If primary care is to survive, it will need to find unique alternatives for ancillary revenue streams. While there are a few strategies PCPs can employ to cut costs and increase profitability, the real money-maker is in the long-term plan. There are actually quite a few options to pursue here like a concierge practice (this option is worthy of a lengthy discussion in another post). But, here are two quick examples I’d like to focus on that we have seen be successful and are available primarily through primary care practices.These examples are the Medical Weight Loss Clinic and BioTE hormone replacement therapy.
Catering to Specific Populations
The Center for Medical Weight Loss (CMWL) is a program that was created “to acknowledge and treat the unique, very personal challenges every person looking to lose weight faces.” See this link for more information about CMWL. Anecdotally, I picked one of my clients who has worked with CMWL for nearly 10 years. They have seen a range of profits from a low of $20,000 to a high of $83,000 and average of $48,000 extra per physician, PER year.
For this primary care practice type, current MGMA range for compensation is $250,000 to $280,000. The bottom line is that on average this ONE change for additional revenue could generate roughly 20 percent more per physician. With the right population of patients, a primary care physician practice “can successfully manage and treat obese patients using behavioral modification techniques coupled with meal replacement diets.” (This from a study of Primary Care Clinics Versus Weight Loss Clinics.)
The next ancillary revenue example is BioTE. According to their website: “BioTE Medical provides bio-identical hormone replacement pellet therapy to men and women experiencing hormonal imbalance.” BioTE “can be completely integrated into your business, making the addition of hormone therapy and replacement a seamless transition.”
For another of my practices, the idea for expanding into the BioTE Hormone Health business started years before a big transition for one of my OBGYN practices. The physicians were looking for ways to make the transition away from OB easier since 40 to 50 percent of their then-current revenue came from OB or related services.They had tried adding new, younger physicians but had no luck finding suitable junior members of the medical team. So replacing $250,000 to $375,000 of revenue (including ultrasound) for each physician had to have a careful plan. Once the decision was made there would be no going back.
As a result, they started the phase-in of BioTE nearly three years before the OB drop date. They were able to phase out over a short time. Once they stopped taking new OB patients, nine months later they were done. The benefits for them are numerous, like:
- Control of family time,
- Sleeping through the night, and
- Regular schedules for both the physicians and their Gyn patients, who would no longer need to reschedule because their physician was called out for a delivery.
Results
As for the revenue replacement… So far so good. They built up two years of profits to sustain them through the transition. As of year three, they have not completely replaced the lost revenue stream from OB and ultrasound. However, the BioTE business increased 50 percent year-over-year 2016 to 2017 and looks to duplicate that result going into 2018. The transition and replacement plan are working as originally envisioned. I can say that the most exciting part for these physicians is the improvement of their patients’ lives and enjoyment the physicians have in providing the service.
Both these sideline businesses are directed at a specific population to improve patient health. If these populations are a large part of your practice, you could investigate the addition of these resources. Or, maybe you have another population segment that could be served by another sideline business.
In these cases, each sideline business became the source of ancillary revenue for the above two physician groups through minimal, but well-planned, effort. I’m always looking for new and innovative projects that link well with private medical practice.
In my experience, these types of projects are the difference between successful practices with a bright future and those that limp along ultimately looking for a way out. In my next post, I’ll talk about one of our best conversion strategies that work well for all types of medical businesses. However, the genesis of a project usually starts with a few specialist physician groups.
Stay tuned … You can email me anytime at sean@medexec.com with questions or comments.
