Add a New Revenue Stream to Your Practice

By Preston, Susan Harrington | Medical Economics, March 1, 1997 | Go to article overview

Add a New Revenue Stream to Your Practice


Preston, Susan Harrington, Medical Economics


Ancillary services can help keep your income stable-despite the inroads of managed care.

Before pulmonologist Diego Alvarez moved to Oneida, N.Y., in 1990, the local hospital assured him that it would put in an exercise stress-testing facility. But the hospital changed its mind. "The administration said I could do it if I wanted," says Alvarez. The equipment alone would cost $41,000.

"l was worried about not being able to meet the lease payments," he recalls. "But after I studied how you can bill third-party payers for both technical and professional components, and after my accountant and I looked at the numbers, it turned out to be doable." (See page 90.)

For Alvarez, who also practices general internal medicine, the equipment proved to be a wise investment. Three years after he moved to Oneida, the hospital brought three new internists into the 11,000-person community and set them up in private practice. "There were already five or six FPs in the area who had been there for 10 or 20 years," says Alvarez. "The physicians who took the brunt of the new competition were the new ones. There was a noticeable drop in my patient population."

At the time, there was no gastroenterologist in town, and Alvarez saw an opportunity in that. "I decided that if I could do a bronchoscopy, there should be no reason why I couldn't do a gastroscopy or colonoscopy," he says.

Today, his 2,500-square-foot office houses not only the exercise physiology lab, but a colonoscope, an upper-GI fiber-optic endoscope, and equipment for doing CBCs. "Adding these procedures enhanced my income and preserved my market share," says Alvarez.

His experience has a lesson for your practice, whether an oversupply of doctors is eroding your patient base or managed care is "downsizing" your revenue. One way to stay competitive and keep your income at its customary level is to expand the scope of your practice. If the services you add are in demand by patients but aren't covered by insurance, so much the better.

We spoke with doctors around the country to find examples of services and procedures that can enhance the market appeal of a primary-care practice. Like many new businesses, they haven't yielded quick profits, but they hold promise of solid revenues.

Travel medicine: personalized care

"I've always been interested in travel medicine," says general practitioner John A. Horton. "When I was 20, I went to Africa to work for a flying doctor service." Today, Horton and internist Edward Hanzelik own World Travelers HealthCare in Westlake Village, Calif.

Horton and Hanzelik met in the early '70s in India, where they helped start a clinic. Almost 20 years later, they decided to form a practice back in the States. Though both had experience with managed care, neither liked working in that environment. "It wasn't supportive of my integrity as a physician," Horton says. "We resigned our last HMO contract last November."

Travel medicine, however, is a niche that managed care rarely touches. HMOs and insurers almost never cover the inoculations and advice that travelers need if they're going to developing countries.

"We began practicing travel medicine along with our regular family practices," Horton continues. "After a while, we decided to make it a separate entity and started World Travelers HealthCare." Today, WTH accounts for 15 to 20 percent of the doctors' revenue.

Along with medical care, WTH provides customized travel kits for patients heading abroad. "We have a standard kit with over-the-counter stuff for colds, sprains, cuts, and so forth," says Horton. "Then, depending on where the person is going, we put together prescription drugs-antibiotics, antihistamines, malaria medicine, altitude-sickness medicine, maybe some antibiotic eyedrops, topicalswhatever we feel would let the person be independent of the local medical resources." The price tag: around $50. …

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