In companion-animal practices, an average markup of 125 to 150 percent is added to the cost of the medicine along with a dispensing
fee of $15 to $25, depending on geographic location. Drugs with low turnover rates (less than eight to 10 times per year)
typically have a 200 to 250 percent markup to cover the additional carrying cost. The total price is then compared to a minimum
prescription fee, and the client is billed the higher of the two.
OAH's standard markup on dispensed medication had remained unchanged for four years and averaged only 100 percent. We increased
it to 150 percent and also raised their minimum prescription fee and dispensing fee to $18.40 with the intent to implement
a minimum prescription fee of $26.40 in six months. While the hospital staff anticipated a tsunami of client rejections, actual
client reaction to the fee increase was insignificant.
Your clients' perception of value is certainly affected by fees, but giving away a medical service sends a direct message
that the service has no value. You should not provide medical services you get nothing for. Giving away services is very costly
to your practice, but pricing strategies are only part of the fee issue. You can spend days or weeks creating the perfect
fee structure, but unless you invoice your clients for all services provided, your efforts are wasted.
For example, many practices fail to charge for services such as medical progress exams, skin scraping, pre-anesthetic sedation,
induction, monitoring and in-patient exams and injections. Giving away one in-patient exam ($45.40) and one medical progress
exam ($36.30) per day for a year amounts to about $25,000 in lost revenue.
Most veterinarians still undercharge for too many of their services, under-value their time and struggle with low profits.
While increasing prices across the board without considering clients' perceptions of value can be disastrous, judicious and
strategic increases can improve client perception of value while also benefitting your practice.
Increasing fees by an overall average of just 10 percent typically increases a business's bottom line profit by 35 to 40 percent.
Adding a 10 percent reduction in overhead also typically increases the profit by 40 to 45 percent.
You can use intelligent, computer-based knowledge systems to be properly compensated for your time, knowledge, and experience
capping your career with an enjoyable retirement. Or, you can wander, unadvised, joining most of America in having to increasingly
lean on our government for your basic needs. The choice is yours.
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; Vethelp@comcast.net
; fax: (866) 908-6986.