Trainer Bills
Running in the Black: Owner's Involvement, Key to Turning Profit
by Gary Burke
Having to pay the training bills on between 30 and 40 horses every month has caused me to take a keen interest in the operation of my racing stable. Even after 14 years in the business, I still get anxious every month when I look at my training bills - whether it be of dread or fear. Believe me, my monthly operating expenses are a tough nut to crack! But through my experiences operating a racing stable, which includes facing the major changes in the tax laws in 1986, I have learned the hard way. The key to operating in the black is to be involved. Simple concept, but it takes some work.
When you enter the racehorse business, you will find a wonderful new world of folks eager and willing to tell you everything you could ever want to know about owning racehorses. In a perfect world, your carefully selected trainer will have all the right strategies to help you win every race. Your veterinarian, who is called upon for numerous items, comes in handy to point a finger at when your trainer's strategies don't win. The farm manager, if you use one, will tell you that you own a world-beater. And if you do as I do, and send your horses to a training facility prior to sending them to the race track, then you will have one more opinion that undoubtedly conflicts with the other three, which already conflict with each other.
Welcome to racehorse ownership! That's why it's so important to become involved. After all, someone has to figure out what to do with all of this input and keep all of the players happy. But sorting through all of this information, and with the bigger picture in mind, I can and do make better decisions. My success has increased. As the IRS will tell you - if they could - I'm running in the black and crossing my fingers.

Keep Good Records. A properly conducted racing stable can run in the black. Good record-keeping is key, as you need to see where your money is going. Keep your books like any other business. A simple balance sheet and profit and loss statement will help track your stable's profitability (see sidebar). If you don't feel comfortable keeping your own books, use a CPA that's familiar with horse racing tax laws and regulations. You will find that running a horse operation for profit will influence your decisions as to how much you want to pay for a horse and at what level you will race it. Contrary to popular thinking, many expenses are legitimate - to illustrate this I have included a basic chart of accounts. Of course these would be adjusted according to your individual requirements. Once again hire a competent and knowledgeable CPA to help you.

Generate Cash Flow / Race Where You Are Competitive. It is extremely important to generate cash flow. Having more than one horse, even if it's only partial interests in horses, helps in this area as horses get sick, need time off, and are not able to race all of the time. I try to keep between 50% and 70% of my horses in training, as it is very difficult to make a profit below 50%. You must also remember that it costs the same amount of money to train a $10,000 horse as it does a $50,000 horse. Yet, the purse money is about three times more for the expensive horse. Therefore, if turning a profit is important to you, as I suspect it is, it might be wiser to own part of a quality horse than all of a cheaper one. As the industry continues to improve purses for owners, it becomes essential to race your horses at levels where they can be competitive. For example, if you pay $30,000 for a horse, and find that it needs to run for $16,000 to win, you will still earn approximately $8,800 less jockey and trainer fees upon winning. On the other hand, if the horse runs up the track for $32,000, you earn nothing. Meanwhile, the costs continue...

Work Closely With Your Trainer. Your trainer can be helpful to the success of your operation in many ways besides the day-to-day conditioning of your horse. He or she basically manages each horse, and can control many of the costs associated with training. I have found that working closely with my trainers helps them understand the financial impact training costs have on my pocketbook. Supplying them with profit-and-loss statements from time-to-time and having regular business discussions is very beneficial. During these meetings I explain to them the importance of monitoring costs, as their livelihood is directly affected by my ability to afford ownership.
For example, I find vet bills to be my largest operating cost - outside of the day-to-day training cost. As trainers are in direct contact with the vets, they have some control over your vet bill. By explaining to my trainer the need to watch veterinary costs, I have seen a reduction in my monthly vet costs. Also, give a horse some rest to allow him to recover from the stress of racing and reduce the need for medication. It's a good bet that time off will allow your horse to come back and be competitive at or above the level he left. So too, by keeping your trainers informed, they will be more careful in selecting horses for you to purchase, since it's in their best interests to help make your investment profitable so you will enthusiastically stay involved in racing. I meet individually with trainers, veterinarians, farm managers, bloodstock agents, consignors, jockey agents, and transportation company representatives.
Through such meetings, I can honestly say that I learned something from each one that ultimately had a favorable impact on my business. While most owners just interact with their trainers, I find that the other people mentioned are quite willing to exchange their ideas and assistance. As in any other business, the owner needs to know the players and establish strong relationships. It's also part of the fun of ownership. Get involved in your racing stable, watch where your money goes, ask questions, and work towards running in the black!

A founding Director of TOC, Gary Burke operated a sizeable claiming stable until his passing in 2001.

Trainer Contracts
Do you really know what the terms of the contract with your trainer are?
By Drew J. Couto, Esq.

How many owners have written contracts with their trainers for services provided? Go ahead, raise your hands. Okay, the six of you that answered "yes" need not read on. However, for the other nine thousand or so who didn't, consider some of the issues raised in this article. When you are finished, ask yourself: "Do my trainer and I actually have an understanding as to what we expect of one another?"

Now, don't get me wrong. I'm not advocating every owner, or for that matter, any owner, require a written contract with their trainer. At least not yet. However, I strongly urge all owners to discuss with their trainers certain recurring and occasionally, problematic issues that can arise in the owner/trainer relationship. It is important that both owner and trainer have a mutual understanding of the rights and obligations, as well as the expectations of one another. Whether that understanding should be reduced to a writing is a personal decision. Many factors must be considered including the size of one's stable, the level of trust between the parties, the duration of the relationship, an individual owner's ability to absorb large or otherwise unusual expenses, etc.

Why do so few of us have written contracts with our trainers? The answer is really not important. However, the fact that so few of us do is an interesting reflection of our industry; a reflection of what is right and at the same time what is wrong with how our industry conducts its business.

Anyone who has been in the business for any period of time has heard at least one owner speak of a bad experience or experiences he or she has had with a trainer. Likewise, we've heard many trainers tell stories of equally bad experiences with owners. More often than not, those bad experiences stem from the fact that neither really understood the expectations, rights, and/or obligations of the other.

In the hopes of avoiding more disputes between owners and trainers, consider the following topics and issues. In particular, consider whether there is a common understanding on these subjects. Where any doubt exists, take time to discuss the subject. Be careful and certain about the relationship. Don't assume that the other shares your understanding.

Purpose of the Arrangement
This seems like a clear-cut subject, right? Believe it or not, it isn't always.

Oftentimes, owners send horses to particular trainers believing that individual to have unique or specialized skills. For example, some trainers have outstanding reputations for breaking young or difficult horses, while others for their skill in bringing horses back from injury. Some trainers are recognized for their development of two-year-olds, fillies, sprinters, European horses, etc

On those occasions when an owner may wish only to engage a trainer solely for that specialized skill and/or for a limited duration, i.e., to break a young horse and then transfer the horse to another's barn, it is essential that that fact - the intent of the owner - should be disclosed to the trainer from the start. Generally, problems arise when it is not disclosed, as the trainer may have expectations of his/her own.

Fees and Payment
Typically, a trainer's compensation consists of two components. The first component is "day rate." The day rate is a fixed, flat fee charged for the day-to-day care and training of a horse. Day rates vary from trainer to trainer and are based largely upon the trainer's reputation and level of success, as well as the geographic region in which he/she is based. Depending on the services provided, the day rate can vary between $35.00 to in excess of $100.00.

What is a fair day rate? The answer to that question is subjective, meaning it is up to the individual to decide. Accordingly, you must ask yourself: Do I fell I am getting my money's worth? How does my day rate compare to others? What level of success have I experienced considering the quality of stock I have in training?

About the only advice TOC can give an owner is, when in doubt, ask! Ask other owners. Ask other trainers. Just ask!

Now, the corollary to receiving a fair day rate is being a "good pay" owner. In other words, an owner should pay his/her bills in a prompt and timely manner. Depending on the particular trainer, "timely" means within 15 to 30 days after receipt of an invoice. Barring exceptional circumstances, a responsible owner should keep one's accounts current.

The second component of a trainer's compensation is as percentage of purse money earned. As with the day rates, this percentage varies from trainer to trainer, as does the placing for which a trainer requests a percentage. In general, trainers require an owner pay them 10% of all purse money earned. However, some owners pay their trainer the same percentage of purse money that the jockey receives; in other words, 10% for first and 5% for second and third.

Don't forget, some trainers require an owner pay a "barn stake" equal to 1% to 3% of purse money earned. The barn stake is intended to be distributed among stable employees in recognition of their contribution of the racing effort.

Again, trainers' fees vary from individual to individual. What constitutes a fair rate is up to the individual owner to decide.

Authority to obtain veterinary and farrier care
One of the most common complaints of owners is that they incur excessive veterinary and farrier expense without prior consultation. The complaint is common because there is no understanding between owners and trainers as to an owner's desire to be consulted. Oftentimes, trainers assume that they are free to make all decisions regarding veterinary and farrier care. Given that it is the owner who typically pays those expenses, some trainers are not as concerned as they should be about the cost of such care.

Excepting emergency care, that care reasonably necessary to save the life, health, or well-being of a horse, a trainer should consult an owner as to all veterinary care. Likewise, trainers should advise the owner of the need for farrier care, be it the periodic replacement of shoes or special services arising from the peculiarity of an animal's foot of other physical condition.

As an added safeguard, many owners require their trainer provide invoices for all veterinary and farrier services, and that the invoice be initialed by the trainer as an indication that it evidences services actually rendered, at a rate deemed reasonable.

Rider Selection
Many owners receive great joy, or as some term it, "psychological income" from selecting or participating in the selection of a jockey. Unfortunately, many trainers overlook this pleasure.

However, before an owner can meaningfully participate in the jockey selection process, they must understand precisely what is involved in securing a rider's commitment. Because of the uniqueness of the situation under which riders are retained, and the peculiarity of the way in which jockeys' agents often conduct business, trainers must have some liberty in retaining a rider. However, "liberty" should not be confused with complete, unbridled discretion to select whomever the trainer chooses.

Trainers should consider it their obligation to make recommendations as to the appropriate rider for a particular horse. They should recognize that the decision is not theirs, but the owner's to make. Likewise, owners should recognize that the recommendation likely comes from a very learned individual, more familiar with your horse than you are, and that their judgment should be respected.

Race Selection
Perhaps the single most important issue to be discussed is race selection. The old backside joke about the danger of giving an owner a condition book belies the importance of the issue. Owners want to run their horses at a level that reflects their perceived value and investment, while remaining competitive. Trainers wish to run "their" horse at competitive levels that assure participation in purse money, and contented owners. Obviously, these interests are largely synonymous, but on occasion can differ. When they do differ, problems can arise.

Logic would dictate that it is the owner that has the right to select the race in which one's horse competes. That is not to say that the trainer's opinions and recommendations should be ignored. The race selection process should be viewed as a cooperative effort. In that way, both share the glory or blame, for the effort.

Special Board and Feed Considerations
A fair number of owners are also hands-on horseman and horsewoman. When their horses are not in training at the track, they are often at home with the owner, receiving personalized care and attention. As a result, specialized feed and board arrangements can develop.

Owners who wish those special arrangements to continue while a horse is in training at the racetrack must bring those wishes to the attention of their trainer. Typically, trainers respect owners' requests and, given the trainer's expertise, can often make recommendations as to further improving a specialized program.

Frequency of Communication
At the very least, owners expect trainers to keep them informed of their horse's works and race commitments.

Understandable, a horse's works are extremely important to an owner, particularly given the infrequency with which a horse may race. Works offer more frequent joy and increased levels of excitement to every owner.

Therefore, the parties should have an understanding as to assurances that the owner will be notified in advance of any and all works. Likewise, an owner should recognize that, in most circumstances, the trainer should be free to determine the length and pace of every workout.

Racing Name
Although this point may seem obvious, a prudent owner should be certain that one's trainer understands under whose name and in whose colors a horse shall compete.

Competition
On occasion, a trainer will enter more than one horse from his/her barn in the same race. As a result, some owners require that their trainer not enter any of the owner's horses in a race in which the trainer has another horse entered, without that individual owner's prior consent.

Insurance and Indemnification
At the very least, in order to protect all parties involved, an owner should insist that as trainer provide proof of current workmen's compensation coverage.

Conclusion
Hopefully, the reader will recognize that this is not an all-inclusive list of the issues relevant to the owner/trainer relationship. Instead, this article is intended to identify issues and concerns common to the relationship so as to encourage owners and trainers to discuss them in advance.

The cornerstones of any long-term owner/trainer relationship are communication and understanding. Where concerns exist about any facet of the owner/trainer relationship, it is best for the parties to discuss those concerns as soon as they arise, rather than when they become problematic.

Trainer Day Rates
The Day Rate: What Does it Cost to Train a Horse?
By Richard Stacy

A Thoroughbred trainer charges his client a fee, commonly referred to as "the day rate" for the daily training and upkeep of a horse, including labor, feed, supplies, etc. Informal debates have long been held regarding the day rate, and whether or not trainers make significant profits from the training rates they charge. The intent of this article is to break down the costs that a trainer incurs, so that owners have a better understanding of their monthly training bill. The figures used are based upon an average training rate of $60.00/day (common in Southern California), with a trainer having an average of twelve horses.

Labor Cost
Grooms are responsible for the day-to-day care of your horse, and are a key player in the well-being of your beloved asset. In most barns, a groom handles four horses per day and is usually paid $11.00 per horse. Grooms work seven days a week, and are responsible for preparing the horse for his daily routine. This includes tacking the horse for his morning exercise, cleaning the stall, and bathing and grooming the horse upon its return. Hotwalkers take care of the horse after its morning exercise, walking the "hot" horse until he is cool. They also help the groom bathe the horse. For their efforts, they are usually paid $6.00 per horse and walk an average of five horses per day. Grooms and hotwalkers are employees of the trainer, so in addition to the $17.00 paid on a daily basis for their work, the trainer must also pay worker's compensation insurance and taxes. Using an average of 17.9% of payroll for worker's comp, $2.86 is now added to the daily labor cost. Add to that payroll taxes, social security, Medicare, and unemployment insurance of $2.84, and the trainer's employee costs for your horse are now $22.70. Wait! What about the exercise rider? They are usually considered independent contractors, so the trainer does not pay worker's comp and taxes on them.* Exercise riders are paid an average of $10.00 per horse, so now the daily labor cost is $32.70. A logical question at this point would be, do we need an exercise rider every day? The answer is no, but in all likelihood the horse will be ponied on the track if not ridden, also at a cost of $10.00 per day.

Feed
The next major component of the day rate is feed. An average monthly feed bill for a twelve-horse barn runs $4,700, which breaks down to $13.00 per day per horse. Hay, straw, and grain are included in this cost. Feed is not cheap, as currently a bale of timothy hay costs $24.00, alfalfa $15.00, and straw $5.75. A bag of grain runs about $15.00. Although different trainers use different amounts and types of feed, most agree that a Thoroughbred in training can be fed for between $12.00 - $15.00 per day. For our purposes, we will use $13.00.

Equipment and Supplies
In addition to the purchase of saddles, bridles, halters, and other tack, a trainer must keep on hand a variety of leg wraps, liniments, sweats, poultices, etc. An average monthly bill for a twelve-horse barn runs between $800-$1,000 which breaks down to $2.25 per day per horse. Most trainers also use certain machines to keep your athlete in prime condition, including ice machines, lasers, ultra-sound machines, and stem-pulse muscle stimulator units. Assuming the capital cost of this equipment is $10,000, they cost .77 per day, based upon a three-year depreciation. Some may argue that this equipment will last longer than three years, but due to the continual wear and tear that this equipment receives from outdoor use, it will usually have to be replaced or at least incur a major repair within this period.

Bad Debt
In addition to being horsemen, trainers are also businessmen, or should think of themselves as such. As a trainer is engaged in the business for profit, he should have a reserve for bad debts, like all good business people. Collection of money is difficult for many trainers based upon the attitudes of some owners who feel that they need not pay for services rendered unless their horse is winning money. A good business person reserves 2.5% for bad debts. Based on a twelve-horse barn billing $60.00 per day, this reserve equals $1.50 per horse per day.

Other Costs
As trainers acquire more horses, some costs will be reduced due to economy of scale. Net profits per horse will be increased. However, once a trainer goes beyond 20 horses, he will normally need to hire an assistant. Most assistants earn on average $2,500 per month. If a barn were to have 24 horses, an assistant will cost $3.47 per horse per day. There are numerous hidden costs incurred by a trainer. For example, when a horse trains at Hollywood Park and is entered to run at Santa Anita, he will ship the day before the race to "school." The trainer will generally send the groom with the horse, leaving the remaining three horses in need of a groom. He will then also have to give the traveling groom money for gas and food, and also pay other grooms an additional amount to care for the three horses that remained behind, until their groom returns. Although not figured in this treatment of day rate, some trainers hire a night watchman, and bookkeeper, which will increase their labor costs. Also, the start-up costs for a trainer, including acquisition of tack, worker's compensation deposit, etc. have not been included.

What the Trainer Receives
As illustrated, it costs a trainer about $50.00 a day to take care of your horse, although there may be wide variations depending on the type of care a trainer gives a horse. But taking the $60 scenario listed above, this leaves $10.00 for the trainer. Out of this, he or she must pay the phone bill (not a small cost if one keeps in good communication with owners), cover their own health insurance, and cover the miscellaneous expenses incurred in running a business. Not a lot considering the trainer plies his trade seven days a week, fifty-two weeks a year. He must win races, or at least finish well, in order to operate a profitable business. It is not the intent of this article to either support or dispute a trainer's rates. There are many variations on a trainer's regime that can increase or decrease costs, such as using a hotwalking machine, having grooms rub five horses, etc. However, such changes impact the environment in which your horse lives. You should take these factors into consideration before determining which trainer to use. There are approximately 800 licensed Thoroughbred trainers in California. Their rates will range from $45 to $80 per day. Rates are generally higher in the South. It is up to you, as an owner, to determine the trainer's care program that best fits your needs. Visit the barn, ask questions, and consult other owners as to their experiences with a trainer. Remember, the choice is yours. Choose wisely!

Richard Stacey is President of Airco Filter Sales, a company he founded in 1979. A lifelong racing fan, Richard became a horse owner in 1986.

Veterinary Bills, Cost Controls

Employing Cost Controls On Your Monthly Veterinarian Bills

By Barry Trinchard

In horse racing, as in any business, costs incurred in your operation should always be examined for their necessity and reasonableness. Veterinary costs incurred in horse racing are expenses that should be examined and questioned in order to operate an efficient stable. The application of sound business practices can help control these costs, and hopefully allow you to reduce their expense.

Understand Your Vet Bills - Then Work to Reduce Them

As in any business, one must have an understanding of costs in order to be able to control them. The key to any owner understanding his veterinary costs is good communication between the owner and his or her trainer. It is important that you, as an owner, understand the veterinary needs of the horses you financially support. Educate yourself about your veterinary statement so that you may begin to understand what treatments are being given to your horse and why.

Understanding your monthly vet bill will help you control it, as you will then be able to discuss with your trainer such ideas as using bute tablets instead of bute injections. Bute tablets, given to your horse through its feed, cost $5.00 per dose, while bute injections, which allow the medication to directly enter your horse's bloodstream, cost $15.00. Is the extra cost of an injection worth the price? Increase your knowledge so that you may decide.

Ask Questions!

Ask your trainer or veterinarian to explain the components of the veterinary bill. Most trainers and veterinarians encourage owners to learn more about the business, and will be happy to answer your questions. And as the individual writing the monthly check, you are entitled to them.

When you examine the veterinary expenses generated by your racehorses, it is important to know the answers to the following questions:

1) How are my veterinary costs incurred?
Usually, the trainer is the purchasing agent for your horse's veterinarian services, incurring veterinary costs on an owners' behalf. Communicate with your trainer to guide him or her in regard to what veterinary costs you feel should be incurred, and know what costs he or she believes are necessary to keep your horses fit and running to win.

2) Who approves my veterinary charges and justifies their necessity?
In most cases, this task lies with the trainer, as he is in charge of the daily care of your horses. If you believe that your trainer should be solely responsible for purchasing veterinary services, then your trainer should be responsible for accounting to you for these costs, including reviewing and signing all veterinary statements before submitting them to your for payment. This practice incorporates a check and balance system to help control your veterinary costs. If a discrepancy occurs in a bill, or an increase in service costs, the trainer will be able to address such problems in a timely manner with the veterinarian. The trainer should also explain your veterinary costs to you, ideally on a monthly basis.

If your trainer cannot satisfactorily explain the costs you have been billed for, you should feel free to call and ask the veterinarian yourself. It should be noted that one charge an owner will not see listed on a veterinarian's statement is the cost of routine examinations. These examinations, which are requested by your trainer, are done quite regularly without charge to the owner.

3) What do these words appearing on my statement mean?
As in other areas of racing, the words on the vet's statement may not have meaning to you. What are Acepromazine tablets used for? What is Rompun, and why did my horse receive it? What are Sulfamethoxazole and Trimethoprim, and why did my horse need a whole bottle? Do not let the unfamiliarity of the words deter you in your education. Ask!

4) What payment methods are available?
You, as the owner and payer of the veterinary bills, have the ability to inquire about methods of payment. In most businesses, payment terms are negotiable. Always ask your veterinarian if payment terms are available. You may be ale to negotiate terms based on prompt payment, such as a 4% discount if paid by the 10th of the month. Additionally, if you own a number of horses and are generating larger than average veterinarian bills, you may be able to negotiate a volume discount with your veterinarian.

Veterinarian costs are not one of the happier aspects of racehorse ownership. While you may not be able to reduce your monthly vet costs as much as you would like, understanding and applying some basic business principles will work to your advantage.

Veterinary Bills, Explanations

Decoding Your Vet Bill

By Trainer Howard Zucker

One of the least understood factors in the cost of owning a racehorse is your vet bill. Vet expenses are an unwelcome but necessary part of maintaining your racehorse in peak condition.

Hopefully, your horse was raised with few veterinary costs other than routine wormings and vaccinations. Perhaps you had to pay for antibiotics to treat an illness or field injury. If there were no problems during early training at the farm or training center, you paid for routine x-rays to check on knee closure and bone maturity, and if all went well, your steed went off to the track.

Then what happened? All of a sudden you see a seemingly endless list of charges, mostly for unfamiliar medications adding up to a vet bill which averages $100, $200, or upwards of $600 per month. What's going on? Is your horse hurt, dying, or has he become drug dependent from job-related stress? Ask your trainer!

Good communication between owner and trainer, resulting in a thorough explanation of the vet's bill, can keep a healthy business relationship alive and well. A smart trainer informs owners of veterinary work being done on a regular basis, either week-by-week or whenever progress reports are regularly given. Such updates avoid the shock at month's end when the bill arrives. It is also a good idea for trainers to personally check and approve all items on a vet's bill before it is sent to the owner. Such practice eliminates one potential trouble of charges mistakenly applied to your bill. It is also useful for the trainer to add a brief note of explanation for exceptionally large charges as to the procedure employed, why it was necessary, and what medication was used.

Some trainers, myself included, use preventative therapies such as electromagnetic therapy, massage, chiropractic adjustments, ultrasound, and ice. Such therapeutic remedies may also work to reduce your monthly vet statement, and keep your horse at its athletic peak.

Is It Better to Administer Medication Orally or Via Injection?

There are basically two ways of administering medication to horses, either orally or by injection. On California racetracks, only a licensed veterinarian can legally give an injection, so any injection will require a veterinary fee. "Injectables" may be given subcutaneously, intramuscularly, or intra-articularly (directly into a joint).

There are a number of ways to administer drugs and medications orally. It may be done by drench (dissolving the medication and squirting it into the horse's mouth with a syringe), or by paste (many common wormers and anti-inflammatories are sold in this form). Some can simply be added to the feed, either as powder or pulverized pills. Oral administration can be done by your trainer, and is thus usually cheaper than injections.

For example, 25 oral doses of Bute cost about the same as one injection. Why then would you want to use an injectable, if the same medication is available orally?

An injection is preferable - sometimes necessary - when a horse needs immediate relief from severe pain. Medication is given in an injectable form before a race to ensure that the horse receives the full dose, and does not leave a part of the dose uneaten in its feed tub. Additionally, some trainers prefer injections because they eliminate the risk of the wrong horse receiving a medication mistakenly placed in its feed tub.

Of course, as in every other aspect of racehorse training, opinions vary. Different trainers and different veterinarians use different approaches to using an injectable vs. and oral dose. Many owners trust their trainers to make these decisions. If an owner is interested in or concerned about how his or her horse is being "vetted," have a conversation with your trainer and/or veterinarian.

With regards to your overall vet costs, don't be afraid to discuss them with your trainer and/or veterinarian. Good communication makes good business, and will enhance your ownership experience.

Howard Zucker has been a licensed trainer for 19 years, during which time he has developed 1993 California Bred Juvenile Champion, Moscow Changes. He has a B.A. from City College of New York, majoring in Finance with a minor in Biology.

Veterinary Bills, Explanations (2)

Understanding Veterinary Bills
By Dr. Rick Arthur, D.V.M.

Ongoing communication with your trainer and your veterinarian can avoid surprises when the vet bill arrives.

No one likes surprises when a bill arrives, and racehorse owners are no exception. Veterinary bills are often the biggest surprise a horse owner receives. Several years ago The Blood-Horse magazine published an article on the most frustrating aspects of owning a racehorse. Trainer communication topped the list, followed by veterinary bills. When I was interviewed for that article, I contended these were really the same problem.

Veterinary bills vary from horse to horse, trainer to trainer, and veterinarian to veterinarian. Some owners prefer to leave everything to their trainers, whereas others expect a phone call on even the most routine treatments. The owner and trainer need to reach a comfort level that fits their goals and relationship.

The California Horse Racing Board recognizes that the trainer has direct responsibility to care for the horse and that the trainer can incur expenses on an owner's behalf to maintain the horse's health and welfare. The trainer orders the services; the owner pays the bill. Implicit in that relationship is the trust you must have in your trainer to control costs. Your veterinarian does nothing to your horse without the direct or implicit consent of your trainer. This is a critical fact all racehorse owners need to understand.

Paying for Services, Not Product

A major misconception regarding racetrack veterinary services is that the racehorse owner is paying for products rather than services. State and federal law requires that the veterinarian have a defined client/patient relationship. That relationship requires that the veterinarian use his/her professional knowledge before administering any medications. Even if the trainer requests a specific treatment, the veterinarian is professionally responsible for that treatment. The veterinarian cannot abdicate that responsibility to the trainer, or even the owner.

Historically at the racetrack, veterinarians do not charge for the most important professional service they provide-the routine, sometimes day-to-day examinations of your horse. Those examinations can take the bulk of a veterinarian's time, especially in the mornings. Veterinarians receive compensation for these examinations by charges for the other services they provide, such as phenylbutazone, Lasix(r), vitamins, dewormings, vaccinations, etc. While this presents an inherent conflict of interest, for the most part, it works well.

If you do not have confidence in the integrity of your veterinarian or your trainer's ability to supervise your veterinary expenditures, you need to find another veterinarian. You should be aware that this may require you to find another trainer as well.

Everyone feels professional fees are too high. This is true whether you are discussing attorneys, doctors, accountants, or any other professionals. Veterinarians average eight years of university education and are on-call 24 hours a day, seven days a week. The veterinary care provided at the racetrack is actually very efficient. If you paid your medical bills directly rather than through a third party, such as your insurance company, this would be obvious.

Why Are Costs So High?

In real dollars almost every routine veterinary service available 25 years ago is less expensive today. So why do veterinary medical costs seem so high? There are a number of reasons. Some of the reasons simply mirror the same factors in the human healthcare field, where costs have also risen astronomically in the last few decades.

When I went to work for Dr. Jack Robbins in the mid-1970s, we had the second fiberoptic endoscope on the Southern California Thoroughbred circuit. Since that time, diagnostic ultrasound, computed radiography, video-endoscopy, nuclear scintigraphy, arthroscopic surgery, laser surgery, and many more technologies have all been introduced into the racetrack practice. All of these technologies are expensive and add to the overall veterinary medical costs.

However, these technologies can improve the quality of veterinary care and, therefore, should be cost-effective. For example, Tiznow, Johar, and Pleasantly Perfect all had musculoskeletal problems identified with nuclear scintigraphy earlier in the same year that they won their Breeders' Cup races. Nuclear scintigraphy provided a precise diagnosis and allowed us to develop a specific rehabilitation plan for their successful recoveries.

Another factor paralleling the human medical experience is the introduction in recent years of a number of patented and useful, but expensive medications. During the 1980s, the pharmaceutical industry discovered that marketing directly to consumers resulted in higher profits. Any evening, while watching TV, you can see ads for specific drugs to control everything from acid reflux (the same drug as in Gastrogard(r)) to depression.

Pharmaceutical companies began to use the same strategy to market medication to the equine consumer, the horse owner. Examples include Gastrogard, a treatment for ulcers, and Adequan(r) and Legend(r), both used to treat arthritic problems. From a study at the Southern California Equine Foundation at Santa Anita and Hollywood Park, we were able to identify gastric ulcers in 84% of all racehorses we examined. However, not 84% of all horses need Gastrogard. Yet some owners specifically ask veterinarians to put their horses on the medication even when it may not be necessary.

The third factor is simply greatly increased demand for veterinary services. For the most part, large veterinary bills are not necessarily the cost of individual procedures or treatments, but the number of services being performed. This is particularly apparent in claiming horses, where the "leave no stone unturned" approach to veterinary care has become standard operating procedure in many barns.

Maidens and high-class horses are not immune to this approach. Every trainer is afraid the next trainer may find an undiagnosed problem and move a horse up. Owners don't like it either.

The competition with claiming horses has become severe, and veterinary services have become a key consideration. Seldom is the attitude that a horse is simply too slow or lacks class. Instead, the horse must have a veterinary medical problem that needs correction. This could include injecting joints, using anabolic steroids or any number of perfectly legal medications to address real or perceived problems. Those costs add up quickly.

Take the example that permeates the racetrack of a decade-old procedure for a dorsally displaced soft palate (also known as flipping his palate or swallowing his tongue). One successful claiming trainer has been doing the procedure on a number of claims this past year, and recently a large stable from back East came on the scene and does the procedure on every horse the stable claims. Other trainers are already beginning to follow suit. Many horses displace their soft palates and the surgery is relatively innocuous, so there is little harm. But the owners will pay the bill.

Many trainers have a routine program where all horses receive the same treatment prior to a race. This approach simplifies stable management but can get very expensive. For example, a horse could receive Banamine(r) (a non-steroidal anti-inflammatory medication), Robaxin(r) (a muscle relaxant), and Azium(r) (a cortisone) the day it's entered; phenylbutazone (commonly referred to as Bute, another non-steroidal anti-inflammatory) and a vitamin shot the night before the race; Lasix and estrogens (anti-bleeding medication) the day of the race; and an endoscopic examination after it runs. With those alone, an owner could spend $200 to $300 every time the horse competes, exclusive of any other treatments prior to entry.

Controlling Veterinary Costs

Certain costs are hard to control, particularly where serious illnesses or injuries are concerned. Colic, colitis, pleuro-pneumonia, or a life-threatening fracture can cost thousands of dollars and are unpredictable, just as they are with your pets or family. Surgery can also be expensive, but you should be interested to know that arthroscopic surgery on your racehorse is usually less expensive than arthroscopic surgery on your pet dog. However, routine veterinary care is very much discretionary.

Preventive health care such as vaccinations, deworming, and dental care are always cost-effective. Addressing a specific veterinary medical problem such as a lameness or respiratory problem should almost always be worth the cost.

A major error in attempting to control veterinary medical costs is eliminating diagnostic procedures. Remember, without a diagnosis, medicine is poison and surgery is trauma. A properly diagnosed problem can save considerable costs by avoiding unfocused and often unnecessary veterinary medical expenses. To put this in perspective, the cost of an X-ray of an ankle or knee is about the same as one day of training. Knowing the condition of your horse will also allow you and your trainer to make better racing management decisions.

What medications are necessary? The answer really depends on your horse, but unless your horse has a specific illness or injury, probably very few. When John Henry was Horse of the Year, his veterinary bill for the year totaled less than $1,000. While Gastrogard, Adequan, and Legend are usually beneficial at one level or another, that is not to say they are necessary or always cost-effective. These are very expensive medications and should only be used with a specific purpose. There should always be a reason to use any medication.

If you have questions you should first ask your trainer. The trainer is your agent and may have a simple, understandable explanation. But if you are not satisfied, your veterinarian should be available for consultation. You should expect a professional relationship with your veterinarian as you would with your doctor, lawyer, accountant, or any other professional providing you services.

Let your trainer know what your level of tolerance is-what level of veterinary care you want. Communication with your trainer will make sure that those decisions are made in your best interest and hopefully in the best interest of your horse.

Dr. Rick Arthur has been a practicing veterinarian on Southern California racetracks for more than 27 years. He is a past president of the Southern California Equine Foundation and the American Association of Equine Practitioners and is a vice president and director of the Oak Tree Racing Association.