Should you raise your fees?

Inflation marches on. No, it's true! I know you've been reading that the cost of living is only up 2.3 percent and consumer confidence is rising. I know you believe the Great Recession is finally responding to our national stimulus plan, and Paradise Lost is just a book title.

If you look at the Consumer Price Index, you'll be impressed with the year-over-year deflation. The recession has been biting us hard, and we've been tightening our belts and driving prices down everywhere — or so they say!

Besides transportation and energy, no sector of our economy has experienced deflation. Let's be clear about what that means. Despite all the panic, overall prices haven't come down at all except for oil and cars. This suggests that once the economy gets moving again with all the money the government has been printing, we're going to have rampant inflation.

As practice owners, we don't have to wait to see the effects of inflation. We look at our drug bills and labor costs to see that our overhead costs us more and more each month as a percentage of incoming revenue. Have you looked at the increase in your withholding taxes lately? With so much money going to taxes, why are those people holding the "Save Our Schools" placards making such a fuss?

It's as plain as ... as ... the fecal specimens you run. If you want the real poop on fees, just consider my survey results regarding fecal testing and other weighty matters.

What would you pay?

From 1982 to 1985, I surveyed 3,500 clients of veterinary hospitals in 37 states. My staff and I explained the fecal-testing process (not always a pleasant discussion) and then asked these pet owners what they thought would be a fair fee for this service.

We expressed answers as a percentage of the examination fee. If they said $8 (in 1985) and the office examination fee was $13, the service fee came to about 60 percent of the exam fee.

After many thousands of surveys over the years, that percentage is still about the same — 61 percent of the office visit fee. Our first survey included questions about 150 fees, asked in bits and pieces (about seven per client). After all, how many questions can you ask a single client before he decides to switch to another hospital where nobody will bother him with survey questions?

The survey has grown over the past 25 years to include 400 basic fees, plus 400 fee-range estimates for procedures?— all answers to "What's this gonna' cost, Doc?"

Who's who?

We soon found out that none of our results mattered unless the surveys were keyed to demographics. Like me, you've probably suffered through TV programs that show you how much home $400,000 will buy you in Smallville, Ohio, versus the same number of dollars in Boston or San Francisco. It's entirely the same with ova and parasite tests. Surprise, surprise!

Then Veterinary Pet Insurance let us in on their statistics on claims filed by insured pet owners, and we correlated everything to the point of statistical accuracy to the nth degree.

So, we know what a client in Anytown, U.S.A., feels is a fair fee for almost any procedure performed in a veterinary hospital. Of course, it took a long time before newer procedures such as ultrasounds, laser procedures, magnetic therapy and rehabilitation were used by enough doctors to create statistical validity. Luckily, veterinarians will leave no stone unturned to find novel ways to diagnose and cure, so our fee schedule was ever growing.

Nobody wants to be at the top

The problem is that veterinarians are stubborn. They always have been and always will be. They want to charge what the guy down the road charges. Never mind that he got his fees from the prior practice owner, who got them from Nero in ancient Rome. Different is definitely bad.

No veterinarian wants his or her hospital fees to be higher than the neighbors', even if bankruptcy lies in the future. The worst sin in creation appears to be the appellation, "The highest-priced vet in town." The problem is that when "the highest-priced practice in town" is too low, everyone suffers. Unless you're the lead dog in the team, the view never changes.

I remember the late Clarence Dee, DVM, a former AVMA president, who said, "Let the worst thing anyone ever says about you be that you're expensive but worth it."

To update or not to update

Some 3,500 veterinarians get their annual updates of these fees, but many tremble in the face of "Great Recession" attitudes. I remind them that 85 percent of their clients are still seeking full medical and surgical services for their pets, and the 15 percent who aren't coming in are, by and large, those who were minimal users of their services before the economy turned.

How many thousands of you readers increased an examination or other fee and asked your staff to report client reactions to the increase? And how many got no reaction to the increase?

Check out your local and national competition. Historical and regional fee schedules are published by AAHA every few years. Customized fee schedules are available from many sources.

Haven't you yet discovered that fee increases based on the necessity of overhead increases are almost never questioned? It's the body language of staff and associates when presenting fees to clients that triggers negative responses. Increasing fees so you can afford a second home on an exotic beach never works, but fee increases to hold onto good staff members always works.

So, yes, of course you should increase your fees. The only questions are about which fees to raise and when. Pay no attention to the guy down the road. He has his clients to please and his overhead to cover. You have yours, and your clients are different. They come to you and not the guy down the road. They expect better and are willing to pay a fair fee for that.

Dr. Snyder, a well-known consultant, publishes Veterinary Productivity, a newsletter for practice productivity. He can be reached at 112 Harmon Cove Towers Secaucus, NJ 07094; (800) 292-7995; Vethelp@comcast.net; fax: (866) 908-6986.

For more articles by Dr. Snyder, visit dvm360.com/snyder.