Protect Your Veterinary Hospital’s Bottom Line by Managing Lab Cost Increases

As January rolls around, veterinary hospitals can expect an uptick in laboratory service costs. While these price adjustments are expected, they can still impact your hospital’s profitability – if you aren’t prepared. Here are some steps you can take to help protect your hospital’s bottom line.

1. Update Your Practice Management System Promptly

Lab providers often implement pricing changes at the start of the year, making it critical to update your practice management system promptly. Accurate data ensures that your markup strategies reflect the true cost of services, helping you maintain healthy margins. This is also an ideal time to evaluate whether your pricing strategy aligns with your financial goals.

2. Prioritize High-Volume Services

Not all lab services contribute equally to your revenue. Focus first on updating pricing for your most frequently used lab tests. These adjustments will have the most significant impact on your profitability while ensuring that essential services are priced appropriately.

3. Roll Out Pricing Changes Strategically

Rather than introducing sweeping price increases all at once, consider spreading adjustments throughout the year. This phased approach prevents sticker shock for clients and helps maintain trust. If your markups are far below where they should be, try raising prices gradually. This approach lets you improve your margins without causing any unnecessary concerns for your clients.

4. Close the Billing Gaps

Lab add-ons and follow-up tests often go unbilled, creating gaps in your revenue. Make sure you have a solid system in place to track and bill for all the services you provide. It’s an easy way to avoid missing out on revenue and to keep your financial records accurate.

5. Stay Competitive While Communicating Value

While price increases are often necessary, keeping an eye on your local market can help you balance staying competitive with covering your costs. If your prices are noticeably higher than your competitors, some clients might hesitate. But being upfront about the quality and value of your care can go a long way in easing concerns about small price increases.

By addressing lab cost increases with thoughtful pricing strategies and clear client communication, your hospital can start the year with a strong financial foundation. If you have additional questions or need help looking at markups and pricing strategies, please contact KSM’s veterinary consulting team using the form below.