Is Now The Time To Add Ancillary Services? 5 Questions

January 5, 2018 by Antonio Arias, MBA, CHBME

Topics: Practice Management, Medical Billing Company

As reimbursements shrink and incentives get harder and harder to obtain, plenty of medical practices are looking for new income streams to supplement their revenue.

And there’s no shortage of offerings they can sell: From lab testing or med-spa services to allergy therapy or weight loss consulting, clinicians can integrate a wealth of ancillary service arms into their practices.

But adding those arms takes a lot of investment. Without the right strategy, resources, equipment, and personnel, even the most marketable ancillary services can end up costing physicians money (instead of earning it for them).

That shouldn’t scare practices away from the idea, but it should give them pause before diving in headfirst. We recommend that doctors and practice managers think through the following five questions (and map out financials carefully) as they pursue new ancillary revenue streams.

1. What services align with your identity?

Adding weight loss consulting to your dental office is likely a recipe for disaster. The new services you offer have to make sense for your practice, which is one reason specialists may have a harder time adding ancillaries than primary care providers.

Practices should avoid adding new offerings to their service line simply because they see it succeeding elsewhere. Instead, they should think about which services affect their patients either before or after they visit your practice: Take a look at what your most popular referrals are, and consider capitalizing on the demand that you’re currently sending elsewhere.

2. Would these services only appeal to existing patients, or bring new people to your practice?

Preventive services, like mobile mammography, can save your patients a trip to another provider (and possibly improve your incentive payouts down the road). But would your current patients be the only ones who use the mammography service? Or would you want referrals from other providers, too?

Even if referrals (and they revenue they pull in) sound ideal, remember that earning them requires publicizing your new services and dealing with increased foot traffic from new people… which your office may or may not have the time and space to handle.

3. What are the capital and infrastructure requirements? Would you earn returns on them?

This is one of the most important things for practices to consider. Adding lab or imaging services to your practice may sound simple, but can involve expensive equipment and onerous insurance requirements that inject new liability into your practice strategy.

We recommend every provider conduct thorough financial modeling and SWOT analysis (Strengths, Weaknesses Opportunities, Threats) before pursuing any services in earnest.

4. How would you staff these services?

Practices often underestimate the amount of staffing their new services will demand, assuming they can bring one or two qualified professionals aboard and leave the administrative aspects to their existing in-house team.

Don’t make that mistake. If you fail to equip your new service line with adequate personnel, your front office and back-office teams can easily become overburdened (ultimately harming the patient experience or worse, creating medical billing errors).

5. Would this help or hurt your primary focus?

Consider the scope of your practice today. Will it be augmented slightly by the addition of ancillaries, or be broadened more significantly? Could the ancillaries grow into a standalone business (as a med spa could)? How would you handle that?

The larger the ancillary service arm, the more potential it has to take away from your practice’s areas of expertise. The threat can have a negative impact on revenue if not handled properly, which is yet another reason practices should model out any service elements carefully (and protect their income by working with a trusted medical billing service).


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