In 2009, the entire landscape of how medicine is practiced in the United States began to change. Passage of the Affordable Care Act (ACA) has since impacted nearly every aspect of the medical field, most notably for solo practitioners and small group practices.
As insurance reimbursements have fallen, large-scale patient demographic shifts have continued and physicians have been saddled with new costly and time-consuming additional administrative reporting and electronic health records implementation requirements, practice profits have been harder and harder to come by.
Some physicians have coped by selling their practices and joining the staff of a larger clinic or hospital. Others have attempted to increase service rates, often with mixed results. For those still in operation, finding the right recipe to maintain at least a baseline net profitability is the source of intense discussion and debate.
In this article, take a look at how the addition of additional patient services to a private practice physician’s menu of services may impact bottom-line, long-term profitability.
Adding Patient Services and the Stark Law
Mention the Stark Law in a gathering of practicing physicians and strongly worded discussion is likely to quickly follow. However, there is an aspect of the Law itself that can actually work in a physician’s favor.
Here it is: the Stark Law expressly prohibits outside referrals from one physician to another where both entities stand to enjoy financial gain from that referral. But if the referral is made from that physician to a necessary additional service which will be provided from within the physician’s own practice (whether by the physician or another in-clinic staff member) there is no Stark Law violation.
This means that any physician that wishes to add additional patient services to their existing menu of patient services may do so AND may refer their patients to these extra services without violating the Stark Law.
NOTE: As of 2010, there is one exception that relates to physicians making in-clinic referrals within a group practice setting. This exception states that, where the referral is to obtain in-clinic PET, MRI or CT scan testing, the patient must be informed that they may also visit other suppliers to obtain these same services.
Why Add Ancillary Services?
When contemplating making practice changes or expanding existing patient services, physicians in solo or small group practice have every right to feel wary. From re-configuring available clinic space to adding additional staff to investing in new technology, there is a great deal to think through.
However, as MedConverge reports, when done well, the ultimate payoff is increased patient satisfaction in addition to the increased revenue and net profits when done correctly.
Increased patient satisfaction scores.
The increased patient satisfaction arises from the ability to obtain necessary tests and services same-day and often in-house. Instead of having to navigate the open waters of referrals to unknown providers, picking and choosing on their own and trying to match a referral up with the providers their insurance will cover, patients can receive necessary ancillary services from a physician they already know and trust and one they know their insurance will cover.
Offering in-house referrals also cuts down on patients’ wasted time (what patient wants to drive across town to have the same test they could have had done at the clinic they are already used to visiting?) and patient stress.
Increased revenue and net profits.
To date, physicians continue to struggle with a large number of existing restrictions on the ability to openly recruit new patients. Advertising and marketing are heavily regulated, all for the purpose of maintaining a “patient-centric” approach that attempts to politely ignore the physician’s own need to make a living.
The big loser in this scenario is the physician, of course. But the addition of judiciously selected additional services can remedy this without adversely impacting the patient’s perception of physician credibility.
In fact, in 2012, the National Institutes of Health (NIH) released a strongly-worded narrative on the topic of physician-owned additional patient services. After analyzing the issue from all sides, the NIH concluded the following in favor of physician-owned ancillary services:
- Patients are more likely to comply with treatment recommendations when treatment can be received in-house
- Offering additional in-practice services potentially provides for a better continuum and flow of patient care and ongoing patient monitoring than using a system of referring outside the practice
- Important economies of scope can be realized when additional services are added within a practice context already set up to support these
- Providing additional in-house services does not create an “imperfect” (i.e. financially motivated) doctor-patient relationship any more than many other existing medically necessary professional and business relationships may do
Choosing Additional Services With Care
Possible cost increases go hand-in-hand with potential increases in revenue and profitability. So it is important to expand an existing physician practice with care.
Discussions with a medical management group can provide insight into which additional services may be the best complement to what an individual or small group practice is already offering.
Popular additional services can include these types of offerings:
- Allergy testing services
- Weight loss programs
- Aesthetic and cosmetic enhancement options (med spa)
- Pharmacogenetics and personalized medicine services
- Advanced blood tests
- X-ray, MRI, CT and PET scan tests
- Pharmaceutical and dispensary services
- Urgent care services
- Physical therapy
Conducting a feasibility study is one practical method of evaluating which additional services to add. For example, any practice that routinely refers out patients for blood or scan tests may want to consider adding these services to the clinic’s own in-house services menu.
As reported by MedScape, to date, just 20 percent of solo practitioners and small group practices have expanded patient offerings to include additional services. However, data analysis shows strong potential to provide superior patient care as well as increase revenue by making this shift.