How to Use Ancillaries to Increase Revenues, Part 2

October 7, 2010
Adam Alpers, DO

Realizing that there are only a limited number of hours in the day that one can reasonably work, it is becoming more apparent that trading time for dollars is not the key. Duplication of your effort is much more beneficial and that is where ancillary services come in to play.

As reimbursements continue to decline year after year, physicians are working harder and more hours only to maintain the level of compensation that they received 10 years prior. Some of my colleagues relate that they have to see three or four more patients a day to just keep up the same level of income that they had years ago.

Realizing that there are only a limited number of hours in the day that one can reasonably work, it is becoming more apparent that trading time for dollars is not the key. Duplication of your effort is much more beneficial and that is where ancillary services come in to play.

First, you must identify whether or not your practice is a good fit for ancillary services. When considering ancillary services, consider what you know and what you are willing to learn. If you have a passion for a certain procedure or service there are many training courses that you can attend to become proficient in performing those. Once you feel competent, you are on your way to providing those services to your patient. The key to making these ancillary services profitable, however, is to have a provider performing those procedures in your office so that you free yourself up from having to personally do all the work.

Take for example physical therapy services. Perform an in-house tracking on all the referrals you are sending out and you can then quantify the amount of those therapy referrals. If you determine that your practice is sending out tons of referrals to physical therapy, then it may be prudent to have that process in your office. Hiring a physical therapist and setting up the service will require a little space and an extra payroll, but the financial rewards can be significant.

When getting started, ask yourself: What do I like and what will I feel comfortable performing in my practice? Do I refer a particular service regularly or is it hard for me to refer to that service?

If you are naturally thinking and consistently sending out that service, then it will probably be easy for you to have the “keep it in the family” mindset. Some services are relatively easy. The key is to make sure you are tracking the service and keeping a log so you can be sure you are generating revenue for that service.

Other services that are on a larger scale may require a service to come to your office and perform the test. Be sure you are aware of the rules and regulations that are particular to your state, as the billing will be different depending upon whether you can bill globally for the procedure or will have to separate the technical from the professional component with regards to the billing. Some services require the presence of a physician or midlevel such as a nurse practitioner or physician’s assistant during the procedure, as is the case in diagnostic cardiac testing, while others require only an allied health professional, such as a therapist.

Carefully considering these factors will ensure you find the best fit for your medical practice.

Financially, the requirements vary from service to service. If you are providing a lab test in your office, the costs are very small in scope and can become larger as the number of tests you perform increase. The good news is that as you continue to bill for those services. As the revenue comes in, the profits can be used to purchase more tests and so on.

On the other hand if you are considering the purchase a large piece of equipment, such as a CT scanner, then you will need to think about the space required as well as the room requirements, power needs, electronics, and building code requirements, to name a few. Make sure you research financing in-depth, and closely review the terms of leases. Be sure you are shopping around when you are thinking about large purchases as the marketplace is very competitive and you can get a great deal with a little negotiation.

In addition, make sure you are aware of the insurance reimbursement requirements for a particular piece of machinery. The rules and regulations are changing and that “great deal” may not be so great if you can’t charge for that scan and insurance is not willing to give you authorization on your machine, or it is too outdated for the number of slices that are required to be in current regulations.

Be aware of the technological changes coming down the pipe. Make sure that your contracts have a provision in them that takes into account these potential changes so that you may be able to get an upgrade for minimal cost. This precaution alone can save you tens of thousands of dollars in the future.

In the third part of this miniseries, I'll show you how to make sure all of your providers are on board to really make a boost in your bottom line.

Adam Alpers, DO, is a family-practice physician in private practice in Ocala, Fla. A medical coding expert, Alpers also helps other physicians learn how to maximize their insurance reimbursements and writes heavily on the subject at his blog medbillingncoding.com.