Five ways to thrive with private-pay service lines

These points can guide a practice in rethinking its business model.

By Bill Kekevian, Senior Associate Editor

Daniel Durrie, MD, has opted out of Medicare. In fact, his Overland Park, Kan., practice does not accept any insurance, period. Operating a fully private-pay facility isn’t common, but Dr. Durrie believes doing so keeps him independent of both corporate health network behemoths and stifling government regulations.

“It’s freeing not to have to jump through these third-party hurdles,” Dr. Durrie says. From ICD-10 updates and regulations on self-referral to Meaningful Use and EHR implementation, those hurdles are plentiful.

Dr. Durrie’s commitment to keeping his practice independent explains his latest business venture, Alphaeon Corporation, of which he is the chief medical officer. Alphaeon is a company on a mission to facilitate private-pay procedures throughout medicine. Practices can access Alphaeon’s consulting network and services, including software, a training program, and a patient-finance model, through a subscription.

DO IT FOR THE RIGHT REASONS

Not every practice is ready to follow Dr. Durrie’s lead and dismiss third-party payers altogether. However, some degree of change may be necessary to keep a practice financially viable, according to Robert Grant, Alphaeon co-founder and CEO. “If you only stay focused on government and insurance-company reimbursements, you’re going to be facing lower and lower reimbursements and working longer hours for less compensation,” Mr. Grant says.

For doctors interested in creating new revenue streams without rewriting their entire business model, implementing some private-pay procedures may be an option. However, do it for the right reasons. “If you’re just doing these procedures to make more money, it’s going to be difficult,” says Michael E. Migliori, MD, an ophthalmologist in Providence, R.I., and president of the American Society of Ophthalmic Plastic and Reconstructive Surgery. Adapting private-pay procedures requires a different approach than ophthalmologists may be accustomed to, he says.

Here are five ways a practice can succeed when implementing private-pay procedures.

1. PREPARE FOR HIGHER PATIENT EXPECTATIONS

“You have to learn to deal with patients who have higher expectations and who are more demanding and more critical,” says Dr. Migliori. “You’re in more of a consumer world and you have to be prepared to handle that. It’s not always as easy as simply adding a new procedure to the practice,” he says. “To be successful you have to know how to run that kind of business.”

To meet these higher expectations, a practice should consider how to improve the patient’s experience at every step in the process. You want to create “a boutique environment,” says Elizabeth Holloway, senior consultant with BSM Consulting. The boutique environment means reevaluating both your practice’s physical and social presentation.

“The waiting room has to be nice,” Dr. Migliori says. Ms. Holloway recommends soothing, classical music and finer attention to interior design.

“When the patient comes in, the front desk should stand up and greet them and call them by name,” Ms. Holloway says. “Everyone should be nice and personable on the phone. Before they have the procedure, someone should outline for patients precisely what the costs will be so no one is surprised. And then you have to have people who are very knowledgeable to explain postoperative care.”

Because patients looking for private–pay procedures are not necessarily ill, they are not pressed for time. That means they have the luxury of being able to shop around, Dr. Migliori says. “They may visit two or three people or talk to other patients who have been there,” he says. They’ll be looking for “a lot of hand-holding” and a staff attuned to when a patient struggling through the healing phase needs some positive reinforcement, he says.

2. PLAY TO YOUR STRENGTHS

Naturally, the first step to implementing private pay, or elective, services is to identify what service lines you intend to offer. These can include refractive procedures such as LASIK or the use of presbyopia-correcting IOLs following cataract surgery, but also cosmetic procedures and oculoplastics.

Some of these services have considerable overhead costs, Dr. Migliori says. “To offer state-of-the-art patient care, some cataract surgeons have added a femtosecond laser, which can increase refractive volume, but also must be feasible for practice expenses,” according to Ms. Holloway.

Mr. Grant advises ophthalmologists look to other medical disciplines for guidance. “Certainly, the aesthetic market is a big one,” he says. “That’s an area I think is going to continue to grow because we see this aging population go more and more toward wanting to have better wellness, beauty and performance in their lives and we tend to see a lot of adoption in that area.”

“Botox [onabotulinumtoxinA, Allergan, Irvine, Calif.] only lasts about three months, so doing injections for crow’s feet is a good place to start,” says Dr. Migliori. “Fortunately, there aren’t many serious side effects with Botox. If the results aren’t that great, it wears off. Any effect isn’t permanent.”

Doctors may find success by expanding on areas with which they already are familiar, Dr. Migliori adds. “Blepharoplasty folks have had some experience with Botox; they’ve learned it in their training,” he says. “Maybe you have older patients with visual problems because they have skin hanging over their lashes. The injection technique is the same; you’re just doing it for a different reason. Paying attention to how functional blepharoplasties look afterward gives you a feel for what you need to do to make the aesthetic blepharoplasty successful.”

That’s not to say doctors won’t find success in non-aesthetic electives. “Even though LASIK volumes have been pretty depressed recently, I think there will be a lot more elective lens replacement procedures in the near future,” Mr. Grant says. “I also think there will be a re-uptick in LASIK procedures over the coming years and maybe even new modalities on how to approach the LASIK procedures. I think presbyopes will also see an increase, and all of those are going to be elective.”

3. CHECK STATE MEDICAL BOARD REQUIREMENTS

It should go without saying that for any procedure a doctor takes on, researching training and certification requirements are necessary. Physicians should be certified to perform even seemingly minor procedures, such as Botox injections and injectable dermal fillers.

“Check with local state or county representatives about the requisite licenses,” Ms. Holloway says. For instance, in Florida physicians must obtain a license to distribute Latisse (bimatoprost 0.3%, Allergan), a solution designed to enhance eyelash prominence, according to Ms. Holloway.

Although most residents get some experience in refractive surgical procedures, Dr. Migliori says, “A lot of these procedures are not something you can just read about and do. You need to know the capabilities and the risks.”

His group hosts an annual meeting at the AAO with one day devoted to aesthetic procedures.

“It’s critical that you know you’re going to get good results before you start doing a procedure, and that you’re not going to hurt people,” Dr. Migliori says. “For instance, if you’re trying to do things that Botox cannot do, you’re going to end up with, at best, a disappointed patient who is now out of money. That patient is going to spread the word that you don’t know what you’re doing.”

4. CONSIDER AUXILIARY SERVICES

Ophthalmologists have expanded their practices by bringing in dermatology and audiology services.

“A lot of practices have added hearing centers,” Ms. Holloway says. “Many end up having an audiologist come in. Typically, the practice will employ the audiologist or the hearing tester and buy the equipment. They simply come into the practice and are there during certain hours to provide free hearing tests.”

Based on those screenings, the audiologist can offer patients hearing aids, with a percentage of each hearing aid sold going to the practice. “It’s a way to create passive revenue, as are offering vitamins or cosmetic procedures,” she adds.

“It certainly makes some sense to partner with other specialties,” says Dr. Migliori. “Patients like that convenience of being able to come in to take care of more than one thing” For instance, if an ophthalmologist partners with a dermatologist, a patient can take care of eye care and skin care in one setting. “That’s being done all over,” he says.

5. MARKET YOUR PRIVATE-PAY SERVICES

A key step to serving patients willing to pay out-of-pocket is finding them and bringing them in the door. That means investing in advertising. To be successful there, you have to know your analytics. “Younger patients are more drawn toward Botox and fillers,” Dr. Migliori explains. “If you’re advertising in senior centers for cataracts and that sort of thing, you’re not going to get the 50-year-olds who are looking for a little rejuvenation. You need to be able to target the folks who will benefit most by what you have to offer.”

The most successful practices consistently analyze and manage their advertising dollars, Ms. Holloway says. “When you’re driving a fee-for-service line of business, there’s a heightened sense of needing to let patients know what you’re offering,” she says.

A Luxurious waiting area is one way that Dr. Durrie’s practice creates a boutique atmosphere.
COURTESY: DURRIE VISION

Alphaeon helps its members with advertising analytics through its Alphaeon MD software suite, which shows practices how to track patients from the point when they first see the practice’s advertising. It also includes automatic scheduling of appointments and sends appointment reminders to patients. “It can all be done on your iPhone,” says Mr. Grant. OM