In many industries today, businesses have come to the realization that being a one-trick pony doesn’t cut it anymore. Revenue diversification is necessary to thrive, and healthcare is no different. Have you ever wondered what it would be like if your practice could generate multiple forms of income?
What is revenue diversification?
Revenue diversification is the practice of creating multiple streams of revenue for your so that you’re never too dependent on any one source of income. By trying out different strategies and offering additional services, you can in turn mitigate financial risk.
Why is revenue diversification important?
The healthcare industry is rapidly changing. Trying too hard to cling to traditional models and maintain the status quo can prove damaging to a practice and over time may lead to a failing business. By focusing on new areas that naturally coincide with their core business, practices can achieve strong profit growth. The truth is that practices who invest in revenue diversification simply do better financially than those who don’t. With revenue diversification, your practice will become less reliant on needing returns from one sole area. Balance in this is important.
3 Key Benefits of Revenue Diversification
The first benefit of revenue diversification is protecting the core business. By bringing in revenue from additional services, you can help to cushion any cash flow issues you may have in your practice. Adding ancillary services can help you to weather rough financial patches, which unfortunately do come up from time to time.
Next, revenue diversification helps to accelerate growth. Offering additional and ancillary services can help your practice grow more rapidly . New patients can be attracted by the additional services you offer and may decide to stay on with your core practice as well.
Finally, revenue diversification presents new opportunities to serve your existing patients. Odds are your current patient population has healthcare needs beyond those which you are currently serving. Whereas previously they needed to go elsewhere to get those needs addressed, when you start offering additional services they can get more done in one place, likely creating a greater sense of loyalty.
How should a practice start the process of revenue diversification?
There are many ways to implement revenue diversification in a practice. One great place to start is to rethink how you can best use office space. It’s possible there is space in your facility that you aren’t currently utilizing to its fullest potential, and this space could be rented out to a practitioner of a related service. Perhaps you can add lab or imaging services, or perhaps rehabilitation therapy. Are you an orthopedic practitioner? Why not rent some space out for strength and conditioning. Dermatologists have been doing this for years by having onsite med spas, but the possibility is there for a variety of practices and specialties. And if renting out the space isn’t attractive to you, maybe you could make the investment to extend some hours and being to offer additional urgent care services to better serve your patients and even attract new ones.
Another way to diversify your practice’s revenue is through the careful monetization of data. One way to do this is to allow a third party to pay for access to deidentified data for us in population health initiatives. Another way is to analyze your data internally to look for insights into how processes can be streamlined in order to increase revenue in that way.
Finally, can your practice itself offer any specialty healthcare services? Maybe you don’t want to rent out space but would still like to add additional options for your patients. Ancillary services are a great way to diversify your revenue streams while better serving your patients. There are a number of options, including: labs, radiology/imaging, and prescription dispensing, just to name a few.
Revenue diversification is likely to become a much more common topic of discussion as time continues on. And while this can feel like an intimidating undertaking, it doesn’t have to be if you consider the services you currently offer and what adjacent services you could potentially bring in house in some way. With some careful thought and planning, you’ll find that your revenue streams are stronger than ever, and your patients are satisfied with the new options as well. And that’s what we like to call a win/win!