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Ancillary Revenue Streams for Private Practices

One of the benefits of being a partner in a private practice is that you have the ability to develop additional ancillary revenue streams that aren’t directly tied to your seeing patients.  In other words, you are also a business owner that shares in the profits of other lines of revenue from the practice. This truly can be passive revenue for physicians, so it’s something that is very attractive to physicians who are considering private practice partnership.

In other cases, these revenue streams can mean more work or administrative burden, but again, provide a nice source of additional income in the face of rising overhead and declining reimbursements.

Whether you are a solo private practice or a group practice, it’s worth considering the different ways you can generate additional income from your primary place of business. As an added bonus, some of these lines may boost your primary practice, as well as offer your patients convenience and better outcomes. Below, we consider various revenue streams practices often add, and the pros and cons of each.

Ancillary revenue options for private practices

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15 Ancillary Revenue Stream Options for Private Practice Owners

A note about careful financial projections and legal due diligence. 

Before you spend the time, money, and other resources into developing these additional private practice revenue streams, make sure you do your due diligence as it pertains to your practice in particular. You need to make sure the increased overhead and opportunity cost/time associated with creating and developing these revenue streams is offset enough by the projected income that it is worth your while.

Just because somebody tells you it worked for them does not mean that it will work for your practice or your patient demographics. 

Some things to consider:

  • how often you are referring these services out

  • the reimbursement for these services with your payer mix

  • how much hiring and/or training will cost

  • the logistics of how these services will be delivered and billed

Keep in mind MACRA considerations that may limit billing. Modifier -25 codes have come under scrutiny a lot lately, and could result in nonpayment by several payers, so it’s important to consider your particular payer mix, whether patients would be willing to come back on a different day for these services, and more.

Paying a practice consultant to run a pro forma for you based on the specifics of your practice and market is a worthwhile investment if you are not sure you’ve made the correct assumptions. 

Additionally, make sure you speak with a healthcare attorney if there is any concern for Stark law violations, which need to be carefully monitored, as the penalties here can be devastating.

1. Real Estate

Real estate is an obvious option for private practices to consider, as they need office space regardless of whether they own it or not. While it's important to be cautious about jumping into real estate from the get go, once a practice is established, this is a direction many practices eventually head in. Many doctors starting a private practice will first lease space and see how the practice takes off before putting down more capital. Once the practice is established, it’s worth asking yourself how much money is left on the table because of monthly lease payments. 

Instead, consider owning the real estate, and leveraging your practice as a tenant. If you and/or your partners own the medical office space the practice uses, then that office space can be rented by the practice. Therefore, one company owns the building, and the practice rents from that company.

By owning all or a portion of both companies, you can turn practice expenses into rental income. In larger practices, the real estate ownership often has a separate buy in process given its immense value. 

The lease is typically structured for a number of years, which will drive the valuation of the building. When considering real estate ownership, keep in mind building medical office space can be quite expensive, and you always need more space than you think you do. Should the long-term planning be well-thought out, the building will appreciate over time, yielding an additional bonus payout at the time of sale.

2. Subleasing Medical Space within Your Practice

Additionally, if you have unused or extra space in the building, this can be leased to another medical practice. A big benefit of this is the potential to share some overhead with resources used by both practices, such as front office staff, cleaners, etc.

The space can also be leased to non-physicians such as practice adjacent fields like masseuses or physical therapists, who could increase referrals to your practice if the business is one that has overlapping clientele with your patient population.

It can even be leased to completely non-medical companies if the space is appropriate. After all, many medical practices occupy prime real estate locations. While there are a number of ways to structure the lease, a triple net lease allows for the tenant to pay for all building expenses and upkeep and is generally advised.

3. Ambulatory Surgery Center

If you happen to be in a procedural field and your local market and CON regulations allow it, an ambulatory surgery center can be an excellent way to augment income streams. If you have enough clinicians to ensure good utilization and are able to operate the facilities efficiently, ambulatory surgery centers can be extremely lucrative.

Learn more about buying into an ASC.

4. Clinical Research

Clinical research is a wonderful way to add income streams to your practice, as well as contribute to science. By joining up with clinical research organizations or pharmaceutical companies conducting research, your practice can offer new clinical options to your patients with certain conditions while adding to the diversity of patients in clinical trials, thus advancing science. Because academic medical centers tend to attract a specific demographic of patients, much of the medical world is now realizing that a lot of clinical trials would benefit from more diversity in their patient base and are trying harder to access patients from the community instead of just tertiary care centers.

The revenue from these clinical trials can be quite significant. You can choose to be very hands on and run the trials yourself as the PI and supply the staff, or can use the help of a clinical research organization that can get you approved for trials and get you up and running. Some of these will even supply clinical staff to help you run operations.

Learn more about clinical research.

5. Remote Patient Monitoring

If you are in a field where there are lots of chronic medical issues that require monitoring or have a patient population that would benefit from check-ins, remote patient monitoring can be a very attractive way to add revenue to your practice. Some concrete examples include medication compliance and 24 hour glucose monitoring.

Depending on how involved you want to get, there are companies that will either handle all the operations and allow you to make relatively passive income, or you could manage a larger portion of the operations and keep more of the profits.

Learn more about remote patient monitoring.

6. Prescription Fulfillment

This is a heavily regulated space. Some states prohibit the sale of drugs and others require specific certifications or compliance disclaimers. It’s important to know the laws in your state if you are looking into dispensing drugs in your office.

Additionally, you will want to look at your payer mix as many insurance companies have associated prescription drug plans or perks that require or encourage patients to fulfill their prescriptions with certain vendors. Staff may need to be trained to handle and dispense these medications in compliance with regulations, and some malpractice carriers will raise premiums if you offer this in your office.

Despite these hurdles, if you are able to do this in your state, and your practice has a patient population that would benefit from this service, it’s worth looking into. In addition to the revenue stream, it offers convenience for patients, as well as a possible increase in medication adherence as they leave the office with the medication in hand. Many offices that try this out start by carrying low cost generic drugs before stocking expensive drugs, especially if they come with storage requirements that increase overhead and equipment needs.

7. Product Sales

If your practice is constantly recommending buying certain products, such as skin care lines, glasses, books, or equipment, consider selling them within your practice for a profit. Here, you typically take advantage of buying at wholesale prices and selling at market prices, similar to other stores. Make sure that the structure of this business line is appropriate.

In some cases, groups will even develop their own product lines, which allows you to keep even more of the profit margins, and opens up the possibility that other practices or patients around the country may order from you. Often times this is white-labeling an existing product, so the opportunity cost of developing a product may be less than what you think.

8. Billing Services

Revenue cycle management is a multibillion dollar industry given the obvious complexities involved in managing contracts with insurance companies, handling CMS policies, and ensuring a high rate of clean claims. If you are able to develop a seasoned team of billers and coders, this staff can be utilized as an outsourced component of the practice. This model typical charges a fee of a set percent for processing and handling all billing and coding for other practices.

While this requires an outlay of significant capital to hire well-trained personnel, multiple contracts an be maintained to provide billing services to smaller groups.

9. Lab and Pathology Services

Another common method to grow passive revenue is to develop pathology and laboratory services. Blood draws and histopathology are the two most common examples, but there can be more.

It's important to check your payer contracts to know what is required. For example, you may need to have a CLIA (Clinical Laboratory Improvement Amendments) certification. Many procedure and pathology specimen heavy practices such as gastroenterology and dermatology choose to bring these services in house not just for revenue, but for better turn around times and the ability to get to work with their pathology team more closely.

10. Imaging Services

Large primary care groups or groups that order a lot of imaging often decide to bring services in house. In addition to additional revenue streams, patients benefit from the convenience of completing these tests immediately. Some examples include orthopedic and primary care groups offering x-rays, CT, and MRI and REI and sports medicine groups offering ultrasound services.

Imaging equipment is often very expensive, and also requires technicians and compliance with safety protocols and regular maintenance. Make sure you have the volume to make these lucrative enough to offset the costs, both in monetary and labor terms. When doing this pro forma, also give yourself generous margins for declining reimbursements, particularly as office reimbursements for the technical fees are significantly lower than hospital technical fees.

11. Other Diagnostic Services

Similar to laboratory and imaging services, there are many other tests often ordered by physicians’ offices that could be cost efficient to bring in house. Some common examples are EKGs, Holter monitors, or incentive spirometry. Often, machines can be rented instead of purchased, or purchased used. 

12. Specialty Adjacent Physician Services

If you are in a specialty where you are often referring out services, consider bringing these services in house by hiring a physician either as an independent contractor or an employee, or forming a multi-specialty group. For example, orthopedic practices sometimes incorporate physical and occupational therapy and pain management services, in addition to the imaging services mentioned above. Psychiatry practices may bring in other mental health professionals and testing services.

Specialties that refer to each other often bring in other physicians either as partners or employees, such as plastic surgery with dermatology, ENT with allergy, orthopedic surgery with physical medicine and rehabilitation, and so forth. By sharing overhead and having built in referral streams, this can be extremely beneficial to the success of both practices.

13. ACPs/Nurse Injectors/Aesthetician Services

A significant source of revenue for many healthcare practices is the appropriate utilization of midlevel support with appropriate supervision. For example, supervised advanced care practitioners can run their own clinics and generate their own billing and collections. If they are on a salary with incentive contract structure, their surplus revenue becomes passive income for the practice.

For aesthetic practices, nurses can be utilized as nurse injectors for neuromodulators and fillers, and aestheticians can be brought on for med spa services. While adjunctive devices such as lasers can be expensive, an appropriate pro forma should help you determine whether this makes sense for your practice.

14. On Call Services

Sometimes, practices will contract with other small private practices or local hospital systems that don’t have employed physicians in their specialty (or enough to cover their call requirements) to provide on call services. This can be a very beneficial situation for both parties, as it allows hospital systems to qualify for a certain level trauma center or allows a solo practice physician to take vacation or get a break from call. 

15. Ancillary Cash Pay Services

Depending on the structure of your practice, some physicians may elect to have ancillary services that pay cash. We mentioned aesthetic services above, which are also sometimes done by appropriately trained physicians. Another example may be a pediatrician who does ear piercings or circumcisions.

Some physicians will also offer joint injections, dietary counseling, laceration repairs, or other services of interest to their patient population. Obviously, it’s important to get whatever training is necessary to perform these services, as well as check with your malpractice carrier to ensure these services are covered.


While every practice, patient population, and payer mix is different, these are common ways in which practices choose to add revenue streams to their practices. It is very important not to jump on the bandwagon with these options prior to doing proper due diligence with careful projections specific to your practice. Discuss with advisors, such as practice consultants and attorneys, to ensure you are aware of local regulations and market factors. Also talk with your private practice partners about the pros and cons of pursuing each line.

In a changing healthcare landscape where overhead is soaring for most practices, these additional revenue streams can be a great way to bolster and preserve income, with many of them coming with the added benefits of increasing patient satisfaction, convenience, and outcomes.

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