Ancillary Providers

A Guide to Ancillary Care for Providers

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A Guide to Ancillary Care for Providers

Ancillary care services are one of the fastest growing sectors in healthcare—almost 30% of all medical spending falls under this category. For primary care providers, choosing to partner with ancillary services come with many benefits and drawbacks.

Partnerships can help capture lost revenue and offer patients a choice in their treatment plans. Yet there are risks involved, and they must be weighed against owning ancillary services and offering them in-house.

What are the most common pitfalls, and how can you maximize the benefits ancillary care offers?

Let’s dive in.


To start, what are ancillary services? Ancillary services consist of three primary categories: diagnostic, therapeutic, and custodial services.

When including these ancillary care services into a practice, the primary objective is to keep things adjacent to your current care offering. This provides several many benefits such as:

  • Convenience for patients and practitioners
  • New revenue streams that are both lucrative and attractive
  • Rapid results for diagnostic services
  • Increased engagement with existing and new patients

Needless to say, these services have enormous potential for any practice. Where most physicians get stuck is in the implementation of ancillary care into their current model. For this reason, many choose to use vendor services, although other options are available.


The benefits ancillary care services provide to your practice are numerous. Revenues have been declining steadily for physicians, and experts agree that providing ancillary services helps net profits that are normally lost when patients are referred to other specialists.

But before including an ancillary practice into your facilities, consider how you are planning to integrate it. There are three ways in which ancillary care can be added into your practice:

  • Complete ownership
  • Co-ownership
  • Utilizing a vendor

Each of these comes with perks and drawbacks.

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Full Ownership of Ancillary Services

When you control your own ancillary services, you are in charge of all operations. This will allow you to net the maximum amount of profits should the service turn a hefty profit. However, this means fronting all of the costs yourself, including:

  • Rent
  • Equipment
  • Staffing
  • Accreditation and training
  • Legal fees

When looking at the full list of ancillary services in healthcare, for some services like diabetes education and telemedicine, implementation costs are minimal. Others, like radiology and medical spa services, can cost hundreds of thousands of dollars to install due to construction and equipment costs.

If you intend to take full ownership over your ancillary care services, keep in mind that all profits—and expenses—are yours. For better or for worse.

Co-ownership of Ancillary Services

If you share a building with other physicians, consider ancillary services that you mutually benefit from. Co-ownership of ancillary care services cuts down the necessary expenses and provides all included parties with convenient care options.

This method lowers overall costs by a substantial amount, but also cuts deeply into profit margins. If providing convenience is your priority, consider this model.

Utilizing a Vendor’s Ancillary Services

Partnering with a vendor is an excellent alternative to holding complete control over your ancillary care services. By doing this, a physician is able to avoid staggering expenses. Vendors can provide:

  • Minimal setup costs
  • Professional marketing
  • Experienced management

Every relationship with a vendor will be different, and it is important to be cautious and perform research before settling with any particular option. In general, you can expect for a physician to refer patients and split profits based on fixed compensation. But before signing on the dotted line, be wary of legal snares.


There are several things to keep in mind when using ancillary vendors—failing to do so can land you thousands of dollars in fines and potential jail time. Compliance with the AMA’s Code of Ethics and the Stark Anti-Kickback Law, means watching for these red flags:

  • Do Not Accept Finders Fees For Referrals – If choosing to partner with a vendor, compensations should not be volume-based. Compensating fixed rates at fair market value is advised.
  • Provide Referral List of At Least 5 Other Facilities – To avoid violation of kickback law, providing alternatives to in-house solutions is advised.
  • Research the Vendor – Before signing any agreements, doing a background check for any legal issues in the past can provide insight on the group you are forming a contract with.
  • Review Your Agreements – Look over any existing agreements you may have before starting an ancillary practice. Managed care agreements, rental agreements, and medical liability policies may affect the terms by which you can use ancillary services.


The world of healthcare comes with many pitfalls. Having experts on your side like PayrHealth can help you craft a sound strategy before committing to services you may come to regret.

For over 25 years, PayrHealth has helped negotiate contracts at every stage of a provider’s journey. Let us help you make the right calls—contact us today.


MGMA. One-Stop Shopping: Finding the Right Level Ancillary Services for Your Practice.

Fierce Healthcare. Why Hospitals Must Pay Attention to Ancillary Providers.

Medical Economics. Ancillary Services: A New Cost Benefit Analysis.

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