ASA August 2003 Newsletter

This NEWSLETTER article is a brief excerpt from a manuscript prepared for the ASA 2003 Practice Management Conference that took place on January 31-February 2, 2003, in San Antonio, Texas. A complete copy of the manuscript is available from the ASA Publications Department.

The choice of location for your pain medicine practice will dramatically affect everything from patient referral patterns to reimbursement for the work you do. Factors to consider in making your choice include the availability of space, nursing and technical personnel, administrative support, financial and administrative resources, contracting interest by payers, insurance costs and the amount of personal time and energy you want to devote to administrative activity.

Space: This space should be large enough to provide a private consultation room, a procedure room adequate in size to allow for fluoroscopy, a procedure table, medication cabinets, monitors and a crash cart, all with room to maneuver. Two to three recovery bays per procedure room are required to avoid any limitations to patient flow from delayed recovery and discharge due to prolonged block or sedation.

The postanesthesia care unit (PACU) is typically offered as space for interventional pain procedures in an ambulatory surgical center (ASC) or outpatient department (OPD). Do not take it. Curtained spaces occupied by patients recovering from major surgery are not conducive to the care of “healthy” clinic patients. Pain therapy patients expect an aura of confidentiality and personal attention. Fluoroscopy in the PACU also is a challenge.

Personnel: For one practitioner working five days a week, there will be work for two nurses at about 1.5 full-time equivalents (FTE), two nurse-extenders at 1.5 FTE, two secretaries and one billing specialist. If the practice is busy, an office manager might be needed. Ideally this might be someone with a clinical background if you do not yet have enough work for a full-time manager. In an office setting, the full-time or nearly full-time employees are key to your operation. Include them in the successes of your practice with bonuses based upon productivity and efficiency.

Administrative support resources: The availability of administrative support is a key factor in deciding between either further development of a relationship with an ASC/OPD or opening your own office. In general, the finance departments of hospital systems are not adept at determining accurate profit-loss evaluations of single physician or specialty services. Therefore, it is likely that you will need to do some of that legwork yourself. If asking for capital equipment or structural changes, you may need to pay for bids from suppliers and contractors before you get the attention of the administration. Often you will find that the administrators of a for-profit, stand-alone ASC are much better at such service-line analysis and may well have already done it. Neither of these institutions will likely give you exclusive use of such a clinic. In your own office, you avoid the competition, but you also lose the financial partner.

Financial support for office development: Labor costs, rental fees, equipment lease and purchase costs can be substantial if you are opening your own office. When going to a bank for a small business loan or a line of credit, you will be expected to create a business plan and a list of anticipated costs, expected procedure volume and anticipated income. Remember, you will probably see a drop in income after a practice move. Patients and referring physicians may remain loyal to whatever institution you just left (hospital, ASC), and that jilted institution may well bring in a new competitor to replace you.

Administrative support for office development: Making the decision to move to your own office must include an assessment of the community’s resources in terms of either people who already have the special skills (both business and personal) to perform these duties or whom you feel you can train.

Contracting — payers and facilities: Some large employers or local insurers may have agreed to site-specific elements in the plans they offer their employees. This may preclude a patient from being seen by you at your new office even if you are a “preferred provider.”

Keys to Success in Contracting
Record and evaluate your outcomes. Use follow-up telephone queries in a valid and quick manner, e.g., using the SF-12. Record the results in a program such as Microsoft^® Excel or Microsoft^® Access.

Create and follow algorithms. You should have a set of indications for the procedures you do; put these in writing, and follow them. Use literature to back them up, insofar as you can. These guidelines will help convince an insurance company that you are not a “procedure mill.”

Perform peer review. Exchange this service with other independent pain practitioners. They should review all patient problems and perhaps a number of randomly selected charts each month. Such a program will make you unique and convince insurance contractors and their reviewers and juries of your attention to quality.

Keep track of each insurer’s patients in your practice. Document how many patients you treated, how much they cost you, how much you charged and were paid, how long it took to get paid and how those patients did. Putting together your costs with the patients’ outcomes will give you an upper hand at the contract negotiation.

Liability: cost of insurance, risk management programs. It will be necessary to obtain office overhead and disability insurance as well as liability insurance that is comprehensive for the acts of your employees, your physical premises and the “trip-and-fall” issue. Rates for this type of insurance are exploding upward.

Reimbursement variation by location. How will practice location affect reimbursement for the work you do? The answer is constantly changing. Medicare payment rates for interventional pain management procedures vary widely across outpatient settings (and geographic areas). In particular, physician practice expense payments are differentiated by site of service. Frankly, the nonfacility payments for pain management services are set at inappropriately low levels because they do not take into consideration the excess safety precautions and equipment needed for these sensitive procedures when performed in an office location.

This short article cannot begin to fully consider all the aspects of this problem, and the reader who is contemplating a change in his or her business model is encouraged to obtain advice from a medical business management professional and, at minimum, attend a professional practice management seminar such as those provided by ASA.

James P. Rathmell, M.D., is Director, Pain Center, Fletcher Allen Health Care, University of Vermont, Burlington, Vermont.

Douglas G. Merrill, M.D., is Staff Anesthesiologist at Virginia Mason Medical Center, Seattle, Washington.

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