Mobile ancillary services let physicians rent

Physicians at The Longstreet Clinic in Gainesville, Ga., no longer have to send patients to the local hospital for outpatient gynecological procedures. They don't even have to make room to store the necessary equipment in their office.

Instead, the 10-physician ob-gyn group rents the equipment on an as-needed basis from a local company, which wheels the machines right into the clinic's procedure room.

For the patient, the arrangement offers convenience and a chance to forego general anesthesia because of advanced technology.

For physicians, it offers a higher reimbursement rate, because insurers pay a site fee that normally would go to the hospital in addition to the typical procedure fee.

"There's a considerable advantage for us to do it here," said Zack Dillard, MD, an ob-gyn with the practice.

"For some reason, the reimbursement is better if we do it here than in a hospital. This is really for the benefit of the patient as well as the physician," he said.

Expansion without investment

More physicians are investigating mobile services as a way to enhance what they offer in-house and build revenue without making a large capital investment.

There are companies that provide imaging and surgical support services, and they cater to most specialties -- from primary care to cardiology and neurology. They allow practices that might not generate large procedure volume a chance to care for patients without sending them to the hospital.

But there remains skepticism about the idea, as some physicians and consultants say a practice would be better off acquiring the equipment outright.

Renting equipment by the day or hour is an extension of the classic leasing-vs.-buying argument that swirls in health care circles.

Ultimately, it comes down to planning and crunching the numbers, said Deanna R. Willis, MD, medical director of quality and medical management for Indiana University Medical Group in Indianapolis.

The importance placed on factors such as patient convenience and excess capacity will determine how you approach an equipment acquisition, she said.

"You want to maximize the utilization of the equipment," Dr. Willis said. "But if you're working on a small margin, you have to plan it very closely, or you could lose financially."

Cost and convenience

Consultants say temporary rental agreements could add scheduling headaches, both in terms of lining up patients and freeing up space on days when the equipment is available. Given the choice, they say, many practices would prefer to keep the equipment on a full-time basis, which would mean shorter wait times for patients and a greater return once you have covered monthly costs.

Renting equipment by the hour or day implies you don't have the volume to support a full-time acquisition, which means patient convenience could suffer as a result, said health care consultant Bill Bristow, a partner with DoctorsManagement in Knoxville, Tenn.

"If you've got [a procedure] every week or two, then you have to queue up patients, and you need a critical mass to justify bringing in the equipment," Bristow said.

On the other hand, buying the equipment requires more full-time staff, which adds a layer of human resources hassles and more overhead costs. A temporary rental arrangement avoids those costs.

Another company, Charlotte, N.C.-based Insight Imaging LLC, offers a per-diem rental fee for its ultrasound equipment or a straight referral contract, where the company regularly rents space from the practice, performs the diagnostic tests and handles billing for the imaging services provided.

Steve Mauldin, the company's CEO, said many physicians who contract for imaging services are starting to choose the per-diem rental arrangement, because they can bill for the site fee.

Fair market value important

As with a typical equipment lease arrangement, renting equipment by the day or hour can fall under in-office safe-harbor provisions of Stark self-referral laws, provided the physician is paying fair market value for the equipment, said Kathleen McDermott, an attorney and partner in the Washington, D.C., office of Blank Rome LLP.

Some mobile-service companies are seeking physicians to invest in their businesses as a way to build credibility in a new market. But McDermott said an arrangement where a physician invests in and contracts with the business "clearly raises a concern" with regards to Stark and antikickback laws. As with any business opportunity, physicians should consult an attorney before making a decision.