Outsourcing Turns a Dog Into a Champion
National retailers face a challenge when they enter the professional services sector. In the area of medicine, many customers view multiple location clinics with apprehension. They conjure up images of inexperienced, overworked and underpaid interns dispensing medical solutions on an assembly line.
Medical professionals often share this perception. The corporate medicine label can be poison for the retailer, making it difficult to recruit the professional staff necessary to run its clinics.
This was the crux of the dilemma for PETsMART in-store veterinary centers, VETsMART. “VETsMART was seen as a good place for a shot clinic, but with less confidence as a full veterinary hospital,” says Phil Francis, PETsMART chairman.
With over 500 stores to staff, overcoming the perception of corporate medicine by the veterinary profession is paramount in solving the recruiting problem. “To run a hospital you need vets. There are about 54,000 vets. Only 26,000 practice veterinary medicine. 20,000 are individual practitioners. You can see the problem of staffing from that pool of 6,000, or one in nine.”
Changing the Perception to Increase Recruiting
In July 2000, the Phoenix-based retailer outsourced its veterinary clinics to MMI/Banfield of Portland, Oregon that had been operating some of the VETsMARTs. An important consideration is to have veterinary professionals offering services in a pet store as opposed to a pet store offering veterinary services.
The outsourcing supplier changed the VETsMART name to Banfield, The Pet Hospital. The name has a solid reputation for giving pets human quality care as a national practice since 1955. “The VETsMART name was definitely a problem,” says Dr. Hugh Lewis, Banfield senior vice president of practice development, and former dean of the Purdue School of Veterinary Medicine. He says the idea of operating what was perceived to be corporate vaccine clinics made it difficult “when it came to hiring veterinarians.”
The supplier adopted a new strategy, including the Charter Practices that are owned by veterinarians. For doctors desiring their own practice, the advantages to this are numerous. For example, location is a major draw as each PETsMART averages 4,000 customers per week. Also, pet owners who relocate from Atlanta to LA can take their pet to another Banfield clinic and know that the veterinarian can access their pet’s records.
The outsourcing vendor also provides training, management consulting, administrative, bookkeeping and technical support to its Charter Practice vets. Banfield’s leverage simplifies procurement and makes the pricing less expensive. This enables the doctor/owner to focus on the care side of the practice.
Building Bridges with a Model for the Future Today
Enhancing the Banfield image by pointing out the advantages of a national practice to the veterinary community is a recruiting strategy. “Since 1995 we have visited veterinary schools and had a good relationship,” says Lewis. He reports the University of Pennsylvania developed an idealized model for future veterinary practice in a pet store; “Banfield is the closest to that model.” Francis notes this assures the veterinary profession that what Banfield offers “is the right kind of model going forward.”
Another strength is Banfield’s database software, PetWareÆ. Francis explains, “They have the best vet software in the world. There is a database on every pet in every store.”
PetWareÆ is also a tool to ensure optimal care. “Through our Quality Assurance Program, we actually evaluate the quality of the work done by our doctors. This was initially viewed as big brother. Now the need for standards in the profession and peer review is recognized by many of our professional colleagues,” says Lewis.
Another advantage is the hotline staffed by a team of experienced practitioners. Lewis elaborates, “Most new veterinarians are not prepared to practice. Having a group to readily mentor is very important. It presents all of the information they need to make a decision. We also bring students into our practice to get over that barrier of the unknown.”
Francis recognizes the wisdom of this approach. “The veterinary world is a closed fraternity/sorority. With the perception of corporate medicine, working for Banfield rather than PETsMART makes the recruiting and retention of veterinarians easier.”
The outsourcing solution is paying dividends. “In the last year recruitment has definitely been easier, especially with experienced veterinarians in the Charter Practices,” says Lewis. The supplier has been able to recruit “some of the most successful in practice today.”
The synergy resulting from outsourcing harnesses the strengths and expertise of each party to produce a win/win scenario for all concerned. In recognizing that outsourcing was the ideal solution as opposed to corporate acquisition, Francis concludes, “From the PETsMART point of view, there is now credibility in a pet store doing medicine. Customers see Banfield, The Pet Hospital, as a full-service hospital. Since we want total lifetime care of the pet, the affiliation with somebody with that reputation is very good for PETsMART. This arrangement with Banfield helps us do this better than we were doing it before.”
Outsourcing has allowed the retailer to concentrate its efforts on retailing. “PETsMART is now better able to focus on the core parts of our business where we have differentiated expertise. It has certainly been a good change for all of us,” says Francis.
In summary, the tail no longer wags the dog.
Lessons from the Outsourcing Primer:
- Outsourcing solves labor challenges since the outsourcing vendor has a better chance of recruiting top talent.
- Outsourcing vendors have proprietary applications that the buyer would never develop.
- Outsourcing vendors have procurement and support systems that help them attract top talent.