9 Ancillary Services That Can Boost Practice Revenue

Leigh Page


August 07, 2014

In This Article

The Value of Ancillary Services

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, 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.

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.


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