Another big cost-saver is to buy used. Lake Champlain Cardiology Associates in Plattsburgh, N.Y., introduced a nuclear laboratory for stress testing in 2001, and it started offering echocardiography testing in 2002, both with previously owned equipment. Today, the two services alone account for nearly 30 percent of the practice’s total revenue. “We purchased a refurbished machine for half the price or less of a new one, and we’ve been extremely happy with it,” says Joel Wolkowicz, a cardiologist with the practice.
Though the success of the practice’s ancillary services has far exceeded expectations, Wolkowicz did offer a word of warning for physicians who are planning to follow suit: “Previously, we sent all our referrals to the local hospital, and we no longer have to do that, so that’s created a lot of friction between them and us. That’s been the only downside so far.”
If managed well, adding ancillaries can effectively help physician groups create new revenue streams. But they’re no magic bullet. Practices that fail to conduct a thorough analysis of patient demand, costs, and potential reimbursement for new services could easily get in over their heads. “Adding ancillary services can be a money pit,” says Gans. “If you add the wrong service or if it’s not managed well, you oftentimes have a very high fixed cost. If it were easy, everyone would do it.”
Shelly K. Schwartz is a freelance writer in Maplewood, N.J., who has covered personal finance, technology, and healthcare for 12 years. Her work has appeared on CNNMoney.com, Bankrate.com, and in Healthy Family magazine. She can be reached via editor@physicianspractice.com.
This article originally appeared in the March 2007 issue of Physicians Practice.
