Knowing the true cost of a product or service helps veterinary practices with pricing decisions, as do published resources like the Well-Managed Practice Benchmarks Study and the AAHA Fee Reference. In case you still find yourself on the fence about when to raise fees, which fees to increase and by how much, here are a few ways you can use quarterly fee reviews, frequently used fee codes and fee consulting services to your advantage.
Conduct quarterly fee reviews
Instead of annual, across-the-board increases, conduct a quarterly review of fees and determine which to increase, which to leave alone, and, in some rare cases, which to reduce. Monitor the quality of patient care and client service to ensure that both continue to reflect the hospital’s fee structure. [bctt tweet=”Teach and mentor team members in order to boost their confidence so they feel comfortable talking about money”] and communicating the value of the practice’s services.
Analyze your practice’s top 50 most frequently used fee codes
[bctt tweet=”Analyzing fee codes can help you get a clear picture of how you’re making and where you may be losing money.”]
Does your list include mostly products and very few services?
If so, it’s time to review your services and identify opportunities to grow service revenue. There’s less competition for service sales and services typically generate more profit for the practice.
Is the average invoiced price lower than the price stated on your fee schedule?
Consider this example: A hospital invoiced the $55 physical exam fee 5,000 times in 2017, which should have resulted in $275,000 of revenue ($55 x 5,000). Per the revenue reports from the practice management software, however, the hospital actually generated $250,000 from the physical exam fee code, for an average fee of $50 ($250,000 divided by 5,000).This indicates that the practice discounted the exam fee and/or didn’t charge for the exam for some patient visits, resulting in a loss of $25,000. If this is true for other top 50 fees, the practice could easily be losing hundreds of thousands of dollars each year.
Are your top 50 fees appropriate given your practice’s quality of care?
Even a $1 difference could result in significant losses. Consider this example: One practice’s top 50 list included pedicures, fecal tests and anal sac expressions. In one year, the practice conducted 7,000 pedicures (actual fee $15, recommended fee $16), 6,000 fecal tests (actual fee $29, recommended fee $30), and 7,000 anal sac expressions (actual fee $23, recommended fee $24).
You should also dig into pricing for value-based veterinary services. By value-based veterinary services, I mean non-shopped, doctor time and knowledge services. Is your hospital’s value-based pricing in line with WellMP? WMPB 2017 includes a worksheet you can use to calculate the expected fee for a variety of non-shopped services and can provide a great reality check for your practice.
Don’t have the time or resources to act on these suggestions?
|Consider tapping into the WMPB Fee Consult service. Designed to save your practice time and money, this service includes a fee examination and treatment plan. The consultants at VetSuccess and WMPB extract the practice data on your behalf – no spreadsheets to complete or forms to fill out. They then analyze your fees, make recommendations in the form of a treatment plan, and discuss the results, opportunities and revenue growth projections with you during a 30-minute telephone consult. Visit https://www.wmpb.vet/product/wmpb-fee-consult/ to get started!
Looking for more management guidance to take your practice to the next level? The consultants at VetSupport and WTA Veterinary Consultants can help.
Denise L. Tumblin, CPA, is the owner of WTA Veterinary Consultants. She provides management, valuation, and transition services to independently-owned veterinary practices across the U.S. Denise can be reached at [email protected].