Identifying New Ancillary Services in Private Practice

Today’s physicians have an enormous amount on their plates with increased regulation, rising costs, and decreasing reimbursement. It’s not surprising that so many practices are seeking additional ways to diversify and help supplement their loss of income.  According to the Medical Group Management Association (MGMA), ancillary services have been on the rise over the past three years as physicians try to find ways to boost revenue into their practices. Some of the most common services include: urgent care center, allergy therapy, physical therapy, dispensing medications, cosmetic (Botox, fillers, lasers hair removal, laser skin resurfacing, vein treatments), diagnostic (lab services, imaging, Holter monitor, treadmill testing), behavioral health (weight management, nutritional counseling, weight-loss supplements or vitamins), and alternative/holistic treatments (acupuncture, massage).

The following are a few helpful suggestions when considering whether or not to add a new ancillary service to your practice:

• First, assess your patient population to see if there is a need for the services you are considering and if your patients would benefit. Determine how the ancillary service will compliment your practice. For example: If your practice consists of mostly Medicare patients, Botox, dermal fillers, and laser hair removal may not be the optimal choice unless you are trying to reach a slightly different demographic.
• Second, consider your market. Research the area demographics online. Often this information can be found at your local Chamber of Commerce. Whether your practice is located in a rural or metropolitan area will also be a consideration when choosing new services. Speak with colleagues who have been practicing in the area longer than you and ask about their experiences and knowledge of the patient population.
• Third, contact your major insurance carriers regarding typical reimbursement, what is covered and what is not.
• Develop a business plan that includes costs such as marketing, staffing needs, training, additional space or equipment, supplies, time, and legal fees. Then estimate your potential patients and fee for service and calculate your break-even point. Determine how you can exceed this to make a profit. It is also important to also consider the time and costs of on-going training and staff education.
• Consider consulting with a professional if the ancillary service has a significant amount of overhead and upfront costs.
• Check with malpractice carriers to determine whether your premiums will rise should you be taking on additional risk. It is also prudent to check on any legal or compliance issues that may be involved such as Stark Laws.
• Finally, consider how well this new service will work into your daily schedule. Ideally, the service compliments the practice, does not take away from patient care but is a benefit to your established patients, and helps to bring in new patients.