The Top 5 Ancillary Services for Urology Practices in the U.S

By Brighter Health Networkhttp://www.bhnco.com/

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About Brighter Health Network

• Leading provider of mobile medical diagnostics including Urodynamics, Anorectal Manometry, UroCuff Testing, and more

• Urodynamics and UroCuff Testing are ancillary services that are very helpful to urology practices.

• Serves over 300 clinics and hospitals nationwide.• Serves Urology Practices of all sizes and interacts with them daily,

which served as the basis for this presentation.• Visit www.BrighterHealthNetwork.com for more info.• For one (1) minute corporate overview, see this video: https://

vimeo.com/184366711 • If you are interested in urodynamics outsourcing visit this link and

sign up: http://www.bhnco.com/Urodynamics/Urodynamics-Testing-Services.html

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Ancillary Services (AS)

• Definition– Diagnostic or therapeutic services provided by a professional health

care provider for clients on an outpatient basis as an adjunct to basic medical or surgical services. • e.g. X-ray, medications, lab or other services.

(Source : http://medical-dictionary.thefreedictionary.com/ancillary+services)

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Why Ancillary Services ?

• Reduction in Medicare contract payments and decreased physician reimbursement from insurers are causing decreased physician salaries, medical profits and general revenue.

• To counter this, many practices are trying to enhance revenue and profitability by seeking ancillary income to offset these losses in other areas.

• Ancillary services - – Become a significant contributor to their basic fee-for-service operation.

– Become an important component of many physician practices with 15-50% of their annual revenue from these services.

(Source : The Complete Business Guide for a Successful Medical Practice bt Neil Baum et.al.; chapter 13 Ancillary Income)

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Benefits of ancillary services

• Facilitate the flow of information regarding patient management. (Source: http://medical-dictionary.thefreedictionary.com/ancillary+services)

• Providing comprehensive services to patients through the integration of ancillary services at the point of service improves communications between physicians of different specialties

• Facilitates the development of coordinated clinical pathways, and

• Enhances the development of disease specific clinical expertise, all of which lead to improved quality at reduced cost.

• Diversifies income streams which lowers operational risk

(Source : https://www.auanet.org/advnews/press_releases/article.cfm?articleNo=324)

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Ancillary Services in Urology Practice

• There are plenty of ways doctors can boost practice income by expanding into a variety of different ancillary services.

• The squeeze on physicians' reimbursements continues, interest in ancillary services has been increasing. The Medscape report showed that starts of new ancillary services rose from 19% of physicians in 2013 to 21% this year.

• With only 25% of Urology Practices providing ancillary services, there is considerable room for growth. The issues is finding those that produce the proper profit margin, provide points of synergy, and don’t cost a fortune to setup.

(Source : http://www.medscape.com/viewarticle/828246)

(Source: Medscape Physician Compensation Report 2014 Leslie Kane; Carol Peckham April 15, 2014)

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Ancillary service scope

• According to Medscape survey findings, 15% of employed and 38% of self-employed urologists say they have offered new ancillary services within the past 3 years.

(Source:Medscape Urologist Compensation Report 2015 Carol Peckham | April 21, 2015)

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Ancillary Service Scope

• Ancillary services, a significant source of income for many urologists

• Urologists derive only about 13% of their income from ancillary services and 87% from patient care, although the ancillary income percentage is higher, at 18%, among those in private practice than those in other practice settings. This shows much potential for expansion for most practices.

• A lithotripter is still the type of ancillary service or equipment most commonly invested in or owned by urology practices (53% report owning one), followed by ultrasound (41%), an ambulatory surgery center (29%), in-house pathology (28%), clinical laboratory (27%), CT scanner (19%), and IMRT (17%).

(Source: Urology Times; December 04, 2013)

IMRT

CT Scanner

Clinical laboratory

Pathology

Ambulatory Surgery center

Ultrasound

Lithotripter

0 10 20 30 40 50 60

17

19

27

28

29

41

53

Ancillary Services in Urology Practice (%)

13%

87%

Urologist’s Income Source

Anciallary Services Patient Care

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Top Ancillary services for Urology Practices

• Lithotripsy• CT scanner/ultrasound• Ambulatory surgery centers (Outpatient Surgical

Centers)• Pathology Lab/diagnostic services• Clinical lab• Clinical Research/Drug Studies• Radiation facilities/IMRT

(Source : Medical Economics E edition Aug 2009; http://rheumatologypracticemanagement.com/special-issues/september-2013-vol-2-no-3/2193-business-challenges-and-opportunities-for-today-s-urology-practices

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Lithotripsy

• Lithotripsy, although not always considered an ancillary service, it is something urologists might be involved with outside of their practices.

• Treatments such as lithotripsy are good for patient care

• The major issue with Lithotripsy is the cost of entry. The equipment can be quite costly.

(Source : http://uropracticemanagement.com/upm-issues/2013/september-2013-vol-2-no-3/2187-the-regulatory-future-of-urology-ancillary-services)

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CT Scanner/ultrasound

• Urologists who own and operate office-based CT scanners may be able to offer advantages over imaging centers because patients are already registered in the practice, the films or results do not have to be transmitted to an outside entity, and the "single line of service" allows for greater efficiency.

• Small and large groups may wish to track referrals to imaging centers to see if they have the numbers to support bringing this service in-house.

(Source: http://urologytimes.modernmedicine.com/urology-times/news/clinical/practice-management/ancillary-income-whats-possible-and-whats-legal?%0A%09%09%09=&date=&id=&pageID=2&sk=)

• Often prevents unnecessary treatment and associated expenses.

(Source : IN-OFFICE ANCILLARY SERVICES EXCEPTION (IOASE) Preserve the IOASE Exception to the "Stark" Law 2015 Issue)

• Major impediment for CT Scanners is the very large upfront costs and the very high ongoing costs. This may prevent many from considering it.

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Ambulatory surgery centers (Outpatient Surgical Centers)

• AUA reports that, 28% of urologists had ownership interests in ambulatory surgery centers (ASCs).

• Urology cases are well suited to outpatient surgery centers.

• Physician owners have a vested interest in using the best equipment, achieving the best outcomes, reducing unnecessary inventory, and reducing turnover times and other inefficiencies.

(Source: http://urologytimes.modernmedicine.com/urology-times/news/clinical/practice-management/ancillary-income-whats-possible-and-whats-legal?%0A%09%09%09=&date=&id=&pageID=2&sk=)

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Pathology

• Ownership of pathology labs has garnered significant attention from urologists and regulatory agencies in the last few years.

• It allow sharing of human resources (management and operations) and professional interpretation by the pathologist.

• A urologist-owned management company—and its dedicated supervision of practice-owned anatomic pathology labs—provides the best opportunity for improving quality, lowering costs, and supplementing professional income

(Source: http://urologytimes.modernmedicine.com/urology-times/news/clinical/practice-management/ancillary-income-whats-possible-and-whats-legal?%0A%09%09%09=&date=&id=&pageID=2&sk=)

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Clinical Laboratory

• Another opportunity to provide ancillary services within the walls of the urology practice is clinical laboratory services.

• Serum PSA, serum testosterone, and urine cultures are the most commonly performed tests. The reagent cost for each test is significant and the profit margins are slim, but large practices may benefit from economies of scale once certain volumes are reached.

• Patients may appreciate the convenience of one-stop shopping and knowing their urologist has a full-service practice.

• An inexpensive laboratory information system provides a computer interface that can be connected to most standard electronic medical record products, and eliminates the cost of processing results from commercial labs and outside facilities.

(Source: http://urologytimes.modernmedicine.com/urology-times/news/clinical/practice-management/ancillary-income-whats-possible-and-whats-legal?%0A%09%09%09=&date=&id=&pageID=2&sk=)

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Clinical Trials

• Professional Development. Remain at the cutting edge of your specific area of therapeutic interest; meet other clinical trial investigators to exchange ideas and plan future collaboration; and gain comfort in working with drugs and processes not yet approved by the U.S. Food and Drug Administration (FDA).

• Professional Recognition. may have the opportunity to become co-authors of articles for publication.

• New Revenue Stream. Clinical trials offer the opportunity for additional revenue by attracting the volume of patients

• Role in the Evolution of Medicine. Clinical trial investigators can potentially bring breakthrough products to the market that could impact the health of people around the world.

(Source : http://www.ppdi.com/Participate-In-Clinical-Trials/Become-an-Investigator/Advantages)

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IMRT

• The latest attraction in urology physician ownership is intensity modulated radiation therapy (IMRT) centers.

• Proponents of IMRT within a urology practice see it as a logical extension of the care continuum for prostate cancer, a disease that constitutes 25% to 50% of a general urologist's practice.

• Just as with ownership in imaging equipment, anatomic pathology services, and outpatient or inpatient surgical facilities, ownership in radiation therapy equipment gives the urologist the ability to directly affect quality and outcomes for his patients.

(Source: http://urologytimes.modernmedicine.com/urology-times/news/clinical/practice-management/ancillary-income-whats-possible-and-whats-legal?%0A%09%09%09=&date=&id=&pageID=2&sk=)

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Adding Ancillary Services Checklist

• If you are considering adding ancillary services, here are some items you should consider:1. Brainstorm and come of with at least 10 Ancillary Services you think would fit well with your

practice. i. The best place to look is where your practice is referring patients out and not getting anything

(such as return referrals) back2. Rank order your list using a decision matrix.3. For top 1 to 3 ranked options

i. Check compliance issuesii. Talk with other practices offering the service (ask about reimbursements, insurance companies

that exclude it, volume of patients expected vs. those actually showing)iii. Verify Medicare Reimbursement Rates for applicable CPT Codesiv. Verify Private Insurance Reimbursement Rates for applicable CPT Codesv. Develop a financial model based on your assumptions

a) Using your financial model, perform a sensitivity analysis to find the break even point. Be sure your startup costs include equipment, supplies, training, staff time, initial marketing, etc…

b) Perform additional sensitivity analysis to find the patient volume needed to produce at least a 20% annualized return on upfront costs.

4. Select best ancillary service and explore different methods for delivering the servicei. Purchase Equipment vs. leasing equipment vs. using a vendor, and so on…ii. Attempt to find a way to “prototype” providing the service for a few month in order to limit your

downside risk. This allows you to confirm reimbursements, ensure demand is present, etc…5. If “Prototype Phase” works well move to full deployment and market service

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Thank you !