Power in numbers: a look at four leading buying groups

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1 Vet Times The website for the veterinary profession Power in numbers: a look at four leading buying groups Author : REBECCA HUBBARD Categories : Business Date : February 1, 2015 Buying groups can be a great way to save money on a wide range of veterinary products and services. But the devil is in the detail and choosing which group is right for your practice can be a daunting task. ECONOMIES OF SCALE dictate the more you buy of something, the less you pay for it. However, in a sector traditionally made up of small, independent businesses, taking advantage of that dynamic has not always been easy for practice owners and managers. That has all changed with the emergence of veterinary buying groups giving member practices access to discounts in areas of expenditure as diverse as medicines, practice equipment and human resources. VBJ asked four of the UK s leading groups to explain how they can help save your business time and money. ST FRANCIS GROUP Alan White, director. Established in 1991 by practising veterinary surgeon John Hodgkin, the St Francis Group has 460 member practices throughout the UK and Northern Ireland. Our approach is to offer unobtrusive support, providing members with valuable information and excellent terms across a wide range of manufacturers and suppliers from pharmaceuticals, lab and crematorium services to equipment, pet health plans and other business-related services. Our aim is to help members save money and time, as well as increase their sales and profits. We pass on 100 per cent of negotiated discounts and rebate to our members, and help save time on their purchasing admin this is consolidated centrally via our monthly financial documents, leaving them with more time to spend with clients. 1 / 16

2 Other services, meanwhile such as our Business Academy, irecall, pet health plans and CarefreeCredit support our members in growing their business. There s no joining fee, no leaving fee, no contract and no minimum term of membership. We are different from most other groups as we process the invoices on behalf of the wholesalers to our members each month, allowing us to credit their discounts against their wholesaler bill. This makes it easy to keep track of discounts earned and paid, reducing admin in practice. In an increasingly competitive market, it is vital independent vet practices maximise their strengths. At St Francis, we support this by ensuring members know exactly what they are paying for, the products they use and sell (and therefore price out to their clients), by giving them the time and tools to engage more effectively with them. It is hard to put a universal figure on the savings achieved with us, but before a member joins us, we produce an accurate savings report based on their actual purchase data. This shows what discounts they would have earned through the group less any discounts they already have in place. However, this is the savings they would make based on existing purchase patterns and it does not take into account other possible savings (by using the management tools we provide). If we are not able to show a saving to a practice, they will be told and would not be expected to join. This process is without obligation on the part of the practice. VETSHARE Ruth Gray, director. Set up in 2008 by my husband and me after we struggled to find a group for our own practice that didn t insist on handling wholesaler monies, or have high fees, VetShare now has more than 400 members covering more than 560 branches. We offer a full range of services, with discounts on pharmaceuticals and pet foods, as well as credit card terms, internal and external laboratories, pet cremation services and waste disposal, instruments, equipment and uniforms. We also cover things like CPD, personal dosimeter badges, pet health care/ loyalty plans, health and safety and employment law. As directors of Equipet Veterinary Hospital in Fife, VetShare is run by practice-owning vets for practiceowning vets. We don t believe in having reps on the road as we see them as an unnecessary expense for members. Instead, overheads are deliberately kept low so fees can be kept low, meaning more money can be paid to our members. Our model sees members order from and pay their chosen wholesaler still receiving their wholesaler settlement discount direct. However, with the aid of the VetShare literature, they have 2 / 16

3 all the information to shop around for pharmaceuticals and services to maximise their savings. We pay members their pharmaceutical rebates monthly, and the whole month together, regardless of whether we ve been paid. With no mixing of wholesaler discount and pharmaceutical rebates, total clarity is guaranteed, and with invoicing going direct to practices (not via VetShare) members can be sure there are no hidden fees or charges. The average monthly saving on pharmaceuticals with VetShare is more than 16 per cent of wholesaler turnover before wholesaler settlement discount. Last year, the highest saving was more than 44 per cent of wholesaler turnover. It s easy to join VetShare membership forms are completed quickly and we do everything else. No changes are necessary at practice level as there is no change of wholesaler accounts. New members just have to sit back and see the monthly payments come into their bank account. Looking forward, 2015 should be an exciting year for members as we have lots of new features and initiatives planned, and we are involving some member practices in these to ensure we move in the right direction. Surveys and polls show we are very much on course with this. PREMIER VET ALLIANCE Andrew Carter, European channel development. Premier Vet Alliance (PVA) was formed in 2010 with the aim of developing a range of services that delivered long-term tangible benefits for the practice in a fairer and more proportionate way following in-practice frustration with the long-established providers of buying group and pet health plan services. Five years on, we offer a range of services to more than 550 practices in the UK and Republic of Ireland. Our core portfolio contains two services: our buying group and pet care plan. Our members find the two complement each other as improved discounts from the former enables the practice, with our support, to design and implement the latter delivering improved benefits to the pet, client and practice. Our buying group model has been designed to address the key issues practices have had with traditional providers. With PVA, practices are able to retain their invoicing relationship with the wholesaler, while accurate projected savings based on 12 months purchase data can be provided. The management fee, meanwhile, is only applied to purchases of products or services we have negotiated terms with, rather than across the total spend via the wholesaler. There s also the ability to opt in or out of any manufacturers we have negotiated with. 3 / 16

4 For a practice looking at joining a buying group, it is not easy to compare the potential financial uplift of one provider to another. From experience, joining a good buying group will result in a significant uplift in rebates received, which should equate to approximately 12 per cent of total wholesaler spend. While practices question the merit of one group over another, so do manufacturers. We are already seeing manufacturers aligning themselves with buying groups that have a portfolio and a track record of helping practices grow their business, as these have a positive impact for the manufacturer, resulting in attractive terms for members. PVA is one of the few groups to be recognised by such manufacturers as being able to achieve this goal helping us receive marketleading rates now and in the future. Our longer term strategy, meanwhile, includes broadening the range of suppliers we have terms with, moving to monthly payments, providing improved management information and working with members to help them grow their business. VETCEL Jonathan Baker, IT manager. Since its formation in 1984, Vetcel has grown to serve 223 member practices. The company is based on two main principles: transparency and equality. All members can see their current net prices at the touch of a button and they are exactly the same for all members regardless of size, turnover or any other criteria. At Vetcel, we offer a comprehensive service to our practices on everything from wholesaler purchases to utilities, and we pride ourselves on being a onestop shop for our members, as they are for their clients. We are an inclusive group that welcomes all types of veterinary practice and we treat all members equally, striving to provide independent practices with a truly transparent, honest and easy-to-use cost management service. Our model sees practices continue to operate exactly as they have always done; however, at the end of the month, instead of paying bills to multiple service providers, they receive a single account from Vetcel itemised by supplier and invoice. According to our practices, this is a benefit in terms of administration time. We pay 100 per cent of the discounts earned the following month and we also do the calculations to help members ensure their accuracy. There is no membership fee and no joining or termination fee and we don t restrict our members choice of product, wholesaler or service provider. Our purchasing strategies are based on market trends as well as our own ability to take in stock. This system allows members to benefit from the best bulk deals available, and allows us to secure 4 / 16

5 product with supply issues. It s hard to come up with an estimate of what a member would save. We are happy to work with any practice to calculate in real terms, using their own wholesale data the rebate they would have achieved through us. You need to know where you are before you can determine potential savings with any accuracy and, sadly, many practices don t have that information. A good starting point for a practice trying to determine if a group could be of any help to it would be to determine the practice s discount earned per pound of purchases a figure that should be available from its accountant. Vetcel aims to make being a member of the group as easy as possible, with centralised billing, verifying discounts against product turnover, providing detailed management data, making net-net pricing continually and easily available, and working with members to analyse their purchases and develop cost-saving strategies. Looking forward, the biggest challenge to us and has always been is the acquisition of independent practices by corporates. However, all those who started the journey with us are still with us today, and the majority that joined along the way have remained as part of the family. 5 / 16

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