How Ancillaries Help Both Patients and Providers

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What does value-based care mean, exactly? Many refer to it as providing the right care at the right time; in other words, shifting the transactional nature of the healthcare system to one that focuses on patient outcomes. However, this simple definition leaves out a third key component: the right place.

Independent practices are already the “right place” for care, so to speak. But there are ways to make that right place an even better option. What if the patient could receive the right care at the right time all in that same location?

Ancillary services are additional diagnostic or supportive measures that physicians and providers can integrate into their practices to help treat patients. There are three main types of ancillary services: 1) diagnostic, which includes lab testing, radiology, and genetic testing; 2) therapeutic, which includes allergy treatment, dialysis, and physical therapy; and 3) custodial, such as nursing homes, home health care, and hospice care.

If a patient needs a specific test or exam to help identify the nature of an illness or other problem, providers with in-office ancillaries will be able to address the need in their office. However, when patient volume dropped by as much as 51 percent during the pandemic, physicians shifted to providing care via virtual health to keep their practices running and visits to their physical ancillaries dropped by 50 percent.

Given this drop in utilization, what is the case for ancillaries now? Why should independent physicians add them to their practices? There are three key reasons:

They Create a Better Patient Experience

Ancillary services account for 30 percent of medical spending. Having these services integrated into a practice saves both physicians and their patients a considerable amount of time and money. Patients don’t need to visit a hospital or outpatient center. And although in-office ancillary services cannot do everything under the sun, they can reduce costs when used appropriately.

Studies also show that patients value cost above quality of care. Forty percent of adults in the U.S. reported skipping medical treatment to save money. In-office ancillary services that can provide testing at a cheaper rate enhance the experience for patients and make them more likely to visit that physician’s practice.

They Create a New Revenue Stream

Independent physicians often hear that they need to diversify their revenue streams. If a physician adds an ancillary, the services can help the practice generate extra revenue.

In 2016, 48 percent of physicians added one or more ancillaries to their practices. Twenty-five percent of physicians who added ancillaries to their practices said they did so both to improve their patients’ care and to add another revenue stream while 25 percent stated they did so based on administrative and business considerations.

In 2020, the most popular ancillary services for internal and family medicine were lab services and electrocardiograms. Family medicine physicians reported earning up to 12 percent of their revenue from their ancillary services.

However, adding an ancillary service does not automatically lead to profit for a practice. Practices must consider their location and patient base. For example, an article by Medical Economics mentioned an independent family medicine practice that incorporated lab services because many of their patients had diabetes. Physicians have to consider what would work best for their patients’ needs.

They Can Improve Health Outcomes

By providing the right care at the right time and at the right place, physicians help their patients lead a healthier life. Patients are more likely to comply with provider guidance if they don’t have to take extra time off of work to get their tests done. Services such as diabetes education and wellness programs help patients maintain healthy habits and prevent expensive emergency department visits. In addition to being valuable resources for patients with chronic conditions, ancillary services can help identify disease early. In addition, ancillaries that are integrated directly with the physician’s electronic health record (EHR) allow physicians to keep all of their patients’ critical information in one place.

Adding ancillaries to your practice is a business decision. Physicians must decide what will best address their patients’ needs. For example, it is impractical to integrate lab services if the majority of a physician’s patients come in for x-rays. Physicians also must perform a cost-benefit analysis and determine if adding the ancillary makes sense from a financial standpoint. This analysis must include the marketing, staffing, training, equipment, and space needed to operate the service.

None of this needs to be difficult. Physicians don’t need to start from scratch to research ancillaries on their own. By joining a larger medical group, or partnering with a management services organization (MSO), ancillary services may be readily available. Business and financial experts can work with the physicians to determine what service will work and streamline the integration process.

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