Modern equipment in the veterinary industry is ever-changing, and everyone wants the latest, greatest devices and technologies. “Veterinarians love their toys,” said Brad Marconyak, CVT, CVPM, practice coach, financial coach, and consultant.
But how do you pay for it? How do you justify the cost? And how do you pass that cost on to your clients?
These are the questions Marconyak aimed to address during his presentation at the 2024 Midwest Veterinary Conference.
The Benefits of Buying Veterinary Equipment
The benefits of investing in new veterinary equipment include:
- Improved accuracy in both diagnostics and treatment.
- Enhanced efficiency in procedures.
- Higher client satisfaction and retention.
- Potential for offering advanced services.
Marconyak presented digital radiography as a prime example. “Digital X-ray was a turning point for me in practice personally,” he said. “Owners were blown away when we just emailed or pulled up an X-ray image. As a result, we took more images, took better-quality images, did more procedures, clients were happier, they paid more money—it was a snowball effect.”
Many modern devices have also gotten smaller and more reasonable, making them obtainable to clinics of all sizes. “Things are advancing, but with that comes the higher cost of veterinary care,” he added.
Understanding the True Cost of Your Veterinary Equipment
To justify the cost of a piece of equipment, you can’t simply divide the purchase price by how many times you use it, said Marconyak. You must also consider all the intangibles that go into maintaining and using it. This will be key to determining what you charge the client.
“You need to have all the incidentals, all the things no one tracks that goes into the equipment, all the inventory items that aren’t billed to the clients,” he explained. These include indirect costs such as equipment maintenance, contracts, supplies, cleaning, and reagents. “Think about all the costs associated with your equipment that you don’t routinely think about.”
Marconyak listed three ways practices commonly set their equipment pricing models:
- Guestimate.
- Inventory mark-up. For instance, a Chem panel costs you $40, and you charge the client $80.
- Using the sales rep/company’s suggested price. The challenge with standard pricing, he noted, is every practice is different depending on geographic location, staff costs, overhead, and more.
He then presented two examples of more accurate methods for valuing your equipment so it generates revenue.
Example 1: Ultrasound Machine
An associate wants an ultrasound machine that costs $35,000. He estimates it will be used five times a month (60 times per year) and expects to charge $350 per ultrasound. Here’s how he got to that number:
- The machine’s life expectancy is 10 years
- Warranty: $7,000/year
- Gel: $50/year
- Insurance: $250/year
- Maintenance: $2,000/year
This puts the total cost per use at $250, which doesn’t account for everything else: staff time, DVM time, overhead, profit. “You have to make money,” said Marconyak. “With profit comes reinvestment in equipment.” Therefore, $350 is a more reasonable charge.
Example 2: CBC Machine
Marconyak provided a more detailed example of how to value your equipment and its use:
- A new CBC machine: $20,000
- Life expectancy: 5 years
- Usage: 900/year
- Supplies and maintenance (reagent packs, quality controls like cleaning supplies, etc.): $8,100/year
- Equipment costs: $16.13/use
- 5 minutes of the vet tech’s time: $17.50
- 2 minutes of the veterinarian’s time: $26.50
- Profit: 20%
Equipment total cost: 4.4 (usage: 20,000/[900 x 5)]) + 9 (supplies and maintenance per use: 8,100/900) + 26.5 (vet’s time) + 17.5 (tech’s time) + 20% profit = $68.88 charge per use for the CBC machine to be profitable.
“This gives us objective results and staff understanding,” said Marconyak. “It allows our associates to understand. Truly scientific and actual data gets their buy-in and takes away the perception that you just made up that cost.”
So what are you getting with your equipment? You’re getting better patient care, a competitive edge, and diversified revenue streams, Marconyak stated. “Now your equipment is a revenue stream—it’s not guestimated, it’s not arbitrary. We are actually accounting for it and have made it a positive revenue generator,” he said.
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