I want to share with you the top 10 ways that doctors make money for their healthcare system or practice. This may seem intuitive. But my guess is that there will be some items on this list that you haven't really thought of before.
My goal here is for you to go through and evaluate your own practice. How are you making money for your practice? Are you being compensated appropriately based on all of these income streams that you create? If not, what can you do to better align that compensation? If so, can you create even more streams? Not all of these will apply to you. But most will or could.
This might seem uncomfortable for some of you. Mainly because of the money taboo that persists in modern medicine. But it is actually really important. and here's why…
Because one of the biggest issues in modern medicine isn’t just how we get paid. It’s everything that gets layered on top of the work we actually do.
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Why you need to understand how doctors make money for their practice
In 2014, a blog post with the title “How to Discourage a Doctor” was published. The written piece detailed how healthcare executives work to discourage doctors and systematically reduce authority and diminish the patient-doctor relationship. It's eye opening in so many ways.
One of the core strategies to discourage doctors in the piece is to make healthcare so overly complex that doctors can't understand it or the value they inherently bring to it.
Around the same time as I read this piece, I heard one doctor refer to herself as a “widget maker.” It made me really frustrated. Because that is what we are so often made to feel like. We provide a service (caring for a patient) and then get paid (most often through insurance and most often we don't get paid directly but our practice or healthcare system does and then pays us secondarily). And that is how we envision doctors when they make money.
But this is not the reality. We are not widget makers
First of all, our service is relational and not transactional. But even beyond this immediate discrepancy in the analogy, we create value in so many more ways than just the creation of a “service.” We don't just “see patients.”
To not understand this is a recipe to become discouraged. To see our value, intrinsically and extrinsically, lessened.
That's why this is important. It's what keeps clinics open. Keeps patient's access to care open. That's why thinking about money as a doctor is actually good when done in the right way. It's why this matters not just for the well-being of us as doctors but for our patients.
10 ways that doctors make money for their practice
N.B. If you are in private practice, you may think that this does not apply to you. But it does. Because you can be sure that there is a market out there putting a value on your practice. And you can be sure shootin' that it's looking to minimize that value. Uncomfortable as that may be, you need to know how doctors make money too.
1. Office Visits & Evaluation/Management (E/M) Billing
Here is the key thing: the classic “clinic visit” is still a foundational income stream. Most practices will try to dismiss office visits as low yield. But that is not truly the case. Optimize your clinic times, code correctly, and not only can you maximize time with patients but also make sure you are compensated appropriately for your expertise. I know one local primary care physician who does this very well and makes more than me as a plastic surgeon.
Make sure to differentiate between new and established visits. Code complexity and medical decision making appropriately. Whether you are in private practice where this is direct income or employed where it converts to RVU productivity, make sure this is being billed the right way. If not, insist on changes.
Because at the end of the day, your time as a physician is not cheap.
Time is money in medicine. AI only matters if it actually gives you that time back. That’s why I use DoxGPT. Quick drug checks, clinical questions, administration tasks, all done in under a minute.
Your time is worth hundreds of dollars an hour. Stop wasting it on tools you can't trust. DoxGPT helps you get that time back without sacrificing quality.
2. Procedures Done in the Office
Most specialties can earn meaningful revenue from in-office procedures. Here is a very small and non-exhaustive list of examples: Skin biopsies, joint injections, IUD placement, laceration repair, ENT scopes, cardiology stress tests, etc.
Procedures equals important care provided to the community, higher reimbursement than standard visits, and more value efficiency per hour for you.
Think about what procedures you offer now, how you could optimize them, and what others your patients need that you can add.
3. Surgery & Facility-Based Procedures
Surgery is one of the most highly reimbursed services that doctors provide. But, when surgeons consider the value created from their surgery, we tend to think just of the professional fee. This is essentially the fee that the surgeon gets for their intra-operative services.
But when you operate, whether at an ambulatory surgery center or a hospital, there is also a facility fee that is generated by the surgery. This may even be more than the professional fee.
The bottom line is not to let your practice convince you that your surgical services just aren't profitable. They are. And doubly so because of the facility fees that the practice is paid when surgery is done in their building
4. Imaging Ordered or Performed
Every doctor needs to order imaging. When we put that order in, we don't think that we are generating income for our practice. But we are.
Imaging often generates revenue through technical and professional components. If your practice owns the imaging suite (whether it's just X-rays or something more complete with advanced imaging like MRI), you just created significant income for your practice. If the radiologists reading those images are within your practice or system, you just created even more value
5. Labs & Diagnostic Testing
Similar to above, diagnostics can be both a huge revenue stream. Think in-office labs (urinalysis, A1c, rapid strep), think send out labs, think pathology, think more advanced studies like sleep studies, PFTs, and even EKGs.
In house diagnostics whether in a practice or academic setting all generate new streams of income that your administrator or practice owner will never tell you about when negotiating your contract. You need to make sure they recognize and acknowledge this.
6. Infusions, Injections, and “Buy-and-Bill” Medications
Many doctors can generate revenue for their practice by administering medications onsite. Some examples include allergy immunotherapy, biologics (rheum, GI, derm), or oncology infusions
The process is simple enough: you or your practice purchases medication, then you bill the payer for administration plus the drug cost.
Out of pocket injectables like Botox are another option.
7. Ancillary Services
Extra services increase both patient outcomes and create an additional stream of income for a practice or health system.
Physical therapy is a great example. It could be a PT service that a practice owns within themselves. Or it could be a practice owned by your health system. Either way, your referral makes money for the practice.
Other examples include dietitians, maybe even embedded in endocrinology, or behavioral health integrated into primary care.
This ultimately serves to provide better continuity of care and creates more revenue per patient relationship.
8. Subscriptions, Concierge Models, and Direct Primary Care (DPC)
This is becoming more and more popular and I'm super interested to see how things go in the future. While now it is mainly focused within the primary care space, I think there are lots of opportunities to expand beyond that. In essence, with this model, doctors shift away from insurance-based revenue entirely.
Features common in this model include membership fees, enhanced access and longer appointments, and predictable cash flow.
9. Telehealth, Asynchronous Care, and Digital Follow-Ups
One of the silver linings of the COVID pandemic is that we learned to provide high quality remote care out of necessity. Now, modern practices can monetize care outside the standard visit.
Examples include:
- Video visits
- E-consults
- Portal message billing (when allowed)
- Remote check-ins
It's win-win. It improves access and optimizes physician time compared to in-person care. I can say for sure that my practice inefficiently bills for this type of care. I am guessing most practices are in a similar boat. This is pretty low hanging fruit since it is often care we are already providing without compensation.
And a lot of this comes down to the small inefficiencies that repeat over and over again throughout the day.
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Eight hours in, notes still unwritten, and the clinical questions keep coming. That is where DoxGPT earns its place.
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10. The “Invisible” Revenue Driver
I saved this for last on purpose. These invisible drivers include things like referrals, reputation, and system growth. The basic concept is this: doctors generate downstream revenue by attracting and retaining patients. In the grand majority of cases, when a patients comes in for a visit, they are coming in because of the doctor, not the practice or healthcare system name or the building that the office is in. Don't forget this. Because it carries immense value.
By bringing in that patients, you create all of the direct and indirect income. A good PCP feeds a specialty network. A surgical specialist drives imaging, labs, and facility utilization. Academic physicians draw complex tertiary referrals. The examples go on and on.
And this holds true no matter what your practice setting is!
What's next?
This is the question that I want you to ask yourself.
Remember, my goal here is for you to go through and evaluate your own practice. How are you making money for your practice? Are you being compensated appropriately based on all of these income streams that you create? If not, what can you do to better align that compensation? If so, can you create even more streams?
Not all of these will apply to you. But most will or could.
No excuses. Stop yourself from telling yourself why it can't work for you. Because there are doctors out there right now doing all of these things. So it is possible. We aren't widget makers. Doctors make money in tons of different ways (even more than I list here!). They are no different than you. So let's do it! And then make sure that you understand your value completely and relay it clearly.
Plus this isn't even broaching the significant income that you can generate via physician side gigs like these.
What do you think? How do doctors make money for their practice? How can we optimize things? And even more, how can we optimize these practice related income streams? Let me know in the comments below!
