Physicians Practice Pearls: Expand for the Right Reasons

April 1, 2006

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Thinking of opening a satellite office? Consider these factors: 

  • Setup Costs. Satellite offices cost money. With few exceptions, satellites increase your operating costs - normalized for additional providers - by 1 percent to 2 percent and sometimes more. Don't open a satellite office if your goal is to save money; rather, do so to take advantage of market opportunities. Evaluate your costs carefully to keep your investment as reasonable as possible. Your practice will have to lease or buy space and purchase new equipment, furniture, and supplies. Personnel costs will certainly rise, as most practices hire one or two additional employees to operate a satellite clinic. Some practices have minimized such costs by establishing a subleasing arrangement for several days a week.

  • Market Analysis. Analyze your market carefully when evaluating whether to open a satellite clinic. First, carefully articulate your reasons for taking such a step. Most practices open additional locations to gain access to a new patient population. Since this is a particularly costly way to attract new patients, analyze other ways that would allow you to reach the population you are targeting.

You'll also want to evaluate how well your new location will work with other services your new patients may need. Explore other patient facilities nearby as well as traffic patterns and road systems that will enable your potential new patients to reach your location. Ensure reliable communications mechanisms are in place so your satellite clinic can easily contact your main office as well as the hospital or surgery center with which you have admitting privileges. Make sure your affiliated hospital can accommodate additional admissions from you.

Most important, you'll need to analyze your expected volume. How will you attract business to a new location where you may not be as well known? For specialty practices, are referral patterns already established with other physicians in your specialty? In sum, can you realistically fill your daily schedule at your new office?

Next, consider reimbursement. You may have the volume to support a satellite office, but it's likely your payer mix will change.

  • Cultural Concerns. Your physicians and staff at a satellite office will be geographically and emotionally separate from your main office. To keep such separation from translating into alienation, some practices with satellite offices implement standard operating procedures, rotate personnel, and require group meetings at least once a month to institute a sense of a shared culture across all sites.

  • Hidden Costs. When you open a satellite office, you often dedicate existing financial and personnel resources to your new venture - sometimes at the expense of taking them away from your main site. So you'll need to consider what you'll miss in addition to what your practice will gain.

Elizabeth Woodcock, MBA, CPC, is a professional speaker and consultant specializing in practice management. Elizabeth is a Fellow in the American College of Medical Practice Executives and is a Certified Professional Coder. She can be reached at

elizabeth@elizabethwoodcock.com

or via

editor@physicianspractice.com

. Learn more about Elizabeth at

www.elizabethwoodcock.com

.

This article originally appeared in the April 2006 issue of

Physicians Practice

.