Dr Puneet Gupta Started the conversation
How do you calculate the cost of a procedure to the customer ? Is there any formula for it ? Like OCT , or a surgical procedure ?
Dr Vasanth Kumar
The Return on Investement for the Equipment should be in the next 3 yrs. Assume u bought a machine for 18L, every year revenue should be 6L, per month Rs.50,000 approx. U charge patients depending on footfall... Rs.1000 per patient if footfall for the procedure is 50. If it is 25, Rs.2000 per patient
Dr Amarendra Samal
Many equipment get us generate revenues indirectly. Like usg,Oct, even green lasers may not create enough revenue directly
Dr Vasanth
Slit lamp, AR - generate indirect revenue .OCT, Green laser, FFA, HFA - we should calculate direct revenue.
Dr Puneet Gupta
Should we not include the cost of other expenses related with the procedure ?
Like optometerist , stationary, AMC and also cost of reporting / performing skill (?)
Dr Senthil
Yes you should include all direct and indirect costs
Dr Saravana
Right. Include Cost of CMC, interest on capital, Tech charges, Reporting charges and an additional 20-40% profit to offset rupee depreciation.
Wherever you feel pt has a need for multiple investigations usage of multiple investments, like FA+OCT, you can opt for a package..Package can be offered at 10- 15% discount
How (not ) to Charge for investigations in your practice?
Dr D P Prakash
Pricing a service is a bit different from pricing a product. That too setting a charge for an investigation that your customers have no option of getting from elsewhere is even more complicated by ethical issues.
I’m sure most will agree that when we want to do an OCT OR BIOMETRY to our patients... we do not give them an option of getting it done from somewhere else . We prefer to do it at our practice for so many reasons. At the same time it’s common knowledge that if the same investigations have been done recently elsewhere we might use them to come to a diagnosis unless we are not happy with the quality of the image etc.
We must understand that when we offer investigations to our patients it’s like a monopoly.... the customer has no choice but to get it done with you or LEAVE YOUR PRACTICE and get investigations done elsewhere. In such a peculiar scenario we have a moral responsibility towards our patients to be reasonable.
*WHAT IS A REASONABLE COST? *
Every practice is different. So the reasonable cost for each practice to offer a particular service ( consultation, investigations, surgery) will not be comparable.
The differences in cost will arise due the
1. Cost of ownership of the equipment
2. Cost of manpower
3. Cost of infrastructure
4. Cost of Amortisation and insurance
5. YOUR COST of interpretation of the investigations.
Most practices offer investigations to the patients for 2 reasons.
1. Offer the convenience to the patients of getting the investigations or treatment in the same place
2. Use appropriate technology to give the patients the benefit of maximum evidence based ophthalmology to aid the management.
Investigations should not be done with the aim of adding revenue to a practice but rather with the above 2 reasons in mind.
The cost of offering a clinical investigation is dependent on
1. Cost of equipment - FIXED - A
For a perimeter 5 lakh
2. Life span of equipment - FIXED- B - for a perimeter 10 years
3. Number of people likely to utilise the service in a given year- VARIABLE - C-
THIS VARIABLE - C - is the most significant component of the cost.
If you buy an equipment that only 10 people can use in YOUR PRACTICE IN A MONTH like a field test , your annual utilisation -C- is 120.
Pricing equation = A/ B x C
500000/ 120 x 10 = 500000/ 1200
? 415 approximately.
This cost of ownership per Perimetery will become ? 930 if
a) you do Perimetery for only 5 patients a month or
b) your equipment lasts for 5 years only or
c) if you bought a ?10 lakh perimeter
So now you will understand how the cost of ownership of any investigation or treatment will differ based on
purchase price
Longevity
Utilisation
It’s very useful to do the
COST OF OWNERSHIP calculations before we buy an equipment .
Remember that this is just the cost of ownership of the equipment alone.
We still haven’t added the cost of
1)Manpower- staff salary
2)Infrastructure - electricity rent
3Insurance & breakdown - AMC
4)amortisation - interest taken on loan ????
5) Your Interpretation cost - plus profit- depends on your experience, education and mindset .
*If we add all these then we will get the COSTING OF ANY SERVICE. *
It’s very evident that pricing of a service is totally variable for each and every practice and it will be a good beginning to start doing the “ COST OF OWNERSHIP “ equation
Cost of equipment -A / expected longevity in years - B X expected usage number In 1 year - C
= A/ B x C
This will be great starting point before you impulsively add any service to your practice.
One last thing to remember is the prevailing market cost of the said service. If you are beginning your practice you may have to price your services closer to prevailing costs. If you are an established practitioner then you’re not constrained by this prevailing cost and you can be an outlier too.
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To Be continued......
