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 Ms. Woodcock |
But thus far, the recession has shown the potential downside of the scenario — and brought a healthy dose of caution to the trend.
 Mr. Reiboldt |
"Not only are there new challenges in terms of whether there will be demand for the services among patients, but even if there does appear to be a demand, obtaining financing is going to be a whole other challenge."
Misjudging the level of that demand is, in fact, one of the biggest mistakes practices make in taking on such services, Ms. Woodcock notes. "Most people are pretty good at getting the cost down and they fully address things like how much space they need, who will perform the procedure, etc."
"But they have this overzealous projection of how many people actually want it and how much they will pay for it. And that's when they run into trouble." Exacerbating the problem are sales reps, who are, of course, just doing their own job of pitching their products, but physicians need to keep a realistic perspective on the true demand they can expect.
"The practice needs to be cautious because 99 percent of the time, the vendor is not going to be," Ms. Woodcock relates. "He or she wants to sell a system, but the practice needs to say, 'Do we really have the patient demand and are the patients going to be able to pay for the services?'"
Ms. Woodcock recommends taking steps such as surveying patients or simply talking to them to gauge their interest in the service. A good vendor, she adds, will give the realistic pros and cons of the aesthetic device being considered. "But again, keep in mind that they want to sell it," she adds.
FIND WHAT'S FEASIBLE Ideally, these steps should be part of a broader and more formal feasibility study, which most potential lenders will require anyway. In a paper outlining recommendations for introducing ancillary services, medical practice consultant John Reiboldt suggests looking at a wide range of factors in a feasibility study, including payer composition, demographics, competition, referral base and opportunities. Mr. Reiboldt, who is vice president of Coker Capital, part of The Coker Group in Alpharetta, Ga., suggests the details of the feasibility study should applied in a financial context to provide the answer to whether the ideal truly does make financial sense. [Editor's Note: Ready to test how feasible adding that new service is? See "Maxing Out" on Page 20.]
Once feasibility for the plan has been established, the next step should be to put together a solid business plan for the planned service addition or extension — even within a practice that is already well-established, Mr. Reiboldt advises. "You need to map out the course of your practice with the services, and your business plan will be that map. Of course there needs to be flexibility in the plan — it should be a dynamic plan — but you've got to have a plan, with goals."
