Considerations for Ancillary Services and Products in a Dermatology Practice

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As the field of dermatology continues to evolve with technology, the incorporation of ancillary services and products within practices has become increasingly significant in terms of potential revenues and profits, as well as complexity and potential risks. Adding additional products and services can improve patient care, satisfaction, and loyalty but may also increase costs, compliance, and potential liability. In this article, we explore some of the top considerations involved in offering ancillary services and products.

Benefits of Offering Ancillary Services and Products

Enhanced Patient Care

By offering a wide range of services, dermatologists can provide a holistic approach to skin health. This includes not just treating conditions but also offering preventive care and aesthetic improvements, all of which can combine for better overall patient outcomes and satisfaction. When patients can receive multiple services under 1 roof, it saves them time and the inconvenience of visiting multiple specialists. This integrated care model is particularly beneficial for busy patients and can significantly improve their overall health care experience.

Increased Revenue Streams and Profitability

Ancillary services, from more traditional services such as laser treatments, chemical peels, and cosmetic procedures, to skin products, to less dermatology–related services such as weight loss programs or cryotherapy, can significantly boost a practice’s revenue on a top-line basis. Many ancillary services and products often come with higher profit margins. This is especially true if they can be delivered without any time involved from the physician, using only physician assistants or other extenders. Of course, stand-alone products, as opposed to services, rarely involve a physician’s time.

Improved Patient Retention and Satisfaction

Offering comprehensive care encourages ongoing patient engagement and loyalty. Patients are more likely to return to a practice that meets a wide range of their medical, cosmetic, and lifestyle needs. By addressing a broader range of patient concerns, dermatologists can enhance patient satisfaction. An example of this might be a weight loss program, for which the target client is different from patients the practice has attracted in the past.

Five Considerations for Integrating Ancillary Services and Products

1) Staff Competency

It is crucial that all staff members delivering specialized services be adequately trained and certified. This not only ensures the safety and efficacy of treatments but also builds trust with patients. Even if there is less of a safety concern, as with stand-alone products, staff training on which products will be most beneficial for each type of patient is important.

2) Quality Control and Product Selection

Choosing the right products and maintaining high standards of service is vital to the success of ancillary offerings.

• Choosing reputable brands: It is important to select products and equipment from well-established, reputable manufacturers to ensure high quality and patient safety.
• Maintaining high standards: Regular reviews and updates of service protocols help maintain the quality and reliability of ancillary services.

3) Marketing and Patient Education

Implementing new ancillary products or services only makes sense if your patients will be aware that they exist. Effectively marketing to and educating patients about the products and services’ benefits and potential risks are key to their successful integration.

• Effective communication strategies: Effective use of various marketing channels, such as social media, practice websites, and patient newsletters, can effectively inform and attract patients to new services.
• Educating patients on benefits and risks: Transparent communication about what patients can expect from new treatments helps to set realistic expectations and enhance patient trust and satisfaction.

4) Regulatory and Compliance Issues

Avoiding legal pitfalls: Proper documentation and compliance with medical guidelines are necessary to mitigate legal risks. This includes maintaining detailed patient records and ensuring that all procedures are performed according to regulations.

Dermatology practices must stay updated with the latest guidelines and regulations to avoid legal issues and ensure high standards of care. Often these compliance regulations are state-based, and there can be a high level of complexity and even contradiction and vagueness in rules. Be sure to work with an expert compliance attorney to be well guided, and apprise them of any new products or services you are considering adding to the practice early in the planning process.

In our podcast “Wealth Planning for the Modern Physician,” we interviewed a very successful dermatologist who is also an attorney and law school professor. He was quite clear in the interview that he shied away from being the first to move toward a new technology to treat patients because of liability concerns. He advised waiting a bit to understand the risks of new treatment modalities, as well as how government departments will regulate them, to steer clear of potential liability.

5) Financial Investment and Return on Investment

While ancillary services can be profitable, they require significant initial investment and careful financial planning.

• Initial setup costs: The cost of new equipment, training, and product stocking can be substantial.
• Assessing profitability: Regular financial analysis is necessary to ensure that the investment in ancillary services pays off.

Dermatologists should implement financial models to forecast the potential return on investment of any new product or service. Working with one’s practice manager, chief financial officer, certified public accountant, or outside consultant is critical.

Conclusion

Integrating ancillary services and products into a dermatology practice offers numerous benefits, including enhanced patient care, increased revenue streams, and improved patient satisfaction. However, it also requires careful consideration of training, quality control, marketing, and regulatory compliance. By addressing these considerations and effectively managing challenges and risks, dermatology practices can successfully incorporate ancillary services and products to provide comprehensive care and achieve financial growth.

David B. Mandell, JD, MBA, is an attorney and author of more than a dozen books for doctors, including Wealth Planning for the Modern Physician. He is a partner in the wealth management firm OJM Group
(www.ojmgroup.com).

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