Good fees, bad fees

In my opinion, there's a fine line between overitemization and underitemization on your invoices. Break out every IV set and suture pack as a separate line item—like a human hospital does—and clients will feel they're being nickel-and-dimed. Hand over an invoice that simply reads, "For services rendered: $825," and you're again facing a fuming client. But you don't want to—nor can you afford to—fail to charge for services rendered and costs incurred. The solution is to pass your fees on to clients in a palatable way, whether that means assigning a service its own line item or packaging it under another service code. To help reach that happy balance, here are my recommendations for revising your fee schedule.

ADD THESE CODES

I've been in a lot of veterinary hospitals and seen a lot of fee schedules, and these are the service codes that are most often missing—which means the practice is missing out on revenue.

In-hospital doctor examination fee

Let's take a patient that's been admitted to your hospital for vomiting and diarrhea. Initially, you would have seen the patient during an outpatient office or emergency visit. And you would have charged an examination fee. But what services would you bill for on the patient's second day in your hospital? You'd probably charge for hospitalization, fluids, medications, and so on. But would you bill the client for the multiple times you examined the patient?

If you think this charge is included in your hospitalization fee, try this exercise. Subtract what you charge for a comprehensive physical exam from your hospitalization fee. What's left is what you're truly receiving for hospitalization. Make this fee comparable to that of your medical progress exam. After all, that's what you're doing: a recheck. The only difference is that the patient is still in your hospital.

Operating room usage fee

The operating room is probably the most expensive room in your hospital, and it's the least used. So where are you getting the money to keep it open, not to mention the materials you use during procedures? You may think it's included in your surgeon's fee, but I bet it's not. If you charge $4 to $8 a minute for your surgery time, and you're honest about the time you actually spend doing surgery, the charge for the operating room costs is not in that surgeon's fee. And it shouldn't be. Break out this fee and charge, at a minimum, $35 to $45. This would cover the operating room use plus basic materials—cap, mask, gloves, one sutures pack, one scalpel blade, and so on. It would not include additional materials such as pins, plates, screws, or surgical staples.

TWEAK THESE CODES

I won't argue that certain fees don't represent true costs to the practice and, thus, you shouldn't charge them. What I will debate is how you incorporate them into your fee schedule.

Make invoices client-friendly

Hazardous waste disposal fee

I used to advise practices to consider removing this service code because I thought clients wouldn't like it. However, practice owners and managers have convinced me that clients don't mind, so I'm no longer against it. But I still think practices can be too aggressive on this fee. Here's what's acceptable: charging this fee anytime you use a syringe or generate biomedical waste during an exam room visit, and charging a daily waste fee between $2 and $5 while a patient is hospitalized.

Stay with the times

Dispensing or pharmacy preparation fee

I used to think all practices were charging a dispensing fee on items prepared (counted out, packaged, or labeled) in the pharmacy, but I've run across a few lately that charge only a minimum prescription fee. While a minimum prescription fee may cover the cost of the medication and markup, it doesn't reimburse you for the preparation costs. Take this example: If your minimum prescription fee is $14 and you dispense 15 pills that retail for $1 each, charging the client a total of $15, where is the reimbursement for your preparation costs? You need a dispensing fee to help offset the cost of counting out, labeling, and packaging a prescription.

However, don't be too aggressive on this fee. Depending on where you practice, a normal dispensing fee falls between $9 and $15. For prescriptions that don't need to be counted out and repackaged but do need a label, you can forgo the full dispensing fee and apply a label fee of $3 to $6 instead.

SAY GOODBYE TO THESE CODES

Fees that tend to upset clients across the board are what I call aggravation fees. Negate future headaches by following this advice on pet owners' biggest fee pet peeves.

New client fee

My No. 1 aggravation fee is the new client charge or medical record setup fee. Who wants to be charged to be a new client? Sure, there's a cost associated with creating a pet's medical record, but pet owners don't want to pay for that. So build that cost into your comprehensive physical examination fee for all clients.

Blood draw fee

Now, this one may go the way of the hazardous waste disposal fee and I might be forced to change my mind—some practices report no negative feedback on this service code. Yet others report that clients don't like it at all. Personally, I'd rather add $5 to the markup of the laboratory procedure to cover the cost of the blood draw.

Now that you're confident about your codes, make sure your employees are comfortable with your fees and can explain them to clients. Clue in team members on how you determine your fees by helping them to understand your overhead costs. Once they grasp the expenses involved, they'll be able to explain how the charges allow your practice to provide the high-quality patient care you're all so proud of.

Mark Opperman, CVPM, is Veterinary Economics' Hospital Management Editor and owner of VMC Inc. in Evergreen, Colo. Send your comments to ve@advanstar.com