We are writing today to propose a fee change for tests performed at TVMDL. It’s important to us that you, our valued clients, understand the justification, rationale and research that went into making this determination.
As an agency of the State of Texas, TVMDL receives approximately 30% of its revenue from the Texas Legislature; the fees we charge for testing services must generate the balance of the revenue needed to operate.
TVMDL last raised fees in 2015. In the two years since, our economy has experienced a cumulative 3.3%* rate of inflation. The cost of supplies, maintenance, and labor have risen and made a significant impact on our bottom line. In addition, we have continued to make strategic investments in cutting edge diagnostic technology to provide faster, more accurate results to our clients.
In early 2017, we conducted an in-depth cost analysis for the 10 most requested tests in each discipline. We compared the test fee to our internal cost; the results showed we currently offer 40% of our high-volume tests at a loss, and in many cases a significant loss.
Considering the impact rising costs have on our operations as shown by our fee analysis and the inflation rate, agency leadership has determined the need to increase our fee revenue to ensure a balanced budget for the agency. In calculating the proposed fees, we studied the above data but also took into consideration several other relevant factors.
In 1969, our agency was established to primarily serve livestock and poultry producers. We understand these industries operate with thin margins and our proposed fees strive to take both of these factors into consideration.
Before determining our proposed fee structure, TVMDL completed a survey of other state diagnostic lab fees. Even with the proposed fee increases, our prices would remain lower or competitive with other state diagnostic labs both in the southwest and across the country. The proposed fee schedule also ensures our fees stay lower than or competitive with our private commercial counterparts.
Fee changes are not the only avenue we are pursuing to address inflation. We actively seek to reduce expenses when possible, taking a hard look at the need to fill each and every employee vacancy, and cutting maintenance expenses when feasible. In addition, we continue our marketing efforts to increase business both in Texas, the U.S. and globally.
All factors considered, TVMDL proposes changes to 125 of our test offerings, or 23% of our total test catalog, and updated prices for a select number of supplies sold to clients. We propose adjusting fees for certain tests where large discrepancies exist between our cost and the price we charge and will continue to give special pricing consideration to livestock and poultry testing. View the proposed changes online.
With 70% our revenue dependent on test fees, we have reached the point that we must operate with a business mindset. Looking to the future, we are determined to keep costs low, and pass along that savings to you. It is now our policy to conduct a detailed cost analysis every 18 months, and if necessary, adjust fees every 24 months, to stay ahead of inflationary effects. Also as a matter of policy, TVMDL will inform clients and solicit feedback prior to implementation of any fee change.
TVMDL will accept public comment on these changes through Friday, August 21, 2017. Agency leadership will review all comments and make adjustments to the proposed fees as necessary. The new fee schedule will go into effect September 1, 2017.
TVMDL is sensitive to the impact this increase will have on your day-to-day operations. We hope you will continue to see the value in supporting your state veterinary diagnostic laboratory. Our customer service is second-to-none and we take pride in providing quality, timely and accurate test results for every case we handle. TVMDL employs some of the most talented diagnosticians in the country who are available to assist with your routine and complex diagnostic cases. We ask for your support as we evaluate and implement this important decision for our agency.
If you have questions about this price change or wish to offer public comment, please email email@example.com or call 979.845.3414 before August 21
*Bureau of Labor Statistics’ Consumer Price Index