Get X-ray vision on new equipment purchases

Introducing part one of a three-part series all about maximizing your use of the top three pieces equipment you said you were adding to your practice (according to the 2013 Veterinary Economics Business Issues Survey). This month, we'll focus on financing.

If team members and clients often refer to your veterinary equipment as "old school," it may be time for an upgrade. We know what you're thinking—you'd add digital radiography, laser therapy and new imaging tools in a heartbeat, but not without first asking, "How much is the equipment going to cost me?"

Turns out, that's the wrong question to ask, according to Gary Glassman, CPA, a Veterinary Economics Editorial Advisory Board member and partner with Burzenski & Co. in East Haven, Conn. He says practice owners should be asking, "How many times will I be able to use the equipment?" and "How will it provide a return on investment to the practice?"

It's easy to look at the $25,000 price tag on a therapeutic laser and think you could never afford it. However, it's important to remember you don't have to pay for the machine in one year, Glassman says. A reasonable payback period—the time it takes to recover the equipment's cost resulting from annual net cash flow—is anywhere from three to five years, he says. You should also consider the machine's life span and determine its potential use. (For an easy way to make these calculations for your practice, click here.)

Embracing new equipment

Veterinary Economics Editorial Advisory Board member Dr. Andrew Rollo has always been an advocate for digital radiography—he says the diagnostic capabilities make the purchase a no-brainer. However, he become an associate at Madison Veterinary Hospital in Madison Heights, Mich., in 2008—right when the economy tanked—so he understood the practice's reasoning for holding off.

"The increase of problems with our old unit seemed to coincide with business improving and that created discussions of what would be best for the practice going forward," Rollo says. "I thought we were within a year or two of purchasing digital radiography equipment, but the practice owner surprised everyone by giving it to the staff at the end of last year's Christmas party."

Dr. Rollo says when deciding on whether to purchase a new piece of equipment, you need to weigh the machine's advanced capabilities against the cost involved. He recommends considering the more tangible issues and asking the following questions in regards to your current equipment:

> How much money am I spending on the upkeep of a 20-year-old film developer?

> How much am I paying staff to develop radiographs?

> How much am I paying staff to retake radiographs?

"These costs of the old system don't come with a huge daily price tag, but can certainly add up over time," Dr. Rollo says. "As old processors and developers get older and break down more often, the huge price tag for a digital system may not end up seeming so big."

Veterinary Economics Editorial Advisory Board Member Dr. Jeff Rothstein, MBA, agrees. He says you'll also save $100 to $200 a month because you'll no longer need to pay for chemicals or a film developing system. Plus, you can snap as many pictures as you want at no extra charge. He says this saves your team the headache of calling the client back for retakes, which is a waste of everyone's time and money.

"It's also easier to send digital radiographs to a radiologist—the process is essentially instantaneous and results can often be had within hours," says Dr. Rothstein, president of the Progressive Pet Animal Hospitals and Management Group in Michigan. "We do better medicine when we are able to send images digitally."

Dr. Rothstein does recommend increasing your fee per radiograph once you go digital. However, don't forget to talk up this new addition to your practice.

"By spending a little more time showing the pet owner the vastly improved images, they won't notice the $10 to $15 increase," Dr. Rollo says. "In most cases a patient will only be radiographed once or twice in its life, so most pet owners are likely not aware of the previous price to compare. Exam fees—well, that's another story."

After making the switch to digital radiography, Dr. Rollo says many practices end up taking more radiographs and the added diagnostics can help pay back the purchase. However, he admits he was skeptical this increase would happen at his veterinary practice.

"I felt I always recommended and took X-rays when I thought they were necessary—regardless of how frustrating the old equipment could be on a given day," Dr. Rollo says. "However, since adding digital radiography last December, we're taking 30 percent more X-rays so far this year with the digital unit."

Develop laser-sharp focus in practice

Dr. Jim Kramer, CVPM, a Veterinary Economics Editorial Advisory Board member and a partner at Columbus Small Animal Hospital in Columbus, Neb., has also found success—and multiple uses—for his new piece of equipment: a therapeutic laser. His veterinary team added the laser to the practice three years ago and now they use it on every spay, neuter, declaw and surgery patient.

What exactly does he charge for this added service? Dr. Kramer breaks the prices down into three different levels of laser therapy treatments (for example, the first level is an incision that only takes a few minutes to treat on up to level three for longer treatment times with one up front payment):

Level one: $15.75

Level two: $52.50

Level three: $79

His veterinary practice actually includes therapeutic laser treatment in the bundled price of spays, neuters, declaws and so on. Why? Because pain management is not an optional service at Columbus Small Animal Hospital. He says patients receive laser therapy treatments—and other types of pain management—before and after surgery and it's all included in the price.

"Laser therapy minimizes pain, speeds healing and reduces inflammation," Dr. Kramer says.

If you're still worried about the equipment's price tag, Dr. Kramer says to consider all of the money you spend on advertising on the Internet, Yellow Pages, newspaper, radio, TV and so on. He says this cost can be huge, so it helps to remember that the new equipment comes with a bonus—it's a great advertising tool. His veterinary team tells clients that the local human hospital has two therapeutic laser machines.

"While it's important to make sure that new capabilities generate a direct return for the practice, don't underestimate the value of enhancing your reputation," Dr. Kramer says.

Now that you know more about the big purchase,next month we'll focus on the best way to make sure you and your veterinary team are knowledgeable enough about the new equipment in your practice to use it well—and often.