Six Ancillary Services Worth Considering

Leigh Page, MS

October 15, 2012

1. Dispensing Medications That Your Patients Commonly Use

Because primary care physicians write a lot of scripts, Aburmishan says selling prescription medications out of your office can have considerable 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 adherent with their treatment because 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 in which to store them.

Controlled substances have to be double-locked: 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, an in-house dispensing company in Tulsa, Oklahoma, says his clients earn an average of $4-$5 per prescription. He says one physician can earn more than $40,000 a year if he or she dispenses a large number of drugs in house.

Virtually all of the drugs you prescribe can be put on the in-house dispensing list, Moseley says. Although 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 says. "Our best customers are the solo practices. Those doctors make sure they do all their scripts this way because it's their business."

What Will It Cost You?

Moseley says start-up costs for a solo practice are less than $10,000. Physicians Total Care 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 says.

He says 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, Physicians Total Care 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 Physicians Total Care for drugs to replenish your inventory.

Physicians Total Care will prepackage the drugs in several set amounts, such as 30, 60, or 90 pills. Another vendor, Physicians' Pharmaceutical Corp., in Knoxville, Tennessee, does not even use prepackaged amounts. Chris Jaffurs, President of Physicians' Pharmaceutical Corp., says 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.

Most states allow physicians to dispense drugs in house, but it is prohibited in 4 states (Arkansas, Montana, New York, and Utah) 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, while New Jersey limits it to oncology and HIV drugs, according to Moseley.

Be forewarned that in-house dispensing has suffered some bad press, related to practices that overcharge workers compensation patients. In July, the New York Times reported that some practices have been charging almost 10 times the average pharmacy price for Zantac®.

Jaffurs and Moseley say that these abuses have been limited to workers' compensation programs, which have not been able to control payment levels. They say that 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."

Pros: Dispensing medications is convenient for patients and is thought to improve outcomes because patients are more likely to be compliant.

Cons: This service may be illegal or restricted in your state, and some patients may be distrustful due to the workers' compensation scandals. Keep in mind that you will be responsible for securing controlled substances.