Collection Site Fee Increases Forcing AADT to Raise Pricing Across the Board

/in /by

After reviewing the financials for year-end 2012, we identified a substantial increase in the “cost of goods” sold. This represents the costs of our lab fees, Medical Review Officer (MRO) fees and collector or collection fees.

This increase over the last 10 months has cost us $54,000 more than last fiscal year. Since our lab fees and MRO fees did not change, it was obvious that the collection sites have increased their fees, not by just a little, but a lot – 50% to 75% and even more in some cases.

We caught this by analyzing the year end financials albeit….a little late. It is difficult to compare the month-to-month financials against the previous year as one month is seldom the same from year-to-year, and especially since we changed the renewal dates to a staggered monthly timeline. So that’s the problem. It’s important to also note that our last price increase was in 2005, 8 years ago.

We contacted our lab (which is now owned by LabCorp and together controls 35% of the lab testing market) on Oct. 1, and they were not surprised at our collection fees “sticker shock”. We discussed a variety of issues and we are now taking the entire collections management back in-house as we believe that we can probably manage and negotiate better pricing with collection sites.

Regardless, the fees have increased and are unlikely to drop. So to help cover the increases in fees from the collection sites, we are forced to offset the costs with price increases.

The suggested AADT price increases are minimal at best and really do not even reflect the total cost increases, but considering the state of the economy and all other things, this proposal is a reasonable solution or compromise at this time.

1. All-inclusive Random or Pay by the Random Test Program Options to be offered. Due to the risk nature of people within trucking, we often get asked to quote our program by the test instead of the all random-inclusive testing for controlled substances and alcohol. We have stayed away from this scheme as the C/TPA programs that do function like this are known to test from 80% to 200% over what is required. So, for those who prefer to gamble, we will offer this option.

2. New Pay by the Test Fees. We are seeing extreme pressure from collection sites, MRO and lab to increase fees and make no mistake inflation is here! By December 1st you will receive a letter about our program offering a smaller enrollment fee but a higher random and non-random test fee. We will make sure not to over-test like most seem to do.

3. Increase the All-inclusive Enrollment Fees Across the Board by $9/year per driver/employee. According to the Bureau of Labor Statistics, Consumer Price Index Calculator, the U.S. rate of inflation has increased 18% since 2005, the last year we increased prices for AADT. The cost of goods sold (primarily collections) have increased alone by about 75%. We are also seeing pressure from both the MRO and labs to increase fees as well – again, inflation is here and showing-up in a large and disturbing way!

4. Increase the testing fees by as much as $9. For those members who choose the all-inclusive random testing, all non-random tests such as Pre-employment drug, Post-accident drug, Reasonable Suspicion, Periodic testing, Other and all BAT tests, will increase by as much as $9 per test.

5. One Free for CCTA member first year only. When the AADT program was created in 1995, we offered annual dues paying CCTA members (the one free driver) program. Time and costs have changed and this offering has become an unsustainable lost-leader program for us. We have administration and program fees, including materials mailed and service to the member company throughout the year. This includes certificates, statistical reports, ID cards, profiles and all phone calls and time the customer service reps spend with CCTA members.

There are a total of “only” 501 CCTA members out of about 806 (63%) active members now enrolled in AADT and only 328 take advantage of the one free driver enrollment – and pay their dues annually. Incidentally, one would have to wonder why 300 members would not want something for free or at a substantial discount – member pricing.

During the last board meeting, the AADT Board voted to cancel the continued “one free” program; it was brought to the entire CCTA board and membership and unanimously approved. The first year free will only apply to new members that pay annually and will transition to special CCTA low-pricing each year after that.