Physicians are increasingly challenged to maintain practice profits in the face of tightening reimbursements from payers. While office visits generate a revenue stream for physicians, it is not clear whether frequent lower complexity visits (e.g., nurse visits to administer injections) are actually profitable for physician practices. OBJECTIVE: To develop an adaptable model and methodology to evaluate profitability and financial incentives for various in-office services provided by physicians and their staff. METHODS: A literature and expert opinion based model was developed from the physician practice perspective and was designed to be flexible for a variety of office-based services. The practice cost component of the model was developed using activity-based costing principles and included direct (drug acquisition, supplies, clinical labor time, office visits) and indirect (malpractice insurance, office rent) expenses. The practice revenue component of the model consisted of the reimbursement amount from payers, including: drug reimbursement; office visits for physician evaluation, injections, end of treatment follow-up and adverse events; and laboratory tests. RESULTS: Practice profitability is inversely proportional to the number of low complexity office visits per year. Payer mix is also an important determinant of profitability for in-office services, with Medicare reimbursements generally resulting in a net loss for practices (>$5 loss per office visit for the lowest complexity services) and typical managed care reimbursements providing only small profits (approximately $4 per low complexity visit). CONCLUSIONS: Frequent low-complexity office visits for administration of drug therapies do not appear profitable for physician practices under Medicare reimbursement. Alternative modes of drug delivery such as implantable drug delivery devices or patient self-administration may be more profitable for physician practices by allowing substitution of more highly reimbursed office services.