Fee anemia is epidemic: here's the cure

Dr. X has a 25-year-old practice that is having trouble meeting expenses. Payroll is covered, but what's left over is about $5,000 short of last year.

Dr. X sends for an advertised fee schedule showing that, for his immediate five-mile radius, the injection fee that will be supported by most clients is $26.75. He just can't believe people will pay that much; it is more than double his current fee of $12.

Chicken that he is, he increases his injection fee by just $2, or 17 percent of the proposed new fee, and gets zero complaints. He asks his staff if they received any complaints. They did, but Mrs. Nasty and Mr. Tight complain about everything.

Wth 2,500 injections a year, Dr. X sees himself ahead $5,000 a year in pure, no-expenses-attached, profit. He is a happy camper.

Had he increased the fee to the full recommendation, he would have added, with few complaints, a much-needed $31,875 (2,500 x $12.75) to his bottom line.

There are another 400 fees sitting on his desk to be adjusted (make that increased), but he got what he wanted – just the $5,000 he was short. The fee list sits and collects dust. He feels badly because his new injection fee is 17 percent higher than it was, and he doesn't want to be perceived as gouging his clients.

His clients really don't care. In the history of the world, or at least since the ark landed, nobody has complained about an injection fee.

When, in the curriculum of veterinary colleges, is the inferiority complex transfused into students? I'm sure they didn't have it on admission. You have to be gutsy to apply against all odds of admission. Darned if I can figure it out, but so many graduate with the fear of adequately charging for their services that it must be subconsciously implanted by some evil professor (biochemistry is the most likely) and probably while our brains were so muddled trying to figure out pH calculations that it just slipped by unnoticed.

Newer (younger) associates call me all the time. They want to buy into a practice, but the older, more conservative owner is living in the past and refuses to charge fees that support his staff. No wonder associates don't stay. They must, in order to grow and support a family.

When their practice owner graduated, gasoline was less than a dollar a gallon. His office visit was $5, a first-class letter could be mailed for four cents and a cup of decent coffee was a nickel. That's B.S., of course (Before Starbucks).

The demographics expert said the practice should have an average transaction of $125, but this one averages just a few pennies over $100. With 10,000 transactions a year, the loss is $25 x 5,000, or a gross of $125,000 per year.

The rent, utilities and staff are all paid out of current income, so that extra $125,000 should add at least 70 percent, or $87,000, profit to the bottom line.

If this were a real corporation, with stockholders holding him accountable, this owner would have been kicked out years ago. However, the only other stockholder is the doctor's spouse and he/she has been making do with so little for so long that he/she has almost taken a vow of poverty.

Most of America's veterinarians charge less than the clients think is appropriate. Clients will never come out and say, "Gee, Dr. Jones, your fees are lower than I expected!" Why should they? They're happy to let things continue to their own economic advantage.

The only thing wrong with the economics of veterinary practice today is that veterinarians are involved in the practice's fee-setting. Give that chore to a savvy administrator or manager and task them to set fees so staff and doctors get paid fairly. Fees will rise rapidly.

Take current expenses, add a fair profit and the profession would change overnight. Now, there is a novel approach! New graduates could pay off their school debt and all would be able to retire comfortably after countless years of dedicated service.

Unless my old history book lied, a president named Lincoln freed the slaves. Yet, here in the new millennium, it would seem our whole profession, with the probable exception of federally employed veterinarians, is a loss leader.

Those who toil through the nights extracting calves and foals do so for the poorest of professional rewards. The overhead cost of maintaining a legally required base hospital rumbles on ponderously while there is little or no reward for long hours behind the wheel of a practice vehicle speeding to some bovine's rescue.

Finding new areas to provide small-animal services in already crowded areas of supposed affluence is more difficult by the day. However, computer programs exist that can find viable practice locations even in states with rapidly decreasing populations.

Fee Technology Inc. sells a computer-software program that details the hard costs of overhead, supplies and labor, and spits out a fee designed to cover all the bases, yielding 15 percent profit. These fees are not related to an area's ability to pay but sure are a wake-up call to grasp the losses that most practices face with present fee structures. Visit www.vethelp.us for details.

Too many practitioners assume that increasing fees drives clients away. That simply is not true. Clients know quality medicine is not cheap.

Only 55 percent of clients produce measurable profits. The bottom 45 percent produce only 5 percent or less of your profits. When you see transactions drop, it is these 45 percent, the non-profitable, who are not coming in. Your transactions drop when too many other hospitals open their doors, and too many of those new practices are spawned because practice owners forcibly drove their associates into solo practice. It is a never-ending, self-defeating process.

Associates seldom leave a quality practice where they are getting properly compensated.

Either way, your manager/administrator can get your practice's act together and determine a supportive bottom line. Just adjust the fees and never let the practice owner see an invoice. Clients will pay fair fees and return for more, provided the owner does not get that unwarranted guilty look on his/her face.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 10737 Knight Castle Drive, Charlotte NC 28277; (800) 292-7995; vethelp@insightbb.com; Fax: (859) 908-6986.