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Medical Economics Website

January 8, 2001

Make your practice more profitable

By Deborah Borfitz

Doctors are finding nontraditional ways to supplement stagnant practice earnings—sellingeverything from pregnancy calendars to advice on aging. Here's what works.

Faced with slimmer earnings and the hassles of dealing with managed care payers, morephysicians than ever are looking for revenues beyond the traditional realm of clinical practice. Besides boosting income, they often want a change of pace and a lighter patient load, says Maureen Swan, a principal with the MedTrend Group in Minneapolis.

Clinical research, cosmetic surgery, product sales, and "premier" services such as executive physicals and heart scans top the popularity list, largely because the revenue potential is significant. Drug dispensing is also gaining interest, as is virtually anything that involves the Internet.

The most successful ideas address the needs of a doctor's current patient base—general surgeons offering prostheses and wigs to chemotherapy patients, for instance. Another example is the customized pregnancy calendar that Detroit-area obstetricians John R. Sanborn and Michael A. Genord are selling, usually for $29.95 a pop. Their patients receive it free, but sales to other expectant women bring in $7,000 to $10,000 monthly.

Supplementing income by dispensing drugs

A growing number of physicians view drug dispensing as a logical way to supplement practice income. Depending on payer mix and prescribing habits, they can make $40,000 to $200,000 per year dispensing medications out of their offices, according to Bill Janis, a regional sales director for Tulsa-based Physicians Total Care. His company provides services and medications to physicians who do their own dispensing. Cardiologists and neurologists, as well as other doctors whose patients are on maintenance medications, do especially well.

About 10 percent of doctors are currently dispensing, says Janis, and the number isincreasing. One reason: Companies like PTC now offer programs that electronically connect physicians' offices to most HMOs' pharmacy benefit managers for immediate claims adjudication and confirmation of reimbursement. The programs also fully automate the dispensing process and inventory control.

With PTC's system, medications are prepackaged and sealed in counts commonly dispensed. Labels are printed when the drugs are dispensed and are easily modified. The system also tracks usage and automates reordering by modem.

"Some studies have also demonstrated significant increases in compliance and decreases in pharmacy error with point-of-care dispensing," says Janis. Malpractice rates are unaffected, though. Dispensing costs include $175 monthly in system support and connection fees, a one-time licensing fee of $4,000, licensing fees as required by the state, and equipment costs of several hundred dollars.

More doctors would be dispensing were it not for fear of computers, says internist and emergency medicine specialist Richard D. Loew of Stuart, FL. He contends that the technological side can be mastered in 30 minutes. Patients like the convenience, he says, and he makes $4 to $6 per prescription. With 40-plus patients per day receiving at least two prescriptions per visit, revenues build quickly. Profits are $35,000 to $60,000 per year.

Loew dispenses 70 percent of the medications he prescribes and accepts the same insurance cards as Walgreens and Eckerd, with which he maintains cordial relationships.

Loew pays nine cents per insurance transaction to Envoy, the central switching service that connects him to the pharmacy benefits manager.

Loew credits security features on the PTC system and his own policy against carrying narcotic pain medication for preventing employee theft and break-ins during his seven years in the dispensing business. Although his prescribing habits haven't changed, Loew says, there's little to prevent overutilization, beyond a doctor's own conscience and oversight by Medicare.

Copyright © 2001 and published by Medical Economics Company at Montvale, NJ 07645-1742. All rights reserved.



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