In addition to collaborating with industry on academic research, the University of Wisconsin School of Medicine and Public Health also provides routine services to industry on a fee-for-service basis. Such activities may be undertaken by UW School of Medicine and Public Health as long as they are consistent with UW-Madison policies and procedures for fee-for-service projects.
Definition of Fee-for-Service Activities
Fee-for-service work typically consists of the execution of a predefined or repetitive process, or the production of a product that meets predefined specifications. The activity is not expected to add to the body of fundamental knowledge in a given field.
Where the activity involves data generation, the data may be so specifically related to a company product or process as to have little value to anyone other than the sponsor or the sponsor’s competitors. This is in contrast to academic research, whether sponsored by government, nonprofit entities or industry, which involves the creation and dissemination of new knowledge.
University Mission
Even though the performance of fee-for-service work falls outside the University of Wisconsin School of Medicine and Public Health’s core academic research mission, the value these activities have to the university can justify university involvement.
The genesis of an outside fee-for-service offering often springs from a technical capability originally developed as a research service supporting the academic research of a university investigator. Offering such a service to companies may boost the production level of the service unit to point where it becomes financially self-supporting, thus ensuring continued availability to UW School of Medicine and Public Health researchers.
The collection of data from company products not otherwise accessible may generate experience and insight in a researcher’s particular field of interest. This activity can be a true embodiment of the Wisconsin Idea, making university resources available to companies in Wisconsin and beyond, and is especially valuable when these resources are unique or of limited availability to those outside the University of Wisconsin School of Medicine and Public Health.
Competition with the Private Sector
The UW School of Medicine and Public Health must avoid establishing service offerings that compete with private sector service providers, both because of its unfair competitive advantage in pricing resulting from its nonprofit status, and because of its desire to enhance rather than to impede economic development by competing with the growth of private sector technology businesses. To this end, fee-for-service approvals are only given when private sector providers in the intended market are not impacted.
Accounting Processes
The accounting processes for fee-for-service activities differ markedly from the management of academic research accounts. Fee-for-service accounts, including invoicing and payments, are managed entirely within the departmental accounting organization. Indirect costs flow directly to departments. University of Wisconsin School of Medicine and Public Health financial oversight is therefore provided at initial account setup, and thereafter by periodic audits.
The repetitive nature of the work allows for the up-front establishment of standard price schedules, or pricing algorithms that are driven by easily defined production metrics. Even though indirect costs are not distributed according to standard university formulas and instead go directly to the department, indirect costs impact fee-for-service activities just as they do for other research, and the price buildup must include these costs.
Each fee-for-service activity should have a 136 account established to manage income flow. As part of the approval process for establishing this account, the university will verify that price buildups underlying the price schedules or algorithms have properly accounted for all costs. The approval process will also address the classification of the work for income tax purposes, and the need to cover charges for unrelated business income tax.
Student Involvement
Since contracts for fee for service work may contain clauses that would inhibit the progress of graduate students toward their degrees and other trainees in their professional advancement, careful consideration must be given to involving such personnel in this type of work. If personnel-in-training are involved, it may indicate that the project is research rather than fee for service.