With the institution of the Affordable Care Act, we really don’t know what’s going to happen to the future of federal funded medicine. And with the implementation of ICD-10, reimbursement to pain practitioners may be delayed by as much as three to six months with a reduction in the income of the practice between 25 to 40%. That’s a major impact on the ability of the physician to maintain the viability of the practice. The other problem is increasing overhead. If you look at the average overhead of a clinic the most commonly quoted number is 50% unless you’re able to cut it down. As of the beginning of 2014, only 39% of clinics in this country were owned by private, solo practitioners. Many are being gobbled up by venture capitalist groups, multispecialty groups, hospitals. How will you maintain your independence? By increasing the income stream in your practice in order to ensure that you will survive.
There are many ancillary services that a physician can decide to adopt. But many physicians are dismissive or overly cautious about plunging into an arena about which they think they don’t have the expertise. Some options to consider: drug testing in house either using a high complexity lab to do semi-quantitative testing or if you want to add a more complex machine to do your own confirmatory drug testing. The combination of those two can increase your revenue stream by as much as 25 to 50%. The creation of a durable medical equipment program is another option. If you’re large enough you can actually get licensed as a DME provider or if you are a small scale practice then you can get DMEs on a consignment basis and still get a continuing revenue stream to the practice. And the establishment of a physical therapy program is often overlooked. Practice modification is a very lucrative way to enhance income. So consider creating a concierge practice within your practice. If you can identify 200 patients that can be enrolled, you can charge them on average $2,000 a year above and beyond insurance payments and co-pays. That’s an additional $400,000 income. Another practice modification to consider is the incorporation of what we so call wellness programs including hormonal therapy, smoking cessation, weight reduction programs.
But not only do you want to increase income, you need to reduce expenses. How do you do that? By becoming a member of a group purchase organization, a GPO. That cuts down your overhead in terms of the purchase of medical equipment and medical supply by as much as 10 to 25%. If you’re talking about supply spending of a million dollars a year, 10% to 25% saving is big for the company. Another idea: be sure that you follow the PQRS requirement or the Meaningful Use requirement for your electronic health records because you get a .5% bonus from Medicare. If you don’t do it, then you get a 2% penalty from Medicare.
The purpose of all this, really, is to increase your EBITDA. Change is difficult, and sometimes hard to swallow. But change sometimes needs to be done if you want to survive in this hostile environment of medical practice today.