Stop monkeying around with your practice fees - DVM
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Stop monkeying around with your practice fees
Use demographics and a little easy math to determine a profitable fee schedule


DVM360 MAGAZINE


A better way


TABLE 1 Facts for fee schedule
Table 1 shows goals for practices based on local demographics in which 25 years of research has shown the most comfortable and profitable exam fees based on average family income within a five-mile radius of the veterinarian's front door. These fees aren't based on a neighbor's or predecessor's fees but on U.S. 2010 Census statistics. These are not based on ZIP codes, because many ZIP codes have affluent areas and poverty level areas. Using an average in these areas would put a practice out of business.

As a practical example, go to your favorite supermarket and note the prices of any 10 items. Then drive three to five miles to another supermarket in the same chain and price those same items. You will almost always find a 5 percent to 15 percent difference. Why? Because the store managers know their customers, and they can charge according to customers' comfort level while still maintaining profitability.

But you can be assured that two areas hundreds of miles apart with a $55,000 average family income will both support a $101.75 average hospital transaction (includes diets, boarding and other over-the-counter charges) and a $145.84 average patient transaction (the patient is presented for treatment).

If we know both the average hospital transaction in an area and the number of transactions to be expected from our share of the 60 percent of pet-owning households and the 60 percent of those households that will get veterinary care, we can project annual revenue for any hospital at any location. Then, if the expected revenue is $900,000 and we're only getting $650,000, we know the difference is likely in the management. Either the fees are off, the veterinarian needs a personality tune-up or the receptionist needs to be declawed. However, if the reverse is true, and the needs of the hospital are $900,000 to meet overhead and the market share cannot exceed $650,000, then it was a folly to put the practice there. Math is a wonderful tool and can be fun, but it can be painful as well.

Final thought

Veterinary care is a great value. The cost of veterinary care has risen little over the past 20 to 30 years, especially when compared to the cost of human healthcare. It's just a shame that most practices today cannot profit enough to support the sophisticated medical services we provide and still pay associates and support staff the compensation they need and deserve. A nationwide wake-up call about fees is needed. Until then, most practices will be subsidizing their clients and patients at the expense of their families and retirement.

The saddest—and truest—statement I've ever heard is that the only rich veterinarians you'll ever meet made their wealth from real estate.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 112 Harmon Cove Towers Secaucus, NJ 07094; (800) 292-7995;
; fax: (866) 908-6986.


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Source: DVM360 MAGAZINE,
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