opinion of rebates developed from experience using them in clinical practice. Farquer became frustrated by the time rebate-processing required of his staff.  

"I'm still waiting for the day when the manufacturer will put one of their own employees in the practice to process their own promotions at their company's cost, rather than leveraging the staff of the clinic … to drive sales for their company," he said.

Neither Bayer Animal Health nor Merial, major manufacturers of flea, tick and heartworm-control products on which rebates often are available, would comment directly on Farquer's position.

But Merial spokeswoman Natasha Mahanes maintained that rebates do provide a benefit to veterinarians. She stated by email that the promotions, "are intended to help (veterinarians) dispense flea/tick, heartworm, and pain medications along with their professional advice and supervision before the pet owner leaves the clinic.”

Implying that rebates offered through veterinary clinics encourage pet owners to buy parasite-prevention products at the clinic rather than from other outlets, Mahanes added, "Merial believes the veterinarian is integral to educating the pet owner on proper use of these products as part of an overall health plan for the pet.”

In critic Farquer’s mind, the best rebate programs have the client complete the paperwork to obtain a reward in the form of credit good only at the practice where the rebate was obtained.

He recommends that practice owners review twice a year the effect of rebates on their respective businesses by comparing revenues generated from sales of products with and without rebates. Is the difference worth the effort?

"If you used to sell 100 and now sell 110, that's a hassle,” he said.

At the same time, Farquer acknowledged, some clients who hear about rebate offers will expect clinics, if they sell the product, to participate. For that reason, practice owners may need to participate, if reluctantly, as a matter of customer service.

"If you carry it, I don't think you can choose," Farquer said. "You need to participate, or carry only products that don't have (a rebate) ..."

Cory, the practitioner in Alberta who’s not keen on rebates, isn’t absolute on the subject. While she has fewer competitive pressures than many of her colleagues — her region is rich with oil money so her clients are well-off, and fleas and heartworms aren’t a big problem in the area, making parasite-control products less necessary — she doesn’t opt out of all rebate programs.

Her exception: Purina therapeutic foods. The formulation for weight management is popular among her clients, making it a product worth the trouble of doing a rebate.

Ellis, the rebate champion, sees the discount offers as a tool to advance her mission to be the only source of products, service and information for her clients. She doesn't want her clients to go to the nearby PetSmart for food and end up signing up for a wellness plan at the in-store Banfield clinic. She doesn't want pet owners heading to the local feed store for flea- and tick-prevention products or unnecessary vaccinations. She also worries that patients whose owners buy vaccinations there will not see a veterinarian again until their rabies booster is due, which could be up to three years.

Without rebates, Ellis believes, clients “wouldn't buy as much at one time and we'd have less good compliance, as far as heartworm- and flea-preventive. Dog food they'd keep buying,” she said, “but not necessarily from us."

And yet even Ellis doesn’t participate in every rebate program available. She limits rebate offers to some food and some flea, tick or heartworm preventives — namely, Merial’s Heartgard Plus, NexGard and Frontline TriTek; and Bayer’s Advantage Multi and Seresto.

The Advantage Multi and Frontline Plus promotions are in-house coupons, meaning it’s the clinic’s job to provide the discount upfront, then apply for reimbursement or credit. With the rest of the products, the client is responsible for sending the paperwork to the manufacturer to obtain the discount.

Using a system she created and honed to high efficiency through trial and error, Ellis estimates that her staff spends less than half an hour per month processing rebate claims. The clinic puts in for reimbursement once a month, and typically is paid within two weeks.

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