Re: end-user cost of compents???
Donnie Priest
Description
Collection
Title:
Re: end-user cost of compents???
Creator:
Donnie Priest
Date:
1/15/2003
Text:
Dear Justin and List,
Unfortunately prosthetic schooling does not teach one about business and
economics. Before going into this, I would like to point out some possible
misconceptions and wrong assumptions from my point of view. First, I
believe that the higher performance feet require more time to align, and
more than one visit to do this correctly. When changing an amputee from a
non-extreme energy storing foot to an extreme energy storing foot, more than
one alignment is necessary. This is due to the fact that the amputees gait
will change with time as the muscles get stronger. Ever notice how the quad
muscles will burn when changing feet as the amputee uses these more to get a
better push (loading the spring with the ground reaction force). With the
muscular change, the gait will change, and thus another alignment should be
necessary for optimal gait. This can be shown to have made it into the
product developement with the Pathfinder foot which has a built in A/P
slide.
The second fallacy I see is determining the cost of a prosthesis by the
cost of parts. When selling an item (as our industry is the end salesman or
saleswoman), we are selling a product and price is determined by the benefit
of the product. When comparing the prices, include the entire cost
associated with the leg for a comparison. Thus, is a extreme energy storing
leg/foot system worth X numbers of dollars (or X percentage) more than a
sach foot system leg (the base standard). Someone must believe so because a
lot of them are being sold and paid for. A prosthesis is worth as much as
the meeting between the highest price a customer will pay for it and the
lowest price a provider will sell it for.
With the economics of business, there are many unseen costs which cause
the items to be based upon percentages and not individual added costs. In
most all businesses, soft goods are marked up by percentages and not by
individual set amounts (except for the very cheap items). This covers a
modest profit, carrying costs, inventory costs, built in fixed and direct
costs, etc. For an example specific to prosthetics, lets say a company has
a Rx for a leg with a foot. The foot is ordered and the shop is now
financially responsible for the costs at that day. At a very expedient
shop, the leg is complete in two weeks from initial visit. Insurances are
billed and the insurance pays 90 days later (hopefully without a fight but
we all know better). Who pays the interest on the money for that 105 days?
It might seem small and incidental at first, but then start adding up all
the feet everywhere and it becomes a big, big value. (Insurances are a
business and the longer that they can hold off paying out monies, the more
interest they make from investing those monies...except for the stock market
the last few years).
The second senario also shows a valid experience. The amputee comes in
with a Rx and the foot is ordered. The shop orders the foot and the amputee
comes in for a check socket fitting and the foot is cut and aligned. The
amputee never shows up again, and thus the foot is now used. How good is
your supplier relationship? Will the supplier credit your shop for this
foot and eat the costs, or is it borne on your shop. The foot is ordered in
a specific side, size, and stregnth. How many other people is this
applicable for in your shop and how long would you need to carry it for to
correctly match it to someone else? Would it be outdated by that time?
Costs are based on percentages of the intital cost and not a straight
mark-up in order to allow for the costs of doing business for items. There
are a lot more examples and reasons why this is so, but I have given you a
few examples to cause you to think. In a perfect system, one would work for
a small per item cost (such as the construction field where some labors are
paid by the piece) or the communist system where a set price per item can be
mandated. But in a capatilistic system, (as I stated above) the price is
determined by the meeting of the highest price someone is willing to pay for
the item and the cheapest price someone else is willing to sell that item
for... and all businesses need to make a profit or they will not be able to
do business.
Sincerly,
Donnie Priest
>From: Justin Foster < <Email Address Redacted> >
>Reply-To: Justin Foster < <Email Address Redacted> >
>To: <Email Address Redacted>
>Subject: [OANDP-L] end-user cost of compents???
>Date: Tue, 14 Jan 2003 16:56:08 -0800
>
>Hi all-
>
>I have a question...
>
>I am going to speak in hypothetical terms here... Why does a hi-end
>prosthetic foot cost so much from us (prosthetists)???
>
>For example, why does Carbonium2000X which costs $1500 from the
>manufacturer, bill out for $3500... while The Woody, which costs $89,
>bill
>out for $200 ??? That is about the same percentage mark up for both items,
>and they require about the same amount of work for the prosthetist to fit
>and align correctly...
>
>An analogy from my home industry:
>
>A discount, low-performing pair of skiis cost a retail shop $75 per pair,
>they may turn around and sell them for $275, making a profit of $200....
>
>A high end pair of race-ready skiis wholesale at around $400, and retail
>near the $600 mark, also netting the store $200 for doing the SAME WORK!!!
>-
>that is, in each case they sold ONE pair of skiis!!!!
>
>If we can afford to provide The Woody foot to people, and make $100 on
>it,
>couldn't we sell the Carbonium2000X for $1700 instead of $3500, and still
>be glad to have pocketed the $200 for doing the SAME WORK?!? - in this case
>fitting/aligning ONE prosthetic foot!!!
>
>Weird... seems like someone is getting screwed...
>
>Justin Foster
>Prosthetic Resident
>CIRS - Palo Alto
>
>P.S. the approximate prices I alluded to above are from the Medicare fee
>schedule, and as such are a matter of public record.
>
>
>_________________________________________________________________
>MSN 8 with e-mail virus protection service: 2 months FREE*
> <URL Redacted>
>
>
Unfortunately prosthetic schooling does not teach one about business and
economics. Before going into this, I would like to point out some possible
misconceptions and wrong assumptions from my point of view. First, I
believe that the higher performance feet require more time to align, and
more than one visit to do this correctly. When changing an amputee from a
non-extreme energy storing foot to an extreme energy storing foot, more than
one alignment is necessary. This is due to the fact that the amputees gait
will change with time as the muscles get stronger. Ever notice how the quad
muscles will burn when changing feet as the amputee uses these more to get a
better push (loading the spring with the ground reaction force). With the
muscular change, the gait will change, and thus another alignment should be
necessary for optimal gait. This can be shown to have made it into the
product developement with the Pathfinder foot which has a built in A/P
slide.
The second fallacy I see is determining the cost of a prosthesis by the
cost of parts. When selling an item (as our industry is the end salesman or
saleswoman), we are selling a product and price is determined by the benefit
of the product. When comparing the prices, include the entire cost
associated with the leg for a comparison. Thus, is a extreme energy storing
leg/foot system worth X numbers of dollars (or X percentage) more than a
sach foot system leg (the base standard). Someone must believe so because a
lot of them are being sold and paid for. A prosthesis is worth as much as
the meeting between the highest price a customer will pay for it and the
lowest price a provider will sell it for.
With the economics of business, there are many unseen costs which cause
the items to be based upon percentages and not individual added costs. In
most all businesses, soft goods are marked up by percentages and not by
individual set amounts (except for the very cheap items). This covers a
modest profit, carrying costs, inventory costs, built in fixed and direct
costs, etc. For an example specific to prosthetics, lets say a company has
a Rx for a leg with a foot. The foot is ordered and the shop is now
financially responsible for the costs at that day. At a very expedient
shop, the leg is complete in two weeks from initial visit. Insurances are
billed and the insurance pays 90 days later (hopefully without a fight but
we all know better). Who pays the interest on the money for that 105 days?
It might seem small and incidental at first, but then start adding up all
the feet everywhere and it becomes a big, big value. (Insurances are a
business and the longer that they can hold off paying out monies, the more
interest they make from investing those monies...except for the stock market
the last few years).
The second senario also shows a valid experience. The amputee comes in
with a Rx and the foot is ordered. The shop orders the foot and the amputee
comes in for a check socket fitting and the foot is cut and aligned. The
amputee never shows up again, and thus the foot is now used. How good is
your supplier relationship? Will the supplier credit your shop for this
foot and eat the costs, or is it borne on your shop. The foot is ordered in
a specific side, size, and stregnth. How many other people is this
applicable for in your shop and how long would you need to carry it for to
correctly match it to someone else? Would it be outdated by that time?
Costs are based on percentages of the intital cost and not a straight
mark-up in order to allow for the costs of doing business for items. There
are a lot more examples and reasons why this is so, but I have given you a
few examples to cause you to think. In a perfect system, one would work for
a small per item cost (such as the construction field where some labors are
paid by the piece) or the communist system where a set price per item can be
mandated. But in a capatilistic system, (as I stated above) the price is
determined by the meeting of the highest price someone is willing to pay for
the item and the cheapest price someone else is willing to sell that item
for... and all businesses need to make a profit or they will not be able to
do business.
Sincerly,
Donnie Priest
>From: Justin Foster < <Email Address Redacted> >
>Reply-To: Justin Foster < <Email Address Redacted> >
>To: <Email Address Redacted>
>Subject: [OANDP-L] end-user cost of compents???
>Date: Tue, 14 Jan 2003 16:56:08 -0800
>
>Hi all-
>
>I have a question...
>
>I am going to speak in hypothetical terms here... Why does a hi-end
>prosthetic foot cost so much from us (prosthetists)???
>
>For example, why does Carbonium2000X which costs $1500 from the
>manufacturer, bill out for $3500... while The Woody, which costs $89,
>bill
>out for $200 ??? That is about the same percentage mark up for both items,
>and they require about the same amount of work for the prosthetist to fit
>and align correctly...
>
>An analogy from my home industry:
>
>A discount, low-performing pair of skiis cost a retail shop $75 per pair,
>they may turn around and sell them for $275, making a profit of $200....
>
>A high end pair of race-ready skiis wholesale at around $400, and retail
>near the $600 mark, also netting the store $200 for doing the SAME WORK!!!
>-
>that is, in each case they sold ONE pair of skiis!!!!
>
>If we can afford to provide The Woody foot to people, and make $100 on
>it,
>couldn't we sell the Carbonium2000X for $1700 instead of $3500, and still
>be glad to have pocketed the $200 for doing the SAME WORK?!? - in this case
>fitting/aligning ONE prosthetic foot!!!
>
>Weird... seems like someone is getting screwed...
>
>Justin Foster
>Prosthetic Resident
>CIRS - Palo Alto
>
>P.S. the approximate prices I alluded to above are from the Medicare fee
>schedule, and as such are a matter of public record.
>
>
>_________________________________________________________________
>MSN 8 with e-mail virus protection service: 2 months FREE*
> <URL Redacted>
>
>
Citation
Donnie Priest, “Re: end-user cost of compents???,” Digital Resource Foundation for Orthotics and Prosthetics, accessed November 2, 2024, https://library.drfop.org/items/show/220339.
