Ancillary Spotlight: The Quiet Side Hustle Gold Mines
The side hustle game is strong this month. Here's what's working (and what's not) in the ancillary world.
If you're only making money from nursing home operations, you're leaving cash on the table. Smart operators figured this out years ago.
Physical Therapy JVs - Mixed Bag
What's Working
Smaller, regional PT companies partnering with 3-5 facility operators.
The sweet spot: SNF owner takes 40-60% equity and lets the therapy group actually run operations.
Why This Works
Therapy group brings clinical expertise and compliance knowledge
SNF owner brings patients and space
Both share in profits without stepping on each other's toes
What's NOT Working
100% owner-operated therapy (unless you actually know therapy)
Tiny equity stakes (10-20% doesn't move the needle)
Therapy groups that want 90% (why bother?)
The Numbers
A well-run therapy JV can add $200K-400K annually to a 120-bed facility's bottom line. Not life-changing, but not nothing.
Pharmacy - The Quiet Gold Mine 💰
Whoever figured out the in-house pharmacy game is printing money.
The Deals We're Seeing
Two deals this month where operators set up their own pharmacies serving 8-12 facilities each.
Margins are stupid good when you cut out the middleman.
The Model
Set up one central pharmacy
Serve your own facilities first
Add other operators' facilities as clients
Suddenly you're in the pharmacy business, not just the nursing home business
The Critical Factor
You need someone who actually knows pharmacy regulations.
This isn't a "figure it out as you go" situation. The compliance requirements will bury you if you don't know what you're doing.
The Numbers
Pharmacy operations can generate $500K-1M+ annually for an 8-12 facility operator. And unlike nursing homes, pharmacy margins are REAL margins.
Why More Operators Don't Do This
Regulatory complexity - State pharmacy boards don't mess around
Startup capital - Not cheap to launch
Finding the right pharmacist partner - They have to be entrepreneurial AND compliant
Managing inventory - Controlled substances tracking is no joke
But for operators who figure it out? It's the closest thing to passive income this industry offers.
DME/Supply - Surprisingly Solid
Medical equipment and supply companies are having a moment.
What We're Hearing
Three operators mentioned their DME subsidiaries are carrying facilities that are struggling operationally.
One Texas operator: "My wheelchairs and beds business is more profitable per square foot than half my nursing homes."
Why DME Works
Every nursing home needs equipment - it's not optional
Margins are better than most people think
Less regulatory hassle than pharmacy or therapy
Easier to scale - one warehouse can serve 20+ facilities
The Model
Start with your own facilities as guaranteed customers
Add other operators in your region
Expand to home health agencies and hospitals
Eventually you're in the DME business with nursing homes as a side gig
The Numbers
A well-run DME operation serving 10-15 facilities can generate $300K-600K annually. Not enough to retire on, but enough to cover your administrator's salary.
What's NOT Working
Hospice JVs
Too much regulatory scrutiny right now. The feds are watching hospice-SNF relationships VERY closely. If you're thinking about this, talk to a good healthcare attorney first.
Lab Services
Margins aren't there anymore. Lab companies already squeezed this lemon dry. Unless you're doing 50+ facilities, don't bother.
Transportation Services
Insurance is killing this. Vehicle insurance for medical transport is insane right now, and one accident can wipe out years of profits.
The Bottom Line Philosophy
Ancillaries work best when you're either:
Really good at them - You have expertise and passion
Smart enough to partner with people who are
The days of "let's just add this service" are over.
The Math That Matters
Average 120-bed SNF might generate:
$300K-500K from operations
$200K-400K from therapy JV
$300K-500K from pharmacy (if you're in that game)
$200K-300K from DME
Total: $1M-1.7M EBITDAR
Without ancillaries: $300K-500K EBITDAR
That's a 2-3x multiplier on your nursing home value when you go to sell.
The Questions to Ask Yourself
Do you have 5+ facilities? Below that, ancillaries might not be worth the hassle
Do you have competent partners? Don't do this alone if you don't know the space
Can you handle more complexity? Each ancillary adds regulatory and operational burden
What's your exit strategy? Some buyers love ancillaries, others see them as distractions
Are your nursing homes stable? Fix your core business before adding side hustles
The Cautionary Tale
We know an operator who:
Ran 8 mediocre nursing homes
Launched a therapy company
Started a DME business
Opened a pharmacy
Lost money on all of them
Now owns 3 nursing homes and no ancillaries
Moral: Do one thing well before doing five things poorly.
The Success Story
We also know an operator who:
Ran 12 excellent nursing homes
Partnered with a pharmacy group (50/50 split)
Let them handle operations
Collects $800K annually in pharmacy profits
Nursing homes run themselves
Plays golf three days a week
Moral: Smart partnerships beat hustle every time.
What's Coming Next
We're hearing about:
Telemedicine services (physician groups doing virtual rounds)
Specialized wound care companies
Behavioral health programs (for post-acute psychiatric)
If you're doing any of these successfully, let us know. We'd love to hear what's working.
Bottom Line: Your nursing home might be a decent business. Your nursing home + well-run ancillaries is a printing press.
But only if you do it right. Otherwise it's just more headaches.
