Physicians Practice - January 2008 - (Page 38)

ADDING ANCILLARIES As reimbursements fall and costs continue to climb, private practitioners across the country are adding an impressive selection of new products and services to their line-up — a direct attempt to diversify and enhance revenue streams. Some sell pharmaceuticals and prosthetic devices. Others offer physical therapy and smoking cessation clinics, along with inhouse elective procedures such as vasectomies, Botox injections, and laser hair removal. Many supplement their income by conducting clinical trials or acting as expert witnesses in court. And then, of course, there are those who spend thousands retroﬁtting their ofﬁces to provide more lucrative laboratory services and diagnostic imaging. Indeed, specialty and small group practices resemble Wal-Mart more every day — positioning themselves as one-stop-shops for all their patient’s healthcare needs. Proponents of the trend say the modern day business model amounts to a win-win situation, helping doctors revive shrinking profits while simultaneously improving the continuity of patient care. They also point to the convenience factor. Patients beneﬁt by having a wider menu of services available from a single provider they can trust. “I think as long as the revenue side of our business stays ﬂat or declines, which it has for insured services, and as long as expenses rise, you’re going to have to ﬁnd new sources of income or go out of business,” says Bill Jessee, president and chief executive of the Medical Group Management Association. “Practices are scrambling to ﬁnd new income streams.” And so they must to survive in the challenging managed care environment. Yet, as the industry evolves, an obvious line of questioning unfolds: Are physicians at risk of spreading themselves too thin? What implications might continued diversiﬁcation have on the business of medicine? And will it affect quality of care? WHEN BIGGER ISN’T BETTER IN SUMMARY: As physicians diversify revenue with ancillary services, they may run the risk of overextending their resources or stepping outside their areas of expertise. • Overworked staff are more likely to make costly mistakes that effect reimbursement and patient care. procedures to stay current, it’s not in the patient’s best interest to perform them at all. as expert witnesses or clinical trial investigators must tread carefully to avoid conﬂicts of interest. services as opportunistic. • If you don’t perform enough • Those who supplement their income • Patients and peers may view ancillary • Ultimately, competition in the healthcare ﬁeld is good for patients, medicine, and the economy as a whole. Judy Bee, a practice management consultant for Practice Performance Group in La Jolla, Calif., says she’s seen ﬁrsthand the effect entrepreneurial zeal can have on practices that push themselves too far too fast. “You’re not just at risk of losing your sense of direction,” she says. “You may lose a pot of money.” One client, for example, came to Bee for advice after his second business venture went awry. The physician, trained in physical therapy, initially opened a weight-loss center where he referred existing clients struggling with obesity. He sold calorie-controlled food and his physician assistant drew blood panels where necessary. “It made a lot of sense and he was able to market the idea commercially as a medically supervised weight loss center,” says Bee. Emboldened by his success, the physician then invested in space to open a medical treatment spa, which never took off. “There weren’t many of his patients that were a natural entrée to support the spa and he had to hire a facialist and two more nurses to support it,” she says. “When he came to me, he was losing $30,000 a month.” According to Bee, practices that add new services often fail to consider the impact it will have on paperwork, personnel and existing patients. “It’s amazing to me how many doctors say they have this great idea and they’re going to market it, but they’re constantly behind in the ofﬁce,” says Bee. “If you’re not staffed up enough to answer phone calls and you’re not able to see patients on time already, you need to ﬁx that ﬁrst.” Such was the case with an ear, nose, and throat specialist Bee counseled, who was looking to bring cosmetic surgery into his fold. The practice already suffered huge wait times and an overworked staff. “They wanted to ﬁnd a way to buffer their reduced revenue stream and from that standpoint they were absolutely right,” Bee says. “But I said to him, ‘You’ve got a month wait for patients already and referring physicians who are angry that they can’t get their patients in. What are you going to do if this marketing plan works?’” Beyond the requisite ﬁnancial analysis of any new ancillary service, Bee suggests doctors looking to broaden their business plans consider patient complaints, phone answering delays, and wait times to determine whether they’re ready to expand. Look, too, she says, at seating availability in the waiting room and the number of parking spaces reserved for patients. “When those service areas go down it’s not just the new patients that are inconvenienced,” she says. “It’s everybody. You’re likely to lose your patients of record who will eventually get sick of it.” PATIENT SAFETY Indeed, practices that overwhelm their resources can compromise performance on multiple fronts. Overworked staff, for example, may be more likely to make mistakes that can cost a practice big, says Nick Fabrizio, senior consultant for MGMA Health Care Consulting Group. On the clerical side, billing clerks who are running to catch up might gather inadequate documentation and enter incorrect billing codes — both of which contribute to WWW.PHYSICIANSPRACTICE.COM 38 | PHYSICIANS PRACTICE | JANUARY 2008 http://WWW.PHYSICIANSPRACTICE.COM

Table of Contents Feed for the Digital Edition of Physicians Practice - January 2008

Physicians Practice - January 2008 Contents The Bigger Picture: Fixing Medicaid Letters Physicians Practice Pearls: You Can Teach an Old Dog New Tricks Noteworthy Cover Story: Fee Schedule Survey: 2007 Results Adding Ancillaries: Bucking the Practice Ask the Experts Idealab: 'How I Got Over My EMR Excuses' Technology: Don't Be Denied The Tech Doctor: Blessing or Curse? The Administrator's Desk: Learning From the Best Coding Career: To Partner, or Not? Management: Controlling Your Inventory Human Resources: How to Fire an Enployee Finance: Beyond Reimbursment - How to Fix Your Mix Classifieds Advertiser Index

Physicians Practice - January 2008

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