By Helen Hadley, VantagePoint HealthCare Advisors

As expenses rise and reimbursements decline or, at best stay the same, many practices are searching for new ways to increase revenue. You've "tightened your belt" as much as possible to reduce expenses, increased office hours and patient visits, and made sure that the billing and collections staff is collecting every possible dollar. Then what?

Many practices have turned to ancillary services to supplement their revenue. Medical imaging, diagnostic testing, laboratory and pharmacy services, and physical therapy are among the more popular ancillary services being offered… more recent additions are smoking cessation and weight loss clinics, vitamins, laser hair removal, and Botox injections.

These ancillary services can produce substantial financial returns if you've done the appropriate due diligence. However, before moving forward, many major questions need to be answered including:

• - Does your billing and collections staff have a good enough track record to take on a new line of business?

• - Have you investigated the appropriate CPT codes and the medical necessity requirements of these services? (Don’t rely on the vendor for this information.)

• - Have you developed a pro forma so that you have a clear understanding of your return on investment and how long it will take for the service to be profitable?

• - Do you have adequate staffing? How will the new service(s) affect their workload? Are they supportive? They can make a substantial difference in your patients' acceptance (and use) of the new services.

• - Can you provide a better level of service for your patients than the referral sources you now use?

• - Will your patient population provide a high enough demand for the service and/or will other practices refer patients to you to offset the costs involved?

• - Will the payers that represent the majority of your patients reimburse you? For example, some payers contract with specific laboratories and won't pay for services done elsewhere.

• - Are you aware of, and do you meet, the legal requirements of the federal Stark regulations and antikickback statutes as well as any applicable state laws? Ancillary services can be provided within these legal parameters, but they are very complex and investing in legal advice is mandatory to protect yourself.

• - Can you meet the CMS supervision requirements for inoffice ancillary services? There are three levels of supervision based on the CPT code of a diagnostic test – general, direct, and personal.

• - Have you investigated all financing options? Purchasing, leasing, renting, and purchasing "previously owned" refurbished equipment?

• - Have you considered the local "politics?" Who currently provides these services? For example, if you currently send your patients to the local hospital for these services, what will the impact be of discontinuing your hospital referrals?

• - What will the public perception be? Will they view it as providing an additional service as a convenience for your patients or simply a way to add to your bottom line? Will it create the perception of unnecessary testing? Is the service closely associated with the specialty of your practice (for example, what will the perception be of a family practitioner doing Botox injections?)

• - Most importantly, can your practice perform these services and maintain the same quality of patient care and the reputation it has developed in the community?

If planned correctly using financial models to project revenue and expenses, ancillary services may prove to be a viable revenue stream for your practice. Before you leap, contact VantagePoint for a complimentary consultation at 203.288.6860 or visit our website http://www.vantagepointconsult.com.

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Helen Hadley is President of VantagePoint HealthCare Advisors.
Email: hhadley@vantagepointconsult.com