What is the Value of Chronic Pain to an Anesthesia Practice?
SUMMARY: Many anesthesia groups have a chronic pain component; but how beneficial is it from an overall financial standpoint? While some make it work, it is very difficult to set up and maintain a profitable pain practice.
Some of our anesthesia clients are actively involved in the provision of chronic pain management services. Usually, the chronic pain physicians are a small subset of the practice. The scope and focus of these services can vary considerably from one practice to another. It used to be that some physicians would perform a limited number of epidural steroid injections in a procedure room, while others were part of a formal pain clinic. The specialty has evolved. Some have even established free-standing pain clinics. In many ways, chronic pain management represents a logical line extension for anesthesiologists who are so inclined. The fact is that the management of a hospital-based anesthesia practice is materially different from the management of a chronic pain practice. While there may be some financial and strategic advantages for an anesthesia group to provide chronic pain services, there are also many challenges; and many practices find chronic pain a loss leader. In the current environment where revenue is contracting and practices are looking for new lines of business, the discussion often includes consideration of chronic pain. The issue is what is involved and whether it is worth the investment.
Financial Considerations
A busy chronic pain physician in a well-managed pain practice should be able to generate 20 to 30 percent more in net collections per clinical day than his colleague working in the O.R. This assumes that his schedule is well organized, that all pre-authorizations and insurance verifications are handled expeditiously, and that the clinic has an efficient layout and provides all the necessary clinical resources. While O.R. providers have workflow and revenue potential defined for them based on the day's schedule, chronic pain physicians have considerably more freedom and flexibility to fill their day with patients and procedures of their choice. What most providers don't really appreciate, however, is how many variables must be carefully managed for a pain practice to be successful. There is an old sports saying that applies to chronic pain: it is not about the numbers until you get what it is about; then it is about the numbers. The two metrics that matter most are average encounters per provider day and average yield per encounter.
Many anesthesiologists have experienced the following phenomenon. They start performing a limited scope of nerve blocks on a select group of patients and are quite pleased with the additional revenue they generate. It may even be a way to make their days more productive because they are able to perform the blocks in their downtime in the afternoon. Based on this early success they suggest to their partners that the group should make more of a commitment to pain. The other partners ultimately agree, and a pain practice is born. The problem is that, as they ramp up, the net yield per procedure starts to decline; and, before long, the group is divided over the potential value of the pain practice.
Politically, it takes a strong and committed pain physician to launch a serious practice. Patients suffering from chronic and intractable pain can be a challenging population to treat, and not all anesthesiologists want the headaches of treating them. The reality is there is no objective test for a patient's pain, much less their tolerance for pain. The chronic pain physician is an ultimate diagnostician, trying to understand the underlying causes of a patient's intractable pain. What many pain physicians like about their practice is the ability to interact with their patients, as compared to giving anesthesia where the patient is asleep. We are in the midst of a serious opioid crisis. Pain physicians walk a fine and perilous line; and, in many ways, they are on the frontline of the crisis.
Many anesthesia chronic pain practices are not profitable, which is often a source of contention in a large practice. The non-pain partners typically resent having to subsidize the chronic pain practice. They are especially concerned when the pain physicians refuse to take their share of call. If the pain practice is profitable, the chances are good that the providers will eventually break off and start their own separate practice. If the pain practice requires a continuous subsidy, then group members will usually ask why and what is the value to the group as a whole? It is rare when there is complete parity between anesthesia and pain.
It should also be noted that getting paid for chronic pain is an order of magnitude more complicated than getting paid for surgical or obstetric anesthesia. There are multiple layers to the challenge. Patient workups require evaluation and management (E&M) codes, which require very specific and careful documentation. Procedure billing seems straightforward, but correct coding guidelines often complicate the equation; some procedures can be billed with others for certain cases but not others. Payer guidelines for the bundling of fluoroscopic services are constantly evolving. It takes a team of dedicated and knowledgeable billers to make sense of chronic pain charges.
The fundamental difference between anesthesia and pain management has to do with the value of incentive. The anesthesia provider is simply motivated to finish his schedule of cases. Some practices may have a productivity-based compensation plan that may encourage the provider to provide more detailed clinical documentation and to find ways to generate some additional units, but revenue potential is usually quite limited. If the pain provider is focused and aggressive, there are many ways to enhance his or her practice. He or she can focus on referral sources and find ways to see patients with better insurance and more complicated treatment options, all of which requires a very different type of management dynamic.
In the ideal world, an anesthesia practice should pay the pain providers differently from the way they pay the O.R. staff. If the goal of the pain practice is to generate new sources of revenue and expand the scope of the practice, then there should be incentives for the pain providers to do this. Rarely is this the case. The typical anesthesia practice pays its O.R. providers the same way it pays the pain providers, and this only exacerbates the problem.
Practices that understand just how different chronic pain is from anesthesia and are willing to make the necessary investment have generally been successful. For most, however, the potential gain does not justify the investment. It has been said that some play to win, others pay not to lose, and some simply do not play. This appears to be true of chronic pain. If you play to win there is much to be gained. The problem is that playing not to lose is a losing proposition.
Strategic Considerations
So, if chronic pain practices are often not profitable, then why do so many anesthesia groups encourage their providers to provide chronic pain services? The answer is that they believe there is strategic value to being able to provide a broader scope of services. By offering chronic pain services, a practice may enhance its relationship with the facility as a kind of one-stop shopping for pain management services. It is not clear how effective this is, but it is a common view.
It may also be a way to engage providers who do not want to provide anesthesia services full time. Many physicians like performing chronic pain management part time as a divergence from providing anesthesia. The ability to offer anesthesia providers a more diverse menu of work options is often perceived to be a benefit, especially in this period of manpower shortage.
The reality is that, for whatever reason, some anesthesia practices have always provided chronic pain management, while others have not. In some hospitals, the chronic pain physicians have always been separate private practices. The irony is that a chronic pain practice can generate significant revenue for the facility, but most hospitals are too busy with other services to focus on this opportunity.
Final Thoughts
Is chronic pain a good and viable option for your anesthesia practice? Those of you who have already made the commitment might respond with caveat emptor. It is not a path that should be embarked on without careful consideration. A lot depends on what the practice is trying to accomplish. There has to be a champion for the concept, a physician who can take responsibility for the myriad of details mentioned above. It also depends on what kind of investment the group is willing to make to have a successful practice. It is critical to have realistic expectations and a well-structured business plan. If you have any questions regarding chronic pain, please contact your account executive. We have extensive experience working with chronic pain practices. As always, you can reach us at info@anesthesiallc.com.
With best wishes,
Tony Mira
President and CEO