Slideshow

Fair Fees® is a revolutionary break-through in setting fees. Fair Fees® sets the fee for your services based on your costs (Labor, Benefits, Taxes, Inventory, Equipment, and Overhead). Fair Fees® is designed to lower your labor percent by controlling and setting labor without cutting staff and to lower your overhead.

Fair Fees® creates a fundamental shift in how expenses and equipment are looked at and valued. Normal expensed items, such as oxygen, calibration, dog food, cleaning supplies, to name a few, are now a revenue source instead of an overhead expense. Fair Fees® will change how accountants look at equipment and your ability to purchase equipment and supplies by charging the customer their fair share of each.

Fair Fees® creates a direct relationship between labor and what you charge. For each procedure, you will know whether you have guessed right or wrong on your current fee. All costs for each procedure: labor, inventory, and equipment are identified and priced to include a fair profit. Your staff will understand the direct link between their salaries and benefits and the price you charge.

Fair Fees® are Fair to the Client, Fair to the Staff, and Fair to the Doctor.

Here is an example of a urinalysis Collection and Diagnostic service. Please scroll down to view successive slides.

There are four main areas to Fair Fees® in creating a fee for any service. Fair Fees® has over 400 services broken down into these four components: Employees, Equipment, Inventory, Subservices.

Adding Employees

The employee area is broken down into six categories. Doctors, Licensed Technicians, Assistants, Kennel, Front Office, and Management. For each employee, total wages, benefits, and employer taxes are calculated to show a total cost to the employer. This total cost for each employee is reduced to a salary per munute. To arrive at a labor cost, a soft cost factor is applied to the salary per minute to account for both the hard and soft time (overhead cost). Labor is set at 20% for doctors and 20% for staff. The labor rate for all employees in a category are averaged to arrive at the labor rate for that category. This results in labor being charged out at 5 times the actual labor cost.

In this example, the labor rate is $5.25 per minute, as calculated by this method.

Adding Equipment

In Fair Fees®, the client is charged their fair share for the equipment and supplies used. By charging the client their fair share of supplies your overhead will be reduced.

Each time you use a piece of equipment, money is added into the fee you charge to replace that machine when it breaks. RCPU is a Replacement Cost Per Use for that piece of equipment. Each piece of equipment is broken down by purchase price, life span, and the number of uses or minutes used per year. A microscope, for example, costing $1783 having a lifespan of 6 years is basically costing $298 a year. Based on the usage of, on average, 1065 times during the year, $0.28 is added to your fee for the clients usage of that machine. By doing this, over the lifespan of the machine, you will have set aside the money to pay for a new machine.

The COPU is a yearly supply and maintenance Cost Per Use. The supplies and maintenance costs for each machine are normally expensed and are considered overhead. In Fair Fees®, these overhead costs are returned to the clinic by charging the client their proportional share of these expenses, thus lowering overhead. By adding to the purchase price on any piece of equipment, you can then set your return on investment (ROI).

Adding Inventory

In Fair Fees® inventory is broken down to a per-unit, or per-ml cost. A markup is applied to arrive at what to charge. For microscope cover slides, the average cost for 100 slides is 2.34 cents. A markup of 100%, for example, will double the value to 4.68 cents. A 150% markup will value the slide at 5.88 cents, or 6 cents per slide. Outside services are captured as Inventory in the miscellaneous category.

Building a Service

The example shown is "Urinalysis: Collection and Diagnosis". In the procedure, the assistant takes the dog out to the yard, collects the urine in a pan, takes the dog back to the kennel, and the urine to the lab. The average time for the assistant is 4 minutes and is captured in a service called \Urinalysis: Free Catch\, used here as a subservice.

The assistant pours the urine into a tube and uses a centrifuge to spin it down. She makes two slides with the sediment: one stained (dip-quick stain) and one non-stained. The assistant also performs a urine dip-stick test. She writes the results in the chart. On average, it takes the assistant 2 minutes to accomplish the tasks of centrifuge and dip-stick test. Fair Fees® captures the employee time by adding the assistant at 2 minutes, the equipment by adding the centrifuge, and all three inventory items.

The technician takes a drop of urine from the pan and puts it on the tip of a urine cytometer. She reads for the specific gravity and cleans up. This service, \Urinalysis: Specific Gravity\, takes an average time of 1 minute for the technician and is captured in Fair Fees® as employee time and equipment used, shown here as a subservice.

The doctor examines the urine sediment slides with a microscope and writes down the results. It takes an average of two minutes for the doctor. Fair Fees® records the doctor's time and the use of the microscope.

A look at the completed service

We have captured all of tasks and costs associated with this procedure and calculated a fair fee. All that is required is for the clinic to enter their present fee, and a difference will be calculated. This difference will show whether you have been guessing right or wrong on your current fees. Multiply this difference by how many times you perform the procedure and you will know how much is missing from the bottom line from this procedure alone.

Fair Fees® has over 340 preloaded procedures defining who does it, how long does it take, what equipment is used, and what drugs and supplies are used.

In this example, the service fee of $29.85 is based on average labor rates of $5.25 min (Doctor 60K salary), $2.57 min (technician's $14.30/hr) and $1.83 min (assistant's $10.15/hr). Demographically, each clinics fees will be different as they are based on the wages and benefits in the area you live in. Most clinics profitability does not come from those services you do once a year. The proceedures you do repeatedly are what impact the bottom line the most. If you are off $2.35 on a procedure you do 1000 times per year, then $2350 will be missing from the bottom line in that year. How many high frequency procedures do you have? Fair Fees® are Fair to the client, fair to the staff, and fair to the doctor. To go back to the veted.net website, click the back button in your browser.