surgery or euthanasia?

Re: surgery or euthanasia?

Mark Rowland — Thu, 08 Mar 2012 19:34:39 GMT

[quote user="Julian Earl"]

[quote user="Mark Holmes"]

No I am not suggesting its a good business model in that exemple you have done an awful lot of work for £500 and as Ian says you may have other business related activities to do which although not fee generating are better use of your time. However I am saying when turning work down, know exactly what you are turning down, look at what you are doing instead and appreciate exactly how it will effect your end of year books to the £1 before you do.

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Agreed. As I implied, there are other factors such as the effects of the practice image, debt collection, etc., all of which are part of the real-life decision-making.

[quote user="Ian Mostyn"]

[/quote]

Re. having a "bank" for needy cases is often the informal situation in practice; the difficulty is making it formal and picking and choosing who gets the benefits ("benefits" being the deliberately chosen word!)

[/quote]

Ah but in this case the choice is being made for you by the breeder who wont pay. What if he has 5 pugs, all needing caesarians, he now has a really cheap source does he not, what if he knows (as they invariably do) other "Breeders" once the precedant has been set its hard to go back on, remember these cases are being presented as an emergency.

What then happens if one needs a blood transfusion (caesarians are not without risk as a certain Vet from the Vet School TV production found out to his cost on national TV) Anyone factored that cost in (I believe its about £270 for the blood from the blood bank).

What about any follow up ops from retained placenta? is it all Free? After all says the client, you ballsed up the op (You dont really expect them to be nice people do you?) But dont worry, I wont raise S**t with the college if you sort it out for me.

Me, Im not gonna be in these guys pockets, Ive had it tried on me and its not nice.

Re: surgery or euthanasia?

Julian Earl — Thu, 08 Mar 2012 18:54:59 GMT

[quote user="Mark Holmes"]

[/quote]

Agreed. As I implied, there are other factors such as the effects of the practice image, debt collection, etc., all of which are part of the real-life decision-making.

[quote user="Ian Mostyn"]

The problem with your argument is that it has to be by definition, limited to just a few cases. You could extend it to a consultation done to cover variable costs only - you have a gap for 30 minutes, I have a dog that has an ear infection - just charge me the ear drops as you weren't going to do anything with that 30 minutes anyway. At some point you have to stop and say this procedure has to make a contribution to my fixed costs. They have to be paid for by other people. There is a place for this pro bono work and it is for my RSPCA wildlife cases, log number cases and the genuine needy.

...Maybe each practice should allow a percentage of cost price cases for those that need. Trouble is, working at 5 - 10% profit margins doesn't leave much scope for that.

Ian

[/quote]

As I said, it is not a good business model so such decisions are clearly not meant to be part of our everyday work! But the argument that it is a gamble whereby you may actually be better off by doing them is a valid argument, if you get the figures right.

Re: surgery or euthanasia?

Ian Mostyn — Wed, 07 Mar 2012 18:44:16 GMT

Now I am not against helping out somebody who is in genuine financial difficulty but hell will freeze over before I start doing caesars (and they aren't mongrels that need them generally....) and just covering variable costs. Especially when these pups will be sold at several hundred pounds each.

Maybe each practice should allow a percentage of cost price cases for those that need. Trouble is, working at 5 - 10% profit margins doesn't leave much scope for that.

Ian

Re: surgery or euthanasia?

Martin Atkinson — Wed, 07 Mar 2012 18:20:34 GMT

Re: surgery or euthanasia?

Mark Holmes — Wed, 07 Mar 2012 18:03:00 GMT

[quote user="Julian Earl"]

I am not suggesting, and I would hazard to suggest Mark is not suggesting either, that this is a good business model but if the work that you do when you otherwise would have been doing nothing covers the costs of those who haven't paid, your profit is up, albeit that it may only be up to 5.0001%!

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Re: surgery or euthanasia?

Gillian Mostyn — Wed, 07 Mar 2012 17:51:15 GMT

[quote user="Mark Holmes"]We can argue about how much is worth having but there surely no argument that routinely turning this sort of thing down is expensive.[/quote]

hahaha- no argument - where would be the fun in that?

Routinely turning down people who say up-front that they cannot pay anything? Sounds like giving myself a much easier life.....and that is priceless!

Re: surgery or euthanasia?

Mark Holmes — Wed, 07 Mar 2012 17:46:50 GMT

[quote user="Julian Earl"]

[quote user="Gillian Mostyn"]

hmm....the OP makes it very clear that this is a 'no money' situation. I am always happy to do any emergency op if the owner provides half the cost - I know I am covering most of the costs then.

By your own calculation, if they don't pay anything you will end up £50 down. I personally think you will do more harm to your practice income and it's reputation than just that. But I guess we'll have to agree to differ on this one.

(Incidentally, I voted that I would do the op - I am not the kind of person who could euthanase in this situation, even though I know I should if only to show them who ultimately has financial responsibility for their dog.)

[/quote]

Yes, but I think Mark's position was that if one out of number X of apparent non-payers paid, you would end up better off; the only question is where that point lies. If one (of these owners) does not pay, then yes you have wasted £50 of actual materials - no-one is arguing or even disagreeing about reputation or other related matters as far as I have seen. But in pure financial terms yep, it's £50-worth of stuff lost, no more, no less - there's nothing to agree to differ about on that!

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Provided you take an up front payment to cover at least the £50 there is no loss. You obviously would take as much up front as possible. You need to worry about how much you can get rather than how much you don't. As you are comparing the work to receiving nothing fixed costs drops out and the profit margins are very high. Some bad debt is incurred but it is still better than turning it down. We can argue about how much is worth having but there surely no argument that routinely turning this sort of thing down is expensive.

Re: surgery or euthanasia?

Julian Earl — Wed, 07 Mar 2012 17:32:55 GMT

[quote user="Gillian Mostyn"]

hmm....the OP makes it very clear that this is a 'no money' situation. I am always happy to do any emergency op if the owner provides half the cost - I know I am covering most of the costs then.

[/quote]

Re: surgery or euthanasia?

Gillian Mostyn — Wed, 07 Mar 2012 17:14:38 GMT

hmm....the OP makes it very clear that this is a 'no money' situation. I am always happy to do any emergency op if the owner provides half the cost - I know I am covering most of the costs then.

Re: surgery or euthanasia?

Mark Holmes — Wed, 07 Mar 2012 16:57:23 GMT

[quote user="Gillian Mostyn"]

[quote user="Mark Holmes"]New Profit = (old turnover + £500) - fixed costs - (old variable costs + £50) [/quote]

I may be being a bit stupid here, but are you saying this person has paid £500? Because the point of the thread is someone who is not going to pay - and that is known from the start...

[/quote]

The point was in the op which I seem to have hijacked that they couldn't afford it. No price was assumed. My argument was that rather than euthanasing the dog and losing the work another pricing structure could be made profitable. When you decide to turn down a proceedure it is an expensive thing to do because any money that could have been taken less variable costs comes direct from profits.

Ie if you could look at your books at the end of the year and compare what they are having turned it down and what they would have been had it been accepted your profit would be increased by the amount you managed to receive less variable costs.

The £500 in that example was purely that an example. For example the normal price of a caesar being £800 (plus VAT). You take a gamble and take £300 up front. The rest to be paid over 3 months. A further £200 is eventually paid and £300 is never received resulting in bad debt. You have taken £500. You have made £450 end of year profit on your gamble. Even though you have a technical bad debt of £300 you are still £450 better off in profit terms at the end of the year than if you had turned the surgery down. (All figures plus VAT)

Whats your normal margin on work done taking into account all costs - 20%? In comparison it is very very profitable to accept work than decline it even if some bad debt is incurred.

Re: surgery or euthanasia?

Julian Earl — Wed, 07 Mar 2012 16:53:47 GMT

[quote user="Gillian Mostyn"]

[quote user="Julian Earl"]you have increased your profit over the year provided, say, two out of Mark's 33 potential shysters do in fact pay. [/quote]

erm - not. The 31 unpaid sections would have cost you 31 x £15 = £465 (or 31 x £50 = £1550). I am assuming you then take your fixed costs out of the ones that were actually paid for (you can't keep ignoring them, surely) meaning that you'll still be running at a loss.

[quote user="Julian Earl"]a small number who do pay cover the extra variable costs and improve your profit at the end of the year. [/quote]

there just isn't enough profit margin in our work to cover the losses I'm afraid - an average practice runs on about a 5% profit margin.

[/quote]

Wrong. The two who pay will provide £1000, or if just one pays you approximately break even on your gamble. (If the actual variable costs are £50 then the ratio is eight need to pay for profit, nine non-payers mean you break-even.) Yet again though, if your "fixed " costs are increasing by doing this operation it is not a fixed cost and should be included in the "£15" (or whatever) as the variable cost being taken in to the equation. The fixed costs are not being ignored, but they do not alter because you do this surgical procedure - that is why they are defined as fixed. They only come in to the equation at the year-end when you do your accounting for overall profitability.

Just do the arithmetic:

Turnover say, £130,000

Fixed costs for the year 100,000.

Variable 10,000

Profit 20,000

Extra ten caesars invoiced at £500 with variable costs of (say) £50, but eight don't pay. (This is where the gmble comes in - how many of those who "look like they won't pay", actually will pay?)

Extra variable costs 10 x £50 £500 so VC now 10,500

Fixed costs still100,000

Extra turnover (paid) £131,000

Profit now £20,500

i.e. you're better off apart from having eight £500 debts to chase!

Re: surgery or euthanasia?

Gillian Mostyn — Wed, 07 Mar 2012 16:37:44 GMT

[quote user="Mark Holmes"]New Profit = (old turnover + £500) - fixed costs - (old variable costs + £50) [/quote]

I may be being a bit stupid here, but are you saying this person has paid £500? Because the point of the thread is someone who is not going to pay - and that is known from the start...

Re: surgery or euthanasia?

Gillian Mostyn — Wed, 07 Mar 2012 16:35:49 GMT

[quote user="Julian Earl"]you have increased your profit over the year provided, say, two out of Mark's 33 potential shysters do in fact pay. [/quote]

[quote user="Julian Earl"]a small number who do pay cover the extra variable costs and improve your profit at the end of the year. [/quote]

there just isn't enough profit margin in our work to cover the losses I'm afraid - an average practice runs on about a 5% profit margin.

Re: surgery or euthanasia?

Mark Holmes — Wed, 07 Mar 2012 15:04:40 GMT

Ian

Your Profit =Turnover - Total costs (put simply)

Total costs = fixed costs + variable costs

Therefore Profit = Turnover - fixed costs - variable costs

You perform surgery which would have otherwise been declined

New Profit = (old turnover + £500) - fixed costs - (old variable costs + £50)

Improvement in profit = New profit - Old profit

Improvement = + £450

The revenue generated from surgery which would have been declined is profit. Or more importantly (possibly) when you decline surgery the balance between the fees and the variable costs comes straight from your profit - (or that dental thats not picked up for example)

Re: surgery or euthanasia?

Julian Earl — Wed, 07 Mar 2012 14:54:45 GMT

[quote user="Ian Mostyn"]

[quote user="Mark Holmes"] The fees generated by not turning the dog away are profit once variable costs have been deducted.[/quote]

But my point is that it isn't profit until an allowance for fixed costs have been paid for.

Ian

[/quote]

And Mark's point [which I supported Mark!] is that doing the op doesn't affect your fixed costs, that's why they're fixed. Whether the actual figures are £15 or £50, and as long as everyone is invoiced the same and pursued the same if they do not pay, you have increased your profit over the year provided, say, two out of Mark's 33 potential shysters do in fact pay.

Whether that encourages more and more people to try and rip you off depends on a lot of other factors but a small number who do pay cover the extra variable costs and improve your profit at the end of the year.

Re: surgery or euthanasia?

Mark Holmes — Wed, 07 Mar 2012 14:52:01 GMT

[quote user="Julian Earl"]

[quote user="Mark Holmes"]

Stuff... [/quote]

You do realise I was supporting your case don't you?!

[/quote]

Mostly yes but I was puzzled by the fallacious and misleading part.

Re: surgery or euthanasia?

Julian Earl — Wed, 07 Mar 2012 14:41:22 GMT

[quote user="Mark Holmes"]

Stuff... [/quote]

You do realise I was supporting your case don't you?!

Re: surgery or euthanasia?

Lorna McHardy — Wed, 07 Mar 2012 12:41:11 GMT

[quote user="Dagmar Steele"]

I think I will take that into off duty now ;-) Getting a bit too far away from the OP

[/quote]

Oh, I dunno... I quite like the way threads drift... and it's turned into a fascinating discussion! It's nice, if nothing else, to know that I'm not the only one with this problem, and interesting and useful to see how others deal with it. Thanks, everyone

Re: surgery or euthanasia?

Mark Rowland — Wed, 07 Mar 2012 12:24:31 GMT

I do standing orders, direct claims etc but have to be very careful with people taking the piss and yes they do talk to each other. So what do people say to their good client who asks for a 15 quid caesarian because someone else in the practice got one? Something done out of goodwill can easily lead to ill feeling with good regular clients who pay full price.

Oh and I would be far more giving with my £5 per month if the VAT man or HMRC would let me do the same.

Re: surgery or euthanasia?

Dagmar Steele — Wed, 07 Mar 2012 12:14:07 GMT

[quote user="Martin Atkinson"]

We need more information on the bike - there's a few cycling nuts on this forum.

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I think I will take that into off duty now ;-) Getting a bit too far away from the OP

Re: surgery or euthanasia?

Ian Mostyn — Wed, 07 Mar 2012 11:19:27 GMT

[quote user="Gerry Henry"]The dog we fixed for peanuts the other day is currently resident at the practice because it can't get the rest it needs at home; no charge. I've been doing it this way for years, some undoubtedly take the piss (behaviour not confined to poor people BTW), but most don't. Neither do they scuttle off to the local chav exchange (which some posters clearly believe exists) and share their good fortune with indigent family and friends. My t/over is around the 300k mark, my bad debt last year - I swear - was less than £2000. Procedures cost next to nothing, billing them out to people who can't afford them at full price just increases your bad debt and, judging by some of the earlier whining, increases the sense of greivance of some of our number.[/quote]

I have found that some of the most grateful people are the ones with little money and if they are honest with me, I will do what I can to help. One lady paid £5 per month until it was all cleared and she never missed a payment. I would gladly help her out any time in the future. I also see no point in billing when there is no genuine chance of seeing the money. Whilst I have sympathy for a broken leg, I run out of compassion for owners trying to breed pedigree dogs. The person with the Pug or Boxer who needs a caesar and has no intention of paying, despite selling the pups for full price. If I exclude them from my bad debt, we are running at about 0.1% in the past 12 months. They will easily double my bad debt. They give us false addresses and leave us with no way of getting paid. I am never going to get a warm fuzzy feeling doing the op for just £15 for them.

Ian

PS All clients talk to each other, good or bad. It is just the bad ones are more likely to have bad friends as well

Re: surgery or euthanasia?

Martin Atkinson — Wed, 07 Mar 2012 10:41:49 GMT

[quote user="Dagmar Steele"]I learned that the best hubby ever intends to give me the most gorgeous bike for my birthday![/quote]

We need more information on the bike - there's a few cycling nuts on this forum.

Re: surgery or euthanasia?

Dagmar Steele — Wed, 07 Mar 2012 10:19:39 GMT

[quote user="Martin Atkinson"]

When you find the answer tell me, I've been 35 years in practice and am yet to find out. Actually it's not strictly true I am very good at walking away and forgetting about the day's stresses but there is still the drip, drip effect of constant niggles that builds up. I find getting out and excercising (long bike rides are the best) de-stresses me more than anything and giving myself a target to look forward to (like skiing next week) helps. A bit of retail therapy doesn't go amiss - think of what you can spend that amazing £10 profit on

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lol Martin, there are days when I cannot shop enough for outdoor clothes to make that nagging go away. I think outdoor activity works better (must admit though that if no time I get back to the shopping...) and hey ho just yesterday I learned that the best hubby ever intends to give me the most gorgeous bike for my birthday!!!! The poor dog will have to brace herself for some serious exercise

Re: surgery or euthanasia?

Dagmar Steele — Wed, 07 Mar 2012 10:19:29 GMT

[quote user="Martin Atkinson"]

[/quote]

Re: surgery or euthanasia?

Martin Atkinson — Wed, 07 Mar 2012 09:56:56 GMT

[quote user="Dagmar Steele"]Anyone able to tell me how to prevent these things from getting under my skin? That would enhance my quality of life unmeasurably! [/quote]