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GROWTH STRATEGIES: Should You Add Services?<
by: Judy Capko
Cash Cow or Money Pit? Several years ago I performed an operations review for a primary care practice, and in the process I spotted a room full of vitamins and nutrients worth thousands of dollars. When I asked about this, staff informed that one of the doctors was sold a bill of goods, buying these products a year earlier from a smooth-talking salesperson. I quickly discovered why these products weren’t moving. The staff was not informed ahead of time and was more than a little irritated about it. With a hefty workload already, they weren’t interested in adding product sales to their daily activities — and they weren’t given any incentive to do so. This practice had made one of the most common mistakes I see when it comes to adding ancillaries: the physicians failed to properly plan and get staff buy-in before making the investment. Are you considering adding a new service or product to your practice? It might be a good idea. These are turbulent times, after all. The costs of running a typical medical practice continues to rise, all the while the squeeze on reimbursement doesn’t seem to be going away. No wonder so many physicians are looking for the cash cow and reaching out for other sources of revenue to keep them afloat. Adding ancillaries may offer the financial cushion you are looking for. But on the other hand it just might become a money pit. Before you take the leap, make sure you know what you are doing. Some physicians come up with their own ideas. Others simply want to get on board with the latest trend by doing stress testing, DEXA scans, or adding a sleep lab — you name it. Whatever you do, don’t assume that just because other doctors are doing something — even if a lot of them are — that you should, too. Some of your colleagues’ decisions may turn out to be big mistakes, while others may work fine for them, but would not suit you. Believe me, I’ve seen it all — from the “build-it-and-they-will-come” attitude to the used-car salesman approach to the practice that simply wasn’t willing to spend enough on the investment of ancillaries to launch the product and reap the rewards. If you’re thinking of adding an ancillary, save yourself some grief and do it the right way. Cautiously approach your pursuit to add revenue sources to your practice, so you end up making a smart choice. In addition to the above point about getting staff buy-in, here are six more tips for adding ancillaries without breaking the bank, while providing financial benefits for years to come: 1. Know yourself. When exploring ways to attract new patients or add new services, think hard about what you really want to do, what would enhance service to your existing patients, and which additional services or products you can endorse. By doing this up-front, you will be more successful at promoting the ancillary to patients, merging it into your existing practice, and in getting crucial staff assistance. If you expect your patients and staff to buy into this new service, you have to be personally committed to it, and not just for the money. 2. Develop your own financial projections. By all means do not rely on the financial forecasts vendors provide on equipment they are selling. Scrutinize the numbers. They may be inflating revenue projections for each procedure and overestimating the number of procedures you’ll likely perform. Even when you have a realistic goal, bringing your numbers up to that goal may take a while, something vendors often fail to factor into their projections. Moreover, it’s not uncommon for those projections to calculate a return on investment (ROI) without considering the costs for labor, added physical facilities, and supplies. Kim Avery, administrator of Mid-South Pulmonary Speci< |
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