'We have to grow': Why ancillary services are becoming more essential for orthopedic practices

Alan Condon -   Print  |
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Expanding revenue streams through ancillary services is becoming a larger part of the orthopedic practice business model as reimbursement continues to decline and many practices wait for pre-pandemic patient volumes to return.

During Becker's 18th Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference, Frank Phillips, MD, director of spine surgery at Rush University Medical Center in Chicago, discussed how Midwest Orthopaedics at Rush is looking to grow and how telehealth has expanded his patient population.

Below is an excerpt from the conversation, slightly edited for clarity. To view the full session on demand, click here

Question: Where do you see the best opportunity to grow your practice going forward?

Dr. Frank Phillips: We've explored a lot of options that are out there. There's obviously private equity, and there's talk that that's going to expand with some groups that are struggling through the shutdown with no revenue for months. The decision we faced is do we take money out to grow our practice? Because we feel the need to grow our practice. For all practices, ancillaries are becoming a bigger piece of the business. We're getting less in professional fees, working harder for less money. We [need to] figure out ancillaries, which would include all the usual ancillaries — therapy, MRI, imaging, but also surgery centers. 

For our practice, it's really figuring out a way to do that on scale. For now, we've made the decision of doing that internally, investing in ourselves, rather than taking outside capital and giving away not only a financial piece [of the practice], but also our brand and what we are, which is inevitable if you bring in someone else who doesn't necessarily share the same clinical goals. We decided we have to grow. We have to have scale for many reasons and we've decided to do that through organic growth with partners, basically putting in retained earnings, which is obviously not the traditional way orthopedic or medical practices function, and use that to grow our footprint both in terms of geography and in terms of developing ancillary streams.

Q: Do you think that telehealth and ability to connect from further distances will be a boon for you when you're looking at growing your footprint?

FP: It's been interesting. When we first started talking about it, I was thinking this is a total waste of time. But as I started doing it, I fell in love with it. It's so efficient for patients. They love it. If I'm downtown, a patient comes from the suburbs to see me, it's like a five-hour commitment driving in and waiting. I'm two hours behind with all this stuff that goes with it. But if I have a telehealth [appointment] at 2 p.m., I call them at 2 p.m., and we get 30 minutes. It's been shocking to me how well-accepted it is, even for patients wanting surgery.

You've got to see the patient to examine them obviously, but the limitation of telehealth will be if payers pull back, because they're afraid that suddenly there'll be a lot more visits than there used to be because telehealth makes it easy. So, if telehealth totally stops getting reimbursed when the dust settles, that'll be a problem. But I think we've seen real opportunities with telehealth. We can reach far wider geography than just the immediate communities we serve. As long as it gets paid for, I think that will expand what we all do. And I think it makes doctors more efficient. 

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