How do we get paid?

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How do we get paid?

Take a closer look at veterinary billing practices
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Aug 12, 2008

To truly know how cows are managed, we need to observe them and their caretakers for several hours.

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We need to see how feed is mixed and delivered, how milking is performed and determine how often feed is pushed up. How much time are cows away from feed? How much time do cows spend standing, and what are air quality and comfort factors at various times of the day? We cannot get this information while talking to owners or managers. Many times they themselves do not know, even if they think they do.

Besides hanging out with the cows for several hours, we also need to review records and the formulated feeding program. We need to evaluate the physical condition and lab results of forages. In some cases, we may need to review heat detection and insemination techniques (as performed, not as written in a protocol). It really does take a lot of time. This in turn brings up the question: How do we get paid?

In some cases, we will simply bill the owner at our standard hourly rate. This can happen when the owner or manager has the right combination of motivation to improve and faith in our ability. He or she is willing to make the financial investment because they believe they will get a positive return on that investment. If so, we simply proceed.

In other cases, the owner will not be willing to pay us for our time. This may be because they are satisfied with herd performance as it exists, or it may be that, despite being dissatisfied with the status quo, they do not believe we will be able to provide a solution. With this scenario, we probably will decide to keep our involvement to a minimum.

However, there is one more possibility: We could tie our fee to a percentage of the economic benefits the herd eventually derives by following our suggestions.

Let's consider the following example: You have a client with 100 lactating cows, and milk production is five pounds below his norm for this time of year. During a routine herd visit, the owner reveals that he is frustrated with this result.

You take a look at the feeding program and some forage test results, and it appears that the formulated rations should support much higher production. The body condition of the cows is acceptable, and you see nothing during your visit that explains the problem.

You know that a lot of money is being lost, and you would like to help. It will take at least 12 hours of your time to do a complete investigation of the problem. You tell the owner you will have to charge between $1,500 and $2,000 to do a work-up. He asks, "And what if you don't find an explanation?"

At this point you may want to get creative. Tell him that if you find no cause of the poor production, there will be no fee. This means you have assumed some risk that you may invest those 12 hours, and get paid nothing.

On the other hand, you agree that if you find the problem, and can make recommendations that are practical and doable, he will implement those suggestions. Then, he will pay you 25 percent of his economic gain over the next 12 months.

So how might this play out? Suppose you find in your time on the farm that cows are without feed several hours each day, and that the milking procedure fails to get units attached in a consistent and timely manner after udder prep. You are able to suggest changes that will solve both problems. These changes are made, and production comes up four pounds per cow per day. Marginal income on those four pounds of milk is at least 40 cents per cow per day, or $40 per day. So under your agreement, you are entitled to $10 per day for the next 365 days, totaling $3,625. So you net roughly double your standard fee, although you have to wait longer. Your client, meanwhile, gets the other 75 percent of the benefit, so he should be relatively happy as well.

Obviously, there are pitfalls to this approach. Your client may agree to implement the changes, yet the staff never actually carries them out. Maybe poor forages just as these changes are made result in reduced productivity. Maybe he gets into superior forages, and is reluctant to give you credit for the improvement. In essence, there are substantial risks, but there can be very substantial rewards.

You could modify the approach, so that you get paid a minimum of perhaps $500, and a maximum of $2,500. Your client may feel more comfortable with this arrangement. Your percentage of the benefit could vary up or down. Obviously, the bigger the herd, the bigger the potential gain.

The greatest benefit to suggesting this approach to your client may be that he or she will see just how much they have to gain by getting production back up to expected levels. At that point, they may well be willing to pay your standard fee. If not, and you proceed with this plan, the most you have to lose is 12 hours of your time. Try it once or twice and see what happens. If nothing else, it will make things interesting.