Comparison of Ancillary Services from Medscape article

Comparison of Ancillary Services from Medscape article (Shaded services offered by MDbizWORx)

Start-up Costs Potential Income Pros Cons

ANS Function & Blood Circulation Assessment

Range of Minimal equipment costs to equipment purchase; consult your Ancillary Service Representative

$210,000 net to the bottom line (on the average) to over $500,000.

Keep patients healthier

Catch adverse conditions (when indicated for testing) before manifestation.

Your biller will have to enter an additional code for an additional service and/or higher level visit

Allergy Therapy Minimal $70,000 - $120,000 / year

Existing patients are a ready-made patient base

Patients would rather see you than go to an allergist

Some allergists oppose a greater role for PCPs

In-House Dispensing

Less than $10,000 More than $40,000 / year

Convenient for patients

May improve patient health due to increased compliance

Service may be banned or highly regulated by state

Patients may be distrustful of doctors selling drugs

Urgent Care Center

$1 million per center (or start minimally by extending your office hours)

About $2 million / year for a full-fledged operation

These are services a PCP is already providing

Very expensive and time-consuming

May require significant changes in physicians’ schedules

Med Spa Services

Fairly low unless you buy lasers which can be as high as $500,000

$50,000 - $100,000 / year (for a mature spa)

Can create a cash-paying niche that solidifies patient base

Can cause patients to care more about their appearance

Very competitive field

With demanding patients

Potentially high expenses

Physical Therapy

$25,000 for equipment, plus the cost of extra space

About $500,000 / year

Cost of equipment relatively low

Reimbursements run about $2,000-$3,000 per patient

May not have access to young, elderly and disabled patients who need PT

Will need to find space and hire trained staff

Start-up Costs Potential Income Pros Cons

Laboratory Tests

$50,000 per practice About $400,000 / year

Convenient for patients

Provides extra income for practice

Have to buy lab equipment, obtain accreditation and hire a lab tech

Low volume, poor oversight and failure to meet standards can lead to financial losses

Weight-Loss Services

Minimal $30,000 - $50,000 / year

Start-up costs are low

You can recruit patients from your own practice

Your patients will be happier

Reimbursements are fairly low

Must convince patients that services are worth substantial out-of-pocket payments

Diabetes Counseling

Minimal, no extra equipment needed. And when dietitians are used as diabetes educators, they can cover other reimbursable activities

No figures reported; but the amount is said to be quite small

Welcome new source of revenue for practices with large numbers of diabetes patients

Accreditation process is challenging

Reimbursement is fairly low

Diabetes patients may not want to use service

Radiography $12,000 - $75,000 to buy a radiography machine and rebuild walls where it will be in operation

About $300,000 / year for orthopedic surgeons PCPs may be more like $20,000

Can open a whole new source of income

Patients are pleased to get preliminary readings immediately

Need to generate a high volume of scans to justify the high costs and oversight

May need to dedicate additional space for equipment

Source: Page, Leigh. 9 Ancillary Services That Can Boost Practice Revenue. Medscape.com, August 07. 2014.

For more information about these and other ancillary services that we offer, please contact: Greg Grice Director of Education MDbizWORX 727.455.7922 [email protected] www.mdbizworx.com

http://www.medscape.com/viewarticle/828246

[1]

The Value of Ancillary Services Medscape. August 7, 2014, Leigh Page

There are plenty of ways doctors can boost practice income by expanding into a variety of different ancillary services. Most practices, however, haven't launched new services recently. According to Medscape's 2014 Physician Compensation Report [1], only about one fifth of doctors said they had recently started providing ancillary services.

“Physicians tend to be cautious, so they miss out on a lot of opportunities,” said Judy Aburmishan, a consultant at FGMK, a CPA firm in Bannockburn, Illinois.

But as the squeeze on physicians' reimbursements continues, interest in ancillary services has been increasing. The Medscape report showed that starts of new ancillary services rose from 19% of physicians in 2013 to 21% this year.

Interest varies widely by specialty. Whereas orthopedic surgeons and anesthesiologists were in the lead - with recent introduction of ancillary services at 33% and 31%, respectively - primary care physicians (PCPs) lagged way behind in the Medscape survey. Only 23% of family physicians, 20% of internists, 19% of ob/gyns, and 18% of pediatricians recently began ancillary services. (One possible reason might be that they added ancillary services years ago.)

PCPs in particular have a wide range of ancillary services to choose from. Family physicians in the Medscape survey listed medication dispensing; weight-loss services; in-office diagnostic tests; nutrition counseling; cosmetic services; and alternative treatments, such as acupuncture and massage.

What Service Should I Offer?

When choosing a new service, it's important to find one that fits your particular practice, according to Nina Grant, a practice management consultant in Irvine, California. For example, a practice with a growing number of older women might be the right fit for cosmetic services (known as "med spa"), whereas one with many diabetic patients might focus on counseling for them.

When deciding on a service, look at your referrals, said Reed Tinsley, a Houston-based healthcare accountant and business advisor to physicians and medical practices. "You could be making money on each service you've been referring out," he said.

Your prescriptions are filled by the pharmacy, patients with back pain go to physical therapists, and blood tests go to a reference lab. If you did this work in-house, he said, you would be able to boost your income, provide patients with one-stop services, and have greater control over the care you provide.

Aburmishan said physicians should perform a thorough study before embarking on a new service. She advised making a complete feasibility study to determine whether you have enough volume and payer coverage to justify the added expenses and compliance requirements.

http://www.medscape.com/viewarticle/828246

Medscape, August 7, 2014 Page 2 of 16

Although potential income is important, Tinsley said you'll also need to factor in expenses. For example, cosmetic lasers and radiography machines can generate a lot of income, but are expensive. On the other hand, diabetes and weight-loss counseling are less lucrative, but expenses are quite low.

Below are 9 ancillary services chosen by the 3 consultants. Quite often, they disagreed with each other's choices, and many of these disagreements are noted. At the end of each service, we have provided a scorecard showing estimates of start-up costs, potential income, and some pros and cons about the service.

1. Allergy Therapy

Providing immunotherapy to patients with allergies is a potentially enormous field for PCPs who traditionally have not done this work. You have enough candidates for the therapy right inside your practice: One in 5 Americans has environmental or food allergies and many are not aware of their condition, according to the Agency for Healthcare Research and Quality. [1][2]

Rather than just prescribing antihistamines that mask symptoms, PCPs could do their patients a real service by identifying allergies in patients through testing and providing immunotherapy that targets the underlying condition. This involves building up patients' immunity to a specific allergen by delivering progressively stronger doses over many months, usually through injections.

Allergists have traditionally provided this service because it takes special training to deal with such risks as life-threatening anaphylaxis. But in recent years, more PCPs have been getting this training, and in many cases, they are contracting with outside immunotherapy companies to provide the materials and much of the expertise in preparing the doses.

Dillon Plaza Family Medicine Group, a small practice in High Ridge, Missouri, started offering immunotherapy 3 years ago, using an on-site lab technician provided by United Allergy Services (UAS), based in San Antonio.

"We wanted to be a one-stop shop," said Mary Lynne Pope, who manages the practice. Because UAS provides almost all of the equipment, "we immediately started making money," she said.

The process starts with identifying candidates for testing through questionnaires. If the test is positive, the physician discusses treatment options. About 3-4 patients enter immunotherapy at Pope's practice each week and get regular shots for as long as 3 years. Insurance coverage varies, but patients are usually covered for some aspect of the process, Pope said.

Practices that use UAS typically make $5000 to $10,000 a month from the service, according to Mike DelVacchio, Chief Commercial Officer at the company. He said PCPs are a natural fit for the work. According to a UAS-commissioned survey, two thirds of allergy sufferers would rather get treatment from a PCP than from an allergist. DelVacchio said patients feel more comfortable with their regular physician, and because allergists are relatively scarce, using one of them can involve waits for an appointment and long travel times, he said.

Although allergists are still needed to treat the more serious cases, PCPs have begun to dominate the field. DelVacchio reported that 15,000 PCPs - more than 5 times the total number of allergists -- are now billing under the CPT code for immunotherapy.

Why This Field Is Growing for PCPs


The emergence of PCPs seems to be a recent phenomenon, tied to the growth of allergy vendors. For a share in payments, the vendor helps doctors and their staffs get trained, test patients for allergies, and prepare immunotherapy doses.

UAS, founded in 2009, now works with more than 3000 providers in 29 states. "This is not a turnkey operation," DelVacchio said. The doctor still assesses the patient, decides on the therapy, and oversees medical care. Once started, patients often self-administer injections at home, which is more convenient and less expensive than coming into the office, he said.

Florida-based allergiMed, another immunotherapy vendor that caters to PCPs, sends practices a complete kit to provide allergy testing and treat patients mostly using sublingual immunotherapy, which involves placing drops under the tongue.

"You can make money on this by just providing services to your existing patients," said Ken Salzman, a partner in allergiMed, but he declined to define how much money practices could make. Whereas immunotherapy injections are usually covered by insurers, until recently the US Food and Drug Administration (FDA) had not approved drops; doctors therefore have had to provide drops off-label, meaning that insurers won't cover them and patients have to pay the full cost.

In April, however, the FDA approved Oralair®, the first immunotherapy drops. These are only for grass allergies, and the agency still has not approved drops for allergies to dust mites, ragweed, cat dander, and tree pollens. These drops have shown efficacy in a few studies and are already allowed in Europe.

Meanwhile, allergists are not happy with the use of such vendors as UAS, claiming that many PCPs don't have enough training and are relying too much on the companies for expertise.

You'll hear a different view from PCPs who provide these services and formed the Academy of Allergy and Asthma in Primary Care (AAAPC) in 2013. "As a board-certified family care physician, allergy services are within the scope of my practice and are a valued service for my patients," said AAAPC President and UAS client Jeff Bullard, MD, in a statement in January.

In January, the AAAPC and UAS filed an antitrust lawsuit against three major allergists' groups. The lawsuit alleged that the allergists have been asking insurers to stop covering immunotherapy by PCPs and that 4 insurers, including the Texas and Kansas Blue Cross Blue Shield plans, have withheld at least some payments to PCPs for allergy treatments. (A spokeswoman for the American Academy of Allergy, Asthma & Immunology, one of the allergists' organizations, declined to comment on the issue, citing the ongoing litigation.)

How do these turf wars affect PCPs wishing to enter the field? DelVacchio said the "vast majority" of insurers still cover immunotherapy. He added that in the settlement of a similar lawsuit in 2013, Texas allergists' organizations agreed not to advise insurers against covering PCPs who use UAS.

Peggy Binzer, Executive Director of the AAAPC, said some of her members provide all the services in-house rather than rely on the vendors, whereas others limit their role to allergy testing or just prescribing the shots, which are then provided elsewhere.

PCPs can also limit the kinds of allergies they cover. Pope said her practice doesn't provide therapy for food allergies because they are riskier, and UAS stated that patients with severe asthma or comorbidities should still be referred to allergists owing to the risks.


PCPs may also benefit from more use of allergy drops, which are easier to administer. Binzer said the recent FDA approval could lead to use of drops for more conditions, thus improving insurance coverage. "I think the drops are going to have a great impact on the marketplace, and there is a great future for PCPs in this space," she said.

Allergy Therapy Scorecard

Start-up costs: Minimal, if you contract with an allergy vendor.

Potential income: $70,000-$120,000 per year.

Pros: Your existing patients are a ready-made patient base, and in most cases they would rather see you than go to an allergist.

Cons: Some allergists oppose a greater role for PCPs, and they have managed to convince a handful of insurers to deny payments.

2. Urgent Care Center

Whether you know it or not, you're in direct competition with your local urgent care clinic, which treats a variety of minor medical problems without an appointment and at times that are convenient to patients. By letting these patients go elsewhere, you're losing patients who could be treated at relatively low expense and recruited to your own practice, Aburmisham said.

Aburmishan said these patients tend to be younger, healthier, and less expensive to treat than patients in your own practice. People in their 20s and 30s often lack a regular caregiver and tend to seek care immediately rather than wait for an appointment, according to a study of a Denver urgent care clinic published in the December 4, 2009, issue of BMC Health Services Research.[2][3]

"If you can get back those healthy patients, you can have a more profitable business," Aburmishan advised.

To tap into this market, consider opening your own urgent care clinic. In 2012, physicians or physician groups owned 35.4% of urgent care centers, down from 50% in 2010, according to the Urgent Care Association of America (UCAA).[3][4]

The UCAA reported that the average urgent care center had 357 patient visits per week in 2012, and the Advisory Board Company estimated that the average center makes $118 per patient visit. Combining those figures means that the average urgent care clinic makes an estimated $2.1 million a year.

Urgent care centers can provide a steady source of income as long as they attain sufficient volume, according to Bill Clayton, a principal at Clark Schaefer Hackett, a CPA firm in Columbus, Ohio, who advises on urgent care start-ups.

"If you can get up to 35 patients a day and you're paying a doctor $65-$85 an hour to staff it, you do the math; you're going to make some money," he said. "It's not going to be the kind of margin that appeals to investors, like you have in a surgery center, but you can still make a good living from it."

How to Do It


Clayton said you can start urgent care within your own office, gradually extending hours to see whether there is enough demand. This can be done by staggering the schedules of your physician-partners, Aburmishan said. She adds that even a solo practitioner could deal with the extended hours by using nurse practitioners and physician assistants, who may already be in the practice, or by taking on moonlighting physicians.

In the long run, however, urgent care should not be located in your practice, for 2 key reasons, said Patrice Pash, RN, Director of Operations for NMN Consultants in Machesney Park, Illinois. First, you need a lot of space: 3 or 4 dedicated examination rooms and a larger waiting room that can accommodate up to 12-14 people. Second, you'll need to be in a busy retail corridor, where medical practices aren't usually located. She said the clinic needs to be a daily sight for everyone, so that they will know how to get there when they need to.

What Will It Cost?

Start-up costs for an urgent care center are at least $1 million per center and can go much higher. Pash advises leasing high-cost retail space and building it out, at an anticipated cost of $850,000 or more. You'll also need to buy new equipment, including an automatic electronic defibrillator, sterilizer, breathing machine, and microscope, at a total cost of about $75,000 new and $25,000 used, according to Clayton.

Clayton cautions against buying a lot of expensive equipment. For instance, there won't be enough patients with fractures to justify a radiography machine. "You need high volume to justify it," he said. "Three x-rays a day won't pay for it." Aburmishan, on the other hand, favors offering radiography and buying a less expensive portable unit. (For more details, see the section below on introducing radiography in your practice.)

Clayton suggests laying aside an advertising budget of $18,000-$38,000, because you'll need more patients than you'll get just by word of mouth. Insufficient volume, he said, has put many an urgent care clinic out of business. To be successful, he advises that a facility have 12,000-13,000 visits per year; whereas some urgent care clinics reach that level within just 6 months, it can take 2 years or more in some markets, he said.

Viewing the risk for failure, Clayton advises making a feasibility study before you make any moves. "You can't just go and declare you're in the urgent care business," he said. "You have to study demand." You need to be in a community of at least 40,000 people, and maybe even 100,000, he said. Then, you need answer some key questions, such as: How many urgent care clinics are there around already? How many patients cannot get an appointment at PCPs in the area?

Also, Pash advises contacting major insurers in the early planning stages to determine whether they will cover your patients. It can take months to negotiate coverage with insurers. Patients who don't have coverage will have to pay entirely out of pocket, which will quickly drive them away, she said. Clayton adds that patients should be told that insurers often charge higher co-pays for urgent care than for visits to a practice.

Tinsley, the Houston consultant, said he doubts that many physicians would be interested in taking on all the responsibilities of an urgent care center. He noted that an urgent care facility requires separate credentialing, a different ID number, and a different payment system with a global fee. Instead, he thinks practices should offer extended hours to capture the young, healthy patients who use urgent care centers. "You could be open every other Saturday," he suggested.

Urgent Care Center Scorecard

Start-up costs: At least $1 million, but you can start at minimal expense by extending hours within your own practice.


Potential income: $2.1 million a year for a full-fledged operation.

Pros: For the most part, these are services that PCPs are already providing.

Cons: Setting up a separate urgent care clinic is very expensive and time-consuming, and it may require significant changes in physicians' schedules.

3. Med Spa Services

Providing cosmetic services for patients, known as "med spa" services, can generate significant revenues for your practice.

Kent Blakely, MD, a rheumatologist in Kearney, Nebraska, started a med spa service 3 years ago, and it has proved to be a powerful source of income. Gross revenues doubled in the second year and doubled again in the beginning of the third year. He said income from 1.5 days of the med spa equals income from 3.5 days for his rheumatology clinic, and currently the new venture provides about as much income as his clinical practice.

However, Dr. Blakely said he also had to invest a great deal in capital equipment, physical space, and advertising. Net revenue from the med spa came to just over $50,000 in the second year. "It takes a while to build relationships and establish a reputation," he said.

Med spa services include providing mostly women patients with injectables, such as Botox® and dermal fillers, which must be repeated every 4-6 months; using lasers to remove hair, rejuvenate the skin, remove spots, and perform body contouring; and selling cosmetic products, such as moisturizers, sunscreens, cleansers, and solutions for skin discoloration and wrinkling.

In contrast to mid-Nebraska, such services are hard to carve out in wealthy, urbanized areas because the market is usually saturated, said Neil Alan Fenske, MD, Medical Director of the Cosmetic and Laser Center at the University of South Florida in Tampa.

In the Tampa area, for example, several med spa launches by clinically talented physicians have failed, according to Dr. Fenske, who teaches a 5-day overview course on dermatology for physicians who aren't dermatologists, with 1 day devoted to med spa.

"This is a rough business," Dr. Fenske said, adding that physicians who are dedicated to treating sick patients may not enjoy the work. "You have to be a bit of a salesperson."

Med spa patients "absolutely demand perfection," he said. "Because they're paying cash, their expectations for results are much greater." And some of them are never satisfied with the way they look. "They may want you to do things that can harm them," he said. "It's a different type of interaction, and you have to be prepared for it."

Before launching a med spa, Dr. Fenske advises spending a great deal of time researching and preparing. Find out what the local competition is, and what services might be needed. Set aside space in your practice, and get adequate training. "You can't just take one tiny course," he said. "You have to acquire the know-how to deal with the complications." He suggests finding a nearby physician to mentor you over a period of weeks.

When you launch, "don't get too greedy, and don't under price yourself to get patients, because you'll go bankrupt," Dr. Fenske said. He suggests starting with Botox and then introducing fillers, such as Radiesse® or Juvéderm®. "You have to achieve a certain volume [of patients], because you have to buy these products in bulk, and there is an expiration date on them," he said.


Med spa patients should be separated from your regular patients, because "these patients are very different," he said. You might start by dedicating half a day per week to the new service. "Because you can't see other patients, initially there could be a loss of revenue," he said.

The goal is to keep costs down until your venture is viable. He advised against hiring extra staff or purchasing lasers when you are starting. Lasers are lucrative but also very expensive, and you'll need different ones for various procedures, Dr. Fenske said.

How expensive are the lasers? According to Vin Wells, owner of Rock Bottom Lasers in Phoenix, cosmetic lasers cost between $10,000 and $250,000, and maintenance contracts, which are necessary after the 1-year warranty runs out, typically cost $5000-$10,000 a year.

Dr. Blakely, from his Nebraskan perspective, is more optimistic than Dr. Fenske about making a go of med spa. He said Kearney patients aren't that difficult. "We're a fairly naïve area when it comes to aesthetics," he said. "I tell my patients that the goal is not looking 25 again."

Moreover, he thinks cosmetic services complement his regular practice, because the outcomes encourage patients to improve their health. He said, "I have seen it many times: When you help these ladies enjoy the way they look, all of sudden they start exercising and losing weight."

Med Spa Scorecard

Start-up costs: Fairly low, unless you buy lasers, in which case costs can be as high as $500,000.

Potential income: Mature med spa practices have reported incomes of $50,000-$100,000 per year.

Pros: You can create a cash-paying niche that could solidify your patient base and inspire some patients to care more about their appearance.

Cons: This is a very competitive field, with demanding patients and potentially high expenses.

4. Physical Therapy

Some PCPs refer a high volume of patients with joint pain, osteoporosis and sports injuries to outside physical therapy (PT) centers. This volume might be high enough to justify an in-house PT program.

Oak Mill Medical Associates, a 5-physician internal medicine group in Niles, Illinois, started this service a few years ago. Denise Alessi, practice manager at Oak Mill, said reimbursements for PT run $2000-$3000 per patient. She said start-up costs are relatively low, including removing walls between 3 exam rooms to create a larger exercise space, spending under $10,000 on equipment, and hiring a part-time physical therapist and a physical therapy technician. Equipment includes treatment tables, upright bicycles, a treadmill, and a heart rate monitor.

Alessi said that when Oak Mill started the service, its 5 physicians brought in enough patients to justify bringing in the physical therapist and tech 3 days a week. An advertising campaign attracted patients from other practices, allowing them to come in 4 days a week, and volume may soon be high enough to justify a full week, she said.


Alessi said Oak Mill's PT clientele includes elderly patients with such issues as damaged rotator cuffs, inability to balance, and osteoporosis. The center also treats younger patients injured in team sports, jogging, and even gardening.

Oak Mill's treatment regimen normally lasts 6 weeks, but the length varies, depending on the type of therapy. The therapist documents treatment, which occurs at least twice a week, and writes several evaluations over the course of treatment. Alessi said the practice is paid about $180 per evaluation and $200-$300 per visit. Oak Mill also sells treatment items to PT patients, such as hot and cold packs and cold laser treatment.

Before launching this service, Alessi said it's important to do your homework. Oak Mill undertook a detailed feasibility study. For 1 month, each physician recorded how many patients they sent to outside PT facilities, and the practice researched insurance reimbursements. "We realized we were outsourcing a lot of physical therapy," she said.

Be aware that some states require a permit to operate as a physical therapist. Whereas permits can cost around $150, New York's costs $2000.

Organizations representing private PT practices have been challenging physician-owned PT, saying that it poses a conflict of interest and violates bans on the corporate practice of medicine in such states as California and Washington. However, the Washington Supreme Court rejected this argument in 2010, and California authorities have been allowing PT in medical practices.

Consultants have mixed feelings about PT. Aburmishan endorsed this service but pointed out that the high investment in equipment and staffing make for low profits. Grant, on the other hand, argued that these services would be useful only if you had a sports medicine practice or treated a lot of elderly patients.

Physical Therapy Scorecard

Start-up costs: $25,000 for equipment, plus the cost of extra space.

Potential income: About $500,000 per year.

Pros: The cost of equipment is relatively low, and reimbursements for physical therapy run about $2000-$3000 per patient.

Cons: You may not have access to the young, elderly, and disabled patients who use PT, and will need to find space and hire trained staff for the work.

5. Dispensing Medications From Your Office

Because PCPs write a lot of scripts, Aburmishan said selling prescription medications out of your office has great revenue potential. She adds that this is a great convenience for your patients, because the prescription is filled in the doctor's office. Moreover, patients are more likely to be compliant, since they walk out of the practice with the prescription already in hand.

Here's how in-house dispensing works: A vendor provides the practice with prepackaged prescriptions with set amounts of the medication. The vendor also credentials the practice with key insurers, which is essential to getting paid, and provides software to process the payment and oversee inventory.


Because the drugs are prepackaged, having a pharmacist on site is not necessary. When the physician writes a prescription, someone on staff selects the right packet, prints out a label, and hands the packet to the patient at the end of the office visit. You'll need a separate printer and a barcode scanner to process the packets and a locked cabinet for storing them. Controlled substances have to be double-locked: that is, placed in a locked box inside a locked cabinet. Your security for the other medications is the same as for the drug samples your keep in your office.

Warren Moseley, President of Physicians Total Care (PTC), an in-house dispensing company in Tulsa, Oklahoma, said his clients earn an average of $4-$5 per prescription. He said one physician can earn more than $40,000 a year if he or she makes sure to dispense as many drugs as possible in-house.

Virtually all the drugs you prescribe can be put on the in-house dispensing list, Moseley said. Whereas some vendors advise practices to focus on the 15-20 most prescribed drugs, he thinks practices should include as many as possible. "You have to use the service to make it pay off," he said. "Our best customers are the solo practices. Those doctors make sure they do all their scripts this way, because it's their business."

Moseley said start-up costs for a solo practice are less than $10,000. PTC levies a one-time charge for the software, which costs $5000 for one site or $4000 per site for multisite practices. The other major start-up cost is buying the inventory in advance, which runs about $2000-$3000 per doctor, Moseley said.

He said it usually takes his clients 6 months to cover their start-up costs, but he notes that practices that take full advantage of in-house dispensing could achieve this in just 3 months. Then, 5 months after start-up, PTC begins charging a $235 monthly maintenance fee, which covers a 24/7 pharmacist hotline for patients and updating credentials with all key insurers. The other ongoing expense, of course, is paying PTC for drugs to replenish your inventory.

How In-House Dispensing Works

PTC will prepackage the drugs in several set amounts, such as 30, 60, or 90 pills. Another vendor, Physicians' Pharmaceutical Corporation (PPC) in Knoxville, Tennessee, does not even use prepackaged amounts. Chris Jaffurs, President of PPC, said the company brings in its own highly trained pharmacy tech to work full-time at your practice. Working in a dedicated room, the tech packages medications in whatever amounts the doctor orders, as a pharmacy would do.

Whereas most states allow physicians to dispense drugs in-house, it is prohibited in 2 states (Montana and New York) and significantly restricted in 3 more (Massachusetts, Texas, and New Jersey). In Texas, for example, in-house dispensing is limited to rural counties and government programs, whereas New Jersey limits it to oncology or HIV drugs, according to Moseley. Two states, Arkansas and Utah, recently lifted their bans.

Be forewarned that in-house dispensing has suffered some bad press, having to do with practices that overcharge workers' compensation patients. In July, the New York Times reported that some practices have been charging almost 10 times pharmacies' price for ranitidine.[4][5]

Jaffurs and Moseley say that these abuses have been limited to workers' comp programs, which have not been able to control payment levels. They say health insurers deny exorbitant billing. Both CEOs said that their client practices charge patients the same price that pharmacies charge. The American Medical Association


Code of Ethics notes, "Physicians may dispense drugs within their office practices provided such dispensing primarily benefits the patients."[5][6]

Tinsley, the Houston consultant, was not enthusiastic about dispensing because it is highly regulated in such states as Texas. "To dispense meds in Texas, you're going to have to comply with state pharma regulations," he said. "You have to have a pharmacist involved and have to meet certain physical requirements."

Dispensing Scorecard

Start-up costs: Less than $10,000.

Potential income: Upward of $40,000 a year.

Pros: Convenient for patients and may improve their health, because they are more likely to take their medications.

Cons: This service may be banned or highly regulated

6. Performing Radiography

Radiography machines are notoriously expensive and require continual oversight, but Aburmishan said that reimbursements can far exceed operating costs if you have sufficient volume and good management.

In order to have sufficient volume, you may need to extend hours to evenings or weekends to get enough patients, she advises. "People want to know right away whether they have broken a bone, or if it's just a sprain," she said.

Carole Williams, sales consultant for Custom X-Ray Digital Equipment Sales and Service in Phoenix, Arizona, said that a radiography machine is often the biggest-ticket item a practice buys. A full-fledged radiography system, complete with a generator and wall mounted bucky, costs $60,000-$70,000. Then it will cost $5000 to install lead-lined drywall and put in a control booth with a lead window. However, she said a portable radiography machine, costing $7000-$20,000, may be sufficient to detect simple fractures, and Aburmishan maintains that portable devices don't require lead-lined walls.

Aburmishan calculates that a 4- to 5-physician practice could provide sufficient volume to justify purchasing a portable radiography machine. States require inspections of radiography equipment once a year or every other year and oversee radiography technicians. Tennessee, for example, requires that such technicians undergo "appropriate educational program" training and pass an approved examination.

With digital radiographic images available within 1 minute, the physician can report preliminary results immediately. If the practice bills for the technical cost of making the radiograph and the professional cost of reading it, called the "overread," revenues can be 5 times greater than costs, according to Thomas J. Grogan, MD, an orthopedic surgeon writing in AAOS Now.[6][7] Non-radiologists can get training in reading radiographs, and Medicare will pay them for the overread.

But Aburmishan said PCPs typically provide the initial reading and send the radiograph to a radiologist for the overread. That means the practice charges for just the technical fee, but that can still be enough to make money on this service, she said.


The American Academy of Family Physicians (AAFP) maintains that PCPs can charge for at least some overreads. A 2006 AAFP position paper states, "Studies suggest that a second reading by a radiologist is not always necessary and selective request for radiology consultation is appropriate in some clinical circumstances."[7][8]

Is It Really Worth the Money?

Whereas orthopedic surgeons can generate more than $300,000 in revenue from radiography, PCPs can expect much less -- perhaps no more than $20,000 per year, according to practice consultants.

"Radiography wouldn't be one of my top picks, because there aren't enough patients," Grant said. "When patients break bones, you'd probably send them to orthopedists anyway."

Meanwhile, the American College of Radiology asserts that non-radiologists should not be providing imaging services, because their training is not as intensive as a radiologist's. Malpractice insurers take the middle ground. The Texas Medical Liability Trust, for example, states that although non-radiologists may provide an initial reading, radiograph overreads should "preferably" be done by a radiologist "on a regular basis."[8][9]

Radiography Scorecard

Start-up costs: $12,000-$75,000, to buy a radiography machine and rebuild walls where it will be in operation.

Potential income: Can exceed $300,000 a year for orthopedic surgeons, but PCPs' income may be more like $20,000.

Pros: Providing radiography can open a whole new source of income. Patients are pleased to get preliminary readings immediately.

Cons: You'll need to generate a high volume of scans to justify the high costs.

7. Laboratory Tests

Many practices already perform their own simple lab tests. These tests, known as "CLIA-waived tests," require very minimal oversight. ("CLIA" stands for "Clinical Laboratory Improvement Amendments.")

However, CLIA-waived tests involve only a small fraction of all the tests that practices need, said Andy Gill, CEO of HealthCare Technologies in Baton Rouge, Louisiana, which helps practices set up in-house laboratories.

Only 16 tests are CLIA-waived, and important labs for PCPs, such as complete blood counts, are not included, he said. Moreover, the disposable cartridges for many CLIA-waived machines tend to be more expensive than those used in more complex tests. By graduating to moderately complex tests, Gill said practices can capture a much greater test volume. But he would not specify what volume of tests could be covered, because he said such tests vary widely by practice and by machines used.

Oak Mill Medical Associates, the Illinois internal medicine group, took on moderately complex tests in 2006. Alessi also would not specify volume but said it was significant. She added that whereas the volume of many


other new ancillary services has to be built up over time, you can immediately attain high volumes with lab tests because you were ordering them already.

"You know lab test volume significant, because the outside reference labs are making money on this," she said. She also would not quote revenues from these tests, saying it can vary from year to year, owing to fluctuating reimbursement rates.

To process these tests, Alessi said Oak Mill had to invest more than $50,000 in expensive machinery and comply with much stricter oversight. She said the device-maker Beckman Coulter supplied a prostate-specific antigen testing machine for free, anticipating that the practice would have to buy the company's reagents. However, Oak Mill spent $34,000 on a chemistry analyzer and a little over $18,000 on a complete blood count machine.

In addition, Alessi hired a lab technician with 4 years of training and had to pass strict requirements used by COLA, an accreditor for practice-based lab services. Accrediting personnel make an on-site inspection initially and then every 2 years. They examine records on personnel, maintenance of equipment, and other quality controls, Gill said.

One key function of the accreditors is following a lab sample through the whole process, up to reporting the results; they then grade the process, he said. Gill adds that the lab must also regularly complete proficiency testing, in which a contracted company sends lab samples to the practice for testing, then reviews the results for accuracy. Labs are also expected to run 2 controls on their own equipment each day and keep a manual spelling out all oversight activities, he said.

What You Need to Consider First

Before considering bringing testing in-house, Gill advises determining whether your practice can earn enough money to make it worthwhile. Ask your outside reference lab for a utilization report to predict potential volume for each test. Review the costs of supplies, such as reagents, and identify insurance reimbursements for each test. Also, make sure your key insurers will cover the test. Some insurers require samples to be sent to designated reference labs.

Even after launching her program, Alessi continually reviews expenses and revenues to make sure they are on target. "The way you manage your operation can make all the difference between a money-making and a money-losing lab," she said.

If you practice in certain states or have certain payers, your options for lab testing are more limited. Grant said California, Florida, and New York have special requirements, and some payers contract exclusively with national labs and won't pay at all for in-practice services.

"This option works for all practice sizes," Grant added. "Your own medical assistants can be trained to draw labs in most states."

Laboratory Test Scorecard

Start-up costs: $50,000 for one practice.

Potential income: About $400,000 per year.

Pros: Convenient for patients, and provides extra income for the practice.


Cons: You have to buy lab equipment, obtain accreditation, and hire a trained lab tech. Low volume, poor oversight, and failure to meet standards can lead to financial losses.

8. Weight-Loss Services

Every practice has a built-in clientele for weight-loss services. If your patients fit the American profile, you have a lot of candidates. More than two thirds of US adults are overweight and more than one third are obese, according to the Centers for Disease Control and Prevention.

Also, studies show that if your patients shed even a few pounds, they can improve their health status. However, research also shows that disappointingly few PCPs help their patients lose weight, in part because many of them are pessimistic that they will keep it off.

The fact is that well-coordinated weight loss programs can be effective for many patients. Although reimbursements for these programs are not impressive, many patients are willing to pay out of pocket, and very little extra equipment is needed.

Dr. Blakely, the Nebraska rheumatologist, started a weight-loss program 9 years ago. To determine the need, he performed body mass index measurements for a sample of patients and found out that 90% of them were overweight. "That was much higher than I thought it would be," he said. "It really opened my eyes."

After doing a lot of research on weight loss, he set up a standard program that involves examining patients one-on-one about once a month, holding weekly group sessions with them, and providing meal replacements.

The group met after normal clinic hours initially in his waiting room, then later in a separate facility. Dr. Blakely bought a body composition scale showing percentage body fat and a machine to test metabolic rates, mainly to evaluate patients' claims that their fat is really muscle or that they gain weight because they have a very low metabolism.

He reported that 5-20 people sign up in each cohort for the 18-week program. Participants have been losing an average of 52 pounds. Some patients stay on the meal replacement for several weeks longer and lose as much as 100 pounds. An estimated 40% of them have maintained more than one half of their weight loss 2 years after completing the program, he said.

An Effective Way to Get Paid

Rather than dealing with insurers, who do not pay well, Dr. Blakely requires patients to pay out of pocket. The charge is $3700 for the full program. "It's not a real cash cow," he said, "but it is a stable revenue source." The program generates an estimated $30,000- $50,000 a year in net revenue.

Stephanie Freeman, MD, an internist in Pearland, Texas, who has been working as a locum tenens physician, took a different approach when she started a weight management program 1 year ago. She focuses exclusively on weight loss, relying on referrals from physicians who do not want to provide the services.

"It's an excellent opportunity for physicians to generate additional revenue," she said. Unlike Dr. Blakely, Dr. Freeman does bill payers for the service, but the payments typically only cover the visit. She said Medicare pays $25 and commercial insurers pay about $35- $40 for an office visit to counsel obese patients. Patients who are just overweight are not covered unless the care can be linked to other conditions, such as high blood pressure or diabetes, she said.


Because payers won't cover supplements, meal replacements, or vitamin injections, Dr. Freeman charges patients directly for these services, or patients do without them. She said some patients prepare their own food rather than rely on meal replacements.

Dr. Freeman sees her patients once a month. "They need that accountability," she said. She directs her patients to lose weight gradually, at a rate of 1-1.5 pounds a week. Because the program is only a year old, she did not have statistics on average weight loss and said it is too early to measure her income.

Dr. Blakely sees his weight loss program as a welcome break from his clinical duties. "It's one of my favorite parts of the week," he said. "It's so much fun seeing people get better." He said there is a link between excess weight and many major diseases and conditions.

Weight-Loss Services Scorecard

Start-up costs: Minimal.

Potential income: $30,000-$50,000 per year in net revenue.

Pros: Start-up costs are low, you can recruit participants from your own practice, and your patients will be healthier.

Cons: Reimbursements are fairly low, and you will have to convince patients that your services are worth substantial out-of-pocket payments.

9. Diabetes Counseling Services

Practices with large numbers of diabetic patients can receive payments for counseling them on managing their condition, but your counselors must meet strict guidelines in order to be paid. These counseling sessions have been shown to improve compliance and reduce hospitalizations, and they are required to qualify as a patient-centered medical home.

"This is a great opportunity for physicians' offices, and we're seeing a great deal of growth in this sector," said Leslie E. Kolb, RN, Director of Accreditation and Quality Initiatives at the American Association of Diabetes Educators (AADE) in Chicago.

However, whereas AADE's membership includes many outpatient hospital facilities, nursing practices, and large physician groups, very few small physician practices are on the list at this time. This may be due to a relatively small reimbursement for this service, a challenging accreditation process, and lack of knowledge about this opportunity, said Linda Sicard, RN, Managing Partner of New York Diabetes Care, a nurse practice in the Bronx, New York, which is paid for diabetes counseling.

Sicard said Medicare pays New York Diabetes Care $73.17, along with $16.63 patient co-pay, for a 1-hour individual visit with an accredited counselor for introductory diabetes counseling. Kolb said this amount is part of a total of almost $500 that Medicare typically pays a provider for introductory counseling. These same rates apply to physician practices.

What is Required?

Introductory counseling is broken down into 1 hour of one-on-one training and 9 hours of training in groups of 2-20 patients. After that, Medicare pays almost $75 for 2 hours of group training per year for each diabetic


patient. Kolb said private insurers are also required to cover diabetes counseling in at least 45 states and tend to use the Medicare requirements.

To qualify for Medicare reimbursement, a counseling program must be recognized either by the AADE or the American Diabetes Association. Kolb said the recognition programs examine the structure, processes, and outcomes of a counseling program. Counselors have to have a background in diabetes education and take 15 hours of relevant coursework each year. You also have to compile a patient education curriculum, Sicard adds.

Vivian R. Bossong, a diabetes counselor at Primary Care & Hope Clinic, a group of 6 nurse practitioners in Murfreesboro, Tennessee, said her practice started with fewer than 20 diabetes patients when it was first recognized in June, and now it has 50 patients. She said there is enough volume now for a full-time educator.

Bossong, who is a dietitian, said that when dietitians are used as diabetes counselors, they can switch-hit for 2 other patient services. First, they can provide 3 hours of medical nutrition therapy for diabetes patients every year, which is also reimbursed by Medicare. Second, they can provide weight-loss therapy, which is generally out of pocket, but some insurers cover it.

Bossong said her practice decided it could offer diabetes counseling after carefully examining patient records. "We looked over our patient population and identified who had diabetes," she said. "We also let providers know we can see these patients - anyone with elevated A1c or a diagnosis of diabetes."

Aburmishan said physicians need to evaluate their practice before launching this service. "There is an advantage to doing it in-house, but you need high volume to make this work," she said. Although most PCPs have a large population of diabetes patients, "Will they come in for this?" she asked. "The diabetes patient is not in pain and could postpone these services indefinitely."

Diabetes Counseling Scorecard

Start-up costs: Minimal. No extra equipment is needed, and when dietitians are used as diabetes educators, they can also cover other reimbursable activities.

Potential income: No figures have been reported, but the amount is said to be quite small.

Pros: This is a welcome new source of revenue for practices with large numbers of diabetes patients.

Cons: The accreditation process is challenging, reimbursement is fairly low, and diabetes patients may not want to use the service.

Conclusion

If you're not interested now, reexamine this list in another 6 months. Aburmishan predicted that as reimbursements shrink, alternative sources of income will become more crucial. "In the next 5-10 years," she said, "the whole way medicine in which is delivered will change. You will need to think outside the box."

However, none of these services is a slam-dunk. Before deciding on a new service, you should carefully examine the needs of your own patients as well as your own areas of interest. Do you really want to get into med spa or pill dispensing? Are you ready to be challenged by specialists, such as radiologists or allergists, who feel that others may not be qualified to provide the service?


And most of all, are you willing to invest funds and put in extra hours to get your new line of service started? All of these questions should be addressed before you start, rather than when you are rolling out your new venture.

9 Ancillary Services That Can Boost Practice Revenue by Leigh Page. Medscape Aug 07, 2014.

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August 22, 2013. http://effectivehealthcare.ahrq.gov/index.cfm/search-for-guides-reviews-and-reports/?pageaction=displayproduct&productid=1646 Accessed April 14, 2014.

2. Scott DR, Batal HA, Majeres S, Adams JC, Dale R, Mehler PS. Access and care issues in urban urgent care clinic patients. BMC Health Serv Res. 2009;9:222. http://www.biomedcentral.com/1472-6963/9/222 Accessed April 3, 2014.

3. The Academy of Allergy & Asthma in Primary Care and United Allergy Services file federal antitrust lawsuit against allergist organizations: AAAAI, ACAAI and JCAAI. PR Newswire. January 14, 2014.http://www.prnewswire.com/news-releases/the-academy-of-allergy--asthma-in-primary-care-and-united-allergy-services-file-federal-antitrust-lawsuit-against-allergist-organizations-aaaai-acaai-and-jcaai-240094771.htmlAccessed April 18, 2014.

4. Meier B, Thomas K. Insurers pay big markups as doctors dispense drugs. New York Times. July 11, 2012.http://www.nytimes.com/2012/07/12/business/some-physicians-making-millions-selling-drugs.html?pagewanted=all Accessed April 23, 2014.

5. AMA Code of Ethics; Opinion 8.06 - Prescribing and Dispensing Drugs and Devices; http://www.ama-assn.org//ama/pub/physician-resources/medical-ethics/code-medical-ethics/opinion806.page Accessed May 1, 2014.

6. Grogan TJ. It's all about the ancillaries. AAOS Now. March 2009.http://www.aaos.org/news/aaosnow/mar09/managing1.asp Accessed April 24, 2014.

7. American Academy of Family Physicians. Radiology (Position Paper): Family Physician Interpretation of Outpatient Radiographs. 2006. http://www.aafp.org/about/policies/all/radiology.html Accessed April 22, 2014.

8. Texas Medical Liability Trust. Risk Management Guide for Practice Physicians.http://resources.tmlt.org/PDFs/RM_guide_for_physicians.pdf Accessed April 3, 2014.

Documents

Comparison of Ancillary Services from Medscape article