Keep Your Business Afloat With Ancillary Services

Of the 5.8 million employer firms in the United States in 2009, 660,900
closed their doors, according to the Small Business Administration’s
Office of Advocacy 2010 report to the president. Small businesses especially
— the bread and butter of the O&P profession — are struggling to
remain afloat amidst ever-growing competition and increasingly stringent
guidelines for reimbursement from third-party sources.

  Bruce McClellan
  Bruce McClellan

ancillary services to your scope of practice is a viable
option that can help your business gain additional revenue, and show your
patient base that you can provide comprehensive offerings.

Types of ancillary services

From crutches, canes and walkers to diabetic shoes and breast
prostheses, ancillary services include any products or services that supplement
the patients’ care experience.

“A significant ancillary service addition might even include an
on-staff physical or occupational therapist to do intensive post-fitting
therapies, such as gait training or functional usage training for upper limb
prostheses,” Bruce “Mac” McClellan, CPO, LPO, FISPO, owner and
president of Prosthetic-Orthotic Associates in Tyler, Texas, said. “While
this is rare, it has been done with varying success in some practices.”

  Jay Zaffater
  Jay Zaffater

Jay Zaffater, CPed, BOCPD, clinical program director for Artex Medical
and secretary of the Pedorthic Footwear Association, has found that many
O&P practices near his office in Shreveport, La. handle pedorthics as a
regular part of their businesses.

“I don’t even know if you would consider that ancillary to
them,” he said. “The foot beds, orthotics and prosthetics — to
me that all goes together.”

  Dennis Clark
  Dennis Clark

Artex Medical started out distributing only diabetic supplies, like
glucometers and strips; the durable medical equipment (DME) business eventually
added pedorthics as an ancillary service, and it has become one of the
company’s main sources of revenue. These days, Zaffater said that he touts
ancillary products such as over-the-counter remedies for arthritis, such as
moist heating options, and pain management products, like cold therapies, along
with his pedorthic options. Specializing in the home health market also allows
Artex room to offer ostomy and catheter supplies, which are not ancillary to
pedorthics, but align with the company’s goals within in-home care.

“We stuck with our expertise. We have pharmacists and CPeds, so
everybody we have is professional and/or clinical,” he said. “It
gives us legitimacy with our referral sources and in the industry.”

Dennis Clark, CPO, president of the Orthotic and Prosthetic Group of
America (OPGA) and of Clark and Associates in Waterloo, Iowa, agreed that it is
not enough to add the obvious.

“My thought process is to go beyond where other people are
going,” Clark said.

While competing O&P practices in the area might offer pedorthic and
post-mastectomy services, he suggested taking that one step further. Instead of
simply offering post-mastectomy prosthetic devices, for example, these
providers also should offer some cash items and develop a specialty boutique.
He also suggested services like functional electrical stimulation for
ambulation, pain management options and oxygen-delivery systems for wound care.

Logistical issues

Clark suggested setting up a focus group to determine how best to
capture a certain portion of the market. By gathering together the potential
users of a service, business owners can increase their awareness of the need
and get information from those users about their perspective of what is needed.
Good business sense dictates collecting that information prior to committing to
the addition.

“You’re always going to have to change your strategies or
tactics just a little bit, but by talking to the beneficiaries of that service
first, you may be closer to your ending point than your starting point,”
he said.

Among the main points to note when considering adding an ancillary
service, McClellan told O&P Business News, are whether or not
there is a need for that particular service in the practice area, and if there
are other businesses that already provide that service in that area. If all
potential patients receive this product or service from another source, it
might not be a smart business decision to enter the competition.

Business owners also should evaluate the initial expense of adding this
service — including an increase of products, supplies and staff — and
compare that to the projected profits. In some circumstances, business owners
may need to either hire appropriately trained personnel or fund training for
existing staff members, depending on specific criteria or certifications
required to provide the particular service, McClellan said.

Other considerations

Zaffater agreed that business owners should thoroughly research
potential ancillary products or services to determine which options best align
with their business models, which would be a detriment to the business and
would create an unfavorable amount of extra effort for the office’s staff.

Increasing a company’s bottom line is beneficial, of course;
however, hiring an employee with additional billing experience, learning a new
billing system and adding a delivery driver to the payroll, for example, might
make it more difficult to break even with current sales numbers.

Providing DME services, McClellan added, requires facility
accreditation. Since orthotists and prosthetists have been exempted from
accreditation by the Secretary of Health and Human Services, many facilities
may not meet that requirement. O&P business owners wishing to add DME
services “would first have to meet all standards and costs associated with
accreditation,” he said.

Another disadvantage is that adding services adds a new set of
competitors — and could strain necessary relationships.

  Image: © 2011 Bachman

“If you went so far as to add a therapist to your staff, privately
owned or hospital-based therapy practices might now consider you a
competitor,” McClellan said.

Those practices might become reluctant to offer up their patients, which
has the potential to negatively affect your referral base, he said.

Zaffater also warned against compromising the legitimacy and
professionalism of the business.

“I think each time you try to expand your revenue base, you have to
be careful that you don’t offend the revenue base that you are primarily
trying to garner,” he said.

A comprehensive budget and business plan for the new product or service
will outline the parameters of the addition — but when the business stops
meeting its targets, shut it down, Clark said. Although adding an ancillary
service can benefit both the patient and the business owner, it also has the
potential to overwhelm the business.

Benefits to add-ons

The primary benefit to the patient, of course, is convenience, McClellan

“If they can get an additional service while at your practice, it
can save them a trip elsewhere to find the same service that you are
offering,” he said. “As a practitioner, you are caring for more than
one need that they have, and can therefore provide care from a broader
perspective than otherwise might be received by going to several different

This strategy can increase traffic to your business, since patients
visiting your practice for specialized products are likely to consolidate their
list of practitioners in favor of a one-stop shop.

Under these circumstances, patients simply could visit their local
O&P office instead of the pharmacy for products like splints and inserts.
Clark stressed that business owners should not underestimate the benefit of
those cash sales.

“It’s another way to turn the care extenders that you have
— and in some cases with pedorthists and credentialed mastectomy fitters
— into revenue producers, utilizing the same space and maybe no more than
a little bit of inventory cost and space,” he said. “We bring
patients in and we sell them that pair of diabetic shoes, but if we had the
ability to have a broader line of those same shoes, they might buy more than
one, paying cash for the other one.”

He pointed out that independent shoe stores are going out of business in
many communities — replaced only by shoe departments of larger stores. By
providing good service and good quality shoes, business owners can create their
own niche market and attract customers who are tired of typical mall traffic.

“Anything that you can do that draws awareness to your location and
to the other services that you provide creates more traffic and a larger
percentage of O&P referrals coming to you,” Clark said.

O&P as the ancillary service

Increasing your own offerings, patient base and revenue is the ideal
scenario, but what about when larger health care entities — like
orthopedic and physical therapy practices — increase their offerings to
include the O&P services you already provide?

Zaffater said that concern is not as large as it initially seems. For
one, there are plenty of patients to go around, and each segment of the market
has its own particular patients. Additionally, O&P providers offer a
specific service and level of expertise to their patients that they are unable
to receive elsewhere.

“If you provide good service and good products, the patients will
follow,” he said.

This rule has exceptions, which Zaffater illustrated with the example of
a bunionectomy. When orthopedic surgeons do this surgery, they get reimbursed
for the surgery, and the billing for wound healing and rehabilitation products
and services comes from physical therapists, podiatrists, DME companies and
O&P professionals. When podiatrists do this surgery, however, they use
their billing codes to get reimbursed for the surgery, as well as for the
healing boot, the crutches and any other necessary products.

Clark emphasized the importance of O&P practitioners truly owning
the profession, and being responsible for their own success.

“I think it’s important that O&P professionals do a good
job of managing the contracting process with third-party payers, that they do a
good job of being visible in their community as quality O&P providers, that
they stay up with current technologies, and that they have an understanding of
what these other companies have to offer,” he said.

Once they become aware of this new competition, practitioners also
should educate patients about their rights. Just because a patient’s
orthopedic surgeon has added O&P services to the practice does not mean the
patient must receive those services there. Arming patients with that
information helps them make the choice to stay with a dedicated O&P

“There’s not a tremendous regulatory constraint, so
you’ve just got to be good at what you do and provide superior quality
care,” Clark said. “The third-party payers need to know that when
they work with you, their patients get what they are paying for, and that
outcomes are a big part of what you’re trying to create with the orthotic
and prosthetic management.” — by Stephanie Z. Pavlou

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