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Veterinary Forum May 2008 (Vol 25, No 5)

Business Skills: Charging for your services

by Amanda L. Donnelly, DVM, MBA

    There are many critical drivers of practice success, such as a competent, trained health care team dedicated to patient advocacy, outstanding client service, sound business principles, effective marketing, a positive practice culture and the list goes on. Regardless of the type of practice and the location, one thing is universal — all veterinarians must charge for their services to survive.

    Those who pay attention to the fee schedule and financial reports are more likely to be profitable. Practice owners and managers should consider the following recommendations when analyzing fees and revenues.

    Develop a protocol to increase fees

    Many practice owners fail to increase profitability because they neglect their fee schedule. All owners or managers should assess their current fee structure if this has not been done. Answer the following questions: Are my fees high or low compared with my area and national averages? How do my fees compare with my competitors? Have I calculated the cost of providing my services? How do my prices compare for shopped services? Am I providing value to my clients? Do I have a system to mark up inventory items? Am I tracking price increases for such items as laboratory supplies and services?

    Once the basic analysis has been completed, a system should be established to regularly increase fees. Although there is no standard for increasing fees, many veterinary practice management consultants advise an increase of 10% per year. Because owners are not always comfortable with this protocol, the reality is that practices that increase fees often raise them between 3% and 10%. To avoid large fee increases and reduce the chance that clients will react negatively to higher prices, many practices make adjustments to the fee schedule quarterly in smaller increments.

    Don't overlook the importance of communicating with the health care team regarding fee increases. Team members need to know when fee increases occur and understand the economics that drive the need for these adjustments. In addition, all employees need to be trained to respond appropriately if clients make comments about fees.

    It is easy, especially during busy times, to forget to add service items to an invoice or to mark the incorrect quantity. Missed charges can add up to a substantial amount of lost revenue. Practices should have an operating system in place to minimize missed charges. Some practices find it helpful to link service codes to avoid missed charges. Other protocols involve updating invoices every time a service is performed and having multiple employees check the invoice for accuracy. In addition, managers should audit invoices and records regularly to check for missed charges. Any trends or patterns related to particular employees or times of day should be noted to make possible improvements.

    Often veterinary practices simply do not charge for services that are performed. Assess whether you are charging for the use of all your equipment, consultation time, technician time and every service you provide for a patient.

    Because equipment use is included in the cost of providing some services, there is a tendency to overlook the importance of charging for all equipment and procedures. Examples of these items include charging for the use of infusion pumps and heating pads, venipuncture for blood samples, cystocentesis or ultrasound to collect urine, anesthesia monitoring, such as pulse oximetry, and the use of topical anesthesia to perform ocular procedures. To cover the cost of biohazard waste disposal, many practices also are adding an environmental disposal fee to all invoices when syringes and needles are used.

    Any service that requires the veterinarian's or technician's time should be charged for appropriately, even if there is no sophisticated equipment being used. Examples of charging for the technician's time include clipping and cleaning wounds or skin lesions as well as outpatient ear cleanings. Likewise, administration of medications or nutrition should be included. The time spent giving multiple medications or tube-feeding hospitalized patients should be accounted for whether it is captured on the invoice as "nursing care" or as a higher level of hospitalization. Veterinarians should have several service codes for different levels of consultation to ensure that clients are charged appropriately for both rechecks and extended office calls.

    Staff members need to fully understand and appreciate the value of all veterinary services. Practice owners and managers should have training programs in place to educate staff about the value of services and coach them on how to communicate this value to pet owners.

    When veterinarians do not charge appropriately for their services, they undermine efforts to achieve financial success for their own practice and the profession as a whole. With relevant economic issues in veterinary medicine — staggering student debt, low staff wages, loss of profit centers and the desire to achieve better life balance, to name just a few — it is imperative that we charge for our services.

    Helping clients pay for services

    Emergencies and expensive care happen, but sometimes owners just cannot afford your fees. When an owner comes in with a new puppy or kitten, recommend pet insurance. Pet insurance does not dictate what you charge, and just like any insurance, fees and coverage differ. But they can help clients afford care for their pet. Also, such companies as CareCredit could be the answer for a client who is facing an expensive bill, so be prepared to talk with owners about some of these services.

    For more information:

    Website: www.ncvei.org.

    NEXT: Chemical levels high in pets

    didyouknow

    Did you know... A client who arrives with children in tow offers a perfect time to make your practice shine. Designate a "kid-friendly zone" for your youngest visitors and show your willingness to have the whole family join in the pet's health care. Read More

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