Should You Offer Your Patients More Services? How to Decide 

James F. Sweeney


October 01, 2019

Some practices use in-person, online, or mail surveys of their patients to determine their interest in new offerings. Practices also should determine whether patients can afford the new services, particularly if they will be operating on a cash-only basis.

4. Will your practice get reimbursed for the new service?

For a practice to be successful with ancillary services, it must of course, be reimbursed for them.

Your cost analysis and due diligence must include being sure that their contracted insurance carriers will pay for these services when done on site, and knowing how much they will reimburse. "One hard lesson for doctors has been them purchasing expensive laboratory equipment and hiring a skilled lab technologist, only to discover that insurance carriers require patients to obtain tests at a full service lab they contract with," says Capko.

Operating on a cash-only basis is an attractive option because it brings immediate revenue and sidesteps third-party payers, but it can limit the potential patient base, particularly for more expensive services.

Before adding any services, practices should examine their third-party payer contracts to see whether they reimburse for those services and how much. Avoid bundled services that aren't reimbursed separately, Gurganious says. Practices can appeal to insurers to pay for services if they can make the case that it will reduce costs of care.

Freedman Memorial met with insurers to negotiate reimbursements for services before deciding whether to add them. "They were willing to help us and be sure we made a profit, which surprised me," Clark says. "That's been very successful for us."

To keep those payer relationships profitable, the practice works closely with its outside billing company to ensure that everything is coded correctly for reimbursement, Clark says. Staff are encouraged to correct physicians if they're prescribing tests and procedures incorrectly. And the practice watches reimbursements closely to make sure it gets what it's owed.

Physicians must take into account whether adding in-house services will result in fewer patients being hospitalized or making trips to the emergency department.

The shift in reimbursement from fee-for-service to value-based care can make it harder to calculate the return on investment (ROI) of ancillary services. What used to be a fairly straightforward equation is now more complicated. Physicians must take into account whether adding in-house services will result in fewer patients being hospitalized or making trips to the emergency department.

In that environment, ancillary services can be as much about avoiding revenue loss as adding new income.

5. Will you need more space?

A practice should consider any physical requirements needed for a new service. Is there enough space to accommodate extra staff, patients, and equipment? Is the waiting room big enough? Is parking adequate? Will the physical layout have to be altered? Does any new equipment require extras, such as more power or lead-lined walls for radiography rooms? And if changes need to be made, how will the cost affect the return on investment?

6. Will the cost of new equipment drain your profits?

Startup and operating costs are a major factor. Will an ancillary service require expensive new equipment and staff to operate it? Will clinicians require new training and certifications to perform lab tests? Not all services are expensive. Some, such as allergy services and telemedicine weight loss programs, are relatively inexpensive. Others, such as surgery suites or radiography, can be quite costly.

Another example is laser equipment—which is not only quite costly, making it difficult to get an ROI without significant volume, but also becomes antiquated quickly because of new models that are improved and enhance the quality of the study, says Capko.

"My advice is not to rely on the ROI from the company that sells the equipment or supplies," says Capko. "Do your own research and cost analysis before signing on the dotted line."

Depending on the service, additional equipment can be a major expense. Freedman Memorial's new cardiac PET machine, for example, costs $90,000 a month to lease and requires employing a dedicated technician, according to Clark.


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