How much is that ultrasound in the window? (Arf! Arf!)

How much is that ultrasound in the window? (Arf! Arf!)

A little thought and some simple division gets an answer to your question of how long till you pay off your new piece of veterinary equipment.
 
Jun 10, 2016
By dvm360.com staff

These patients want to know if your practice has the best medicine. If only they came in on their own with their own money, right? ... (Illustration Getty Images)If your vision for new equipment (say, a brand-new ultrasound machine) is to improve patient care and improve your veterinary hospital's reputation in the long run, stop agonizing.

If you can afford it and you're ready to use it, buy it.

If, however, you're curious -- or your practice manager is sighing loudly whenever you mention buying the new ultrasound or another piece of equipment for the hospital -- why not run the numbers?

It's easy math (with a little digging in your financials) with a handy-dandy formula and tips below from Karen Felsted, CPA, MS, DVM, CVPM, CVA, all gathered from a "Learn then Earn" CVC session:

Payback Period Analysis

Total purchase price
(machine, monitor, probes, shipping cost, service contract, supplies, installation cost, training, taxes and, if you're leasing or buying on credit, interest expense)

DIVIDED BY

Annual net income
(gross revenue less operating costs [service contract,maintenance costs over life of equipment, supplies, cost of doctor and staff time])

"Pay it off in a year and a half or so?" Felsted says. "I'd be pretty happy with that."

But what's more important about analyses like these is, people assume they'll make money. But they should know, not assume, Felsted says: "You want to make sure you've done the calculations and have a reasonable reason to think that."

P.S. If you're motivated only by needing more revenue now, this isn't the way, Felsted says: Look at marketing and bringing in more people now, not paying off an expensive machine over time.

Count this: 'But if she's just there anyway ... '

Yes, you need to count the cost of doctors and staff when you calculate operating costs for an ultrasound. It's true that doctors and team members are there when you're open, and they're already being paid. But (and it's a big but) they should be generating revenue while they're there. If your lead technician is just going to organize the drug cabinet again and you're not sending her home because there's nothing to do, that's a management problem.

Don't count this: Better compliance should be in your head, but not in the calculation

Start doing more advanced diagnostics in your practice, and you'll do a better job of identifying problems. Communicate findings to clients, and you'll have more pet owners willing to treat because you could more accurately identify problems. But that's hard to quantify, and Felsted doesn't try to capture that in the Payback Period Analysis. "That's just gravy," she says.

You're worth it ... if the client says so

Trying to calculate how long before your new service/equipments pays for itself? You need to know how much you charge client per service. And you probably don't need to be reminded, but just in case: It's not just what you're comfortable charging for your new service: "It's what you can communicate to clients so they understand the real value to the pet of having this procedure done," Felsted says.

"It's easy to look at the individual cost of a diagnostic and say, that doesn't look too bad," she says. "But where's the tipping point? When is the client willing to spend $550, but not $600?"

What to charge

What did well-run hospitals report they charged for ultrasound? Here's data from AAHA and Benchmarks 2015: A Study of Well-Managed Practices (dvm360.com/benchmarks2015):

Ultrasound fees at AAHA and Well-Managed Practices
  Average Average
  (Benchmarks) (AAHA)
Ultrasound, abdominal $260 $229
Ultrasound, chest $265 $238
Ultrasound, chest and abdominal $375 $342

Source: AAHA Veterinary Fee Reference 2015 and Benchmarks 2015: A Study of Well-Managed Practices.