Pain Management Practice Models and Efficiencies

Approximately seventy percent of physicians are employed by an organization including Private Equity (PE), a variation of owned groups backed by publicly traded companies, or Hospital Systems (including pure academic, for-profit, and not-for-profit).

Interventional pain management physicians have the unique opportunity to structure a practice best suited to their specific entrepreneurial desires from employed to independent solo or group outpatient clinics. This article will focus on how to evaluate the various models from the perspective of providers and potential employers.

Employment Models.

Academic Medical Centers

Some of the pros include:

1. The opportunity to be involved in teaching fellows, residents, medical students, and other healthcare providers. This can be enormously gratifying for the right pain physician.
2. Research in the pain world is rapidly expanding fueled by the opioid epidemic. Thirty years ago, large doses of fentanyl were part of standard anesthesia protocols. It was not unusual for surgeons to give prescriptions for 60-90 pills of various opioid medications for post-op pain relief. Interventional Pain physicians routinely prescribed 60 mg or more of delayed-release opioids. Through vigorous research, much of it at academic medical centers, we have developed opioid-free surgery and recovery. Techniques such as ultrasound-guided peripheral nerve blocks which are part of all anesthesiology residencies were simply not an option 30 years ago. Interventional chronic pain treatments have expanded beyond medications and intermittent blocks through research and development. For example, the rudimentary spinal cord stimulator has evolved to both refined spinal, autonomic, and somatic (peripheral) nerve stimulation.
3. You will have a large ready referral base from your physician colleagues at the medical center. You don’t have to market your practice.
4. The back-office functions are generally managed by the HealthCare system. RCM, HR, recruitment of staff, and P&L are responsibilities of business managers, freeing the physician to concentrate on clinical care.

Disadvantages include:

1. Generally lower reimbursement at facility-based practices based on Medicare maximum allowable (CMS.gov).
2. Lower income for the physician. Generally, a lower base salary.
3. Loss of autonomy. When physicians join a large HealthCare system de-facto loss of individual control is assumed. There are committees, review boards, and administrators involved in physician decisions.
4. You may have more inpatient nighttime consults on call.

Independent or non-affiliated practices. There are several flavors of independent practices including; PE owned and true free-standing groups (both single specialty and multi-specialty) providing pain care as an outpatient department of a hospital, ambulatory surgery center (ASC) based, or clinic-based.

Independent or PE practices providing care as an outpatient department of a hospital is very similar to the hospital-employed model with the largest difference that generally the group charges and collects for the professional fee while the hospital charges for the facility fee. It is essential in this arrangement both parties bill the same E&M or ICD codes for the same CPT. This is a particularly hot topic for the OIG. Some contract arrangements include the hospital collecting both fees and returning the professional fees to the group. There is a high risk in this model including potential Stark anti-kickback rules. If one decides to construct this contract model, it is very important to seek guidance from knowledgeable regulatory counsel who is very familiar with the Federal Physician Anti-Kickback Statute.

Medical Clinic Model. This model is simply an office for medical management utilizing a convenient ASC or OPD for procedures.

Advantages include:

1. Low startup and ongoing management costs
2. Autonomy for working hours, scheduling both in the office and procedural location.

Disadvantages include:

1. Potential challenges in getting block time at the ASC or OPD to allow you and your staff to be efficient.
2. Revenue cycle management (RCM). It can be complicated getting the billing information from the procedural area and clinic setting to sync.
3. There has been a traditional stigma that non-procedural pain clinics are “pill mills” and may attract a patient base not consistent with your goals.

Independent or PE Practices with ASC ownership. This is by far the most common practice arrangement.

Advantages include:

1. Autonomy regarding practice scheduling, staffing models, for example will APPs perform all office-based H&Ps, and F/U visits.
2. Control over hours of operation, billing, and collections etc.
3. Generally higher reimbursement than OPD of a hospital which translates to more income for the physicians.

Risks include:

1. This arrangement brings the Stark Anti-Kickback Laws into sharp focus. “The Stark Anti-Kickback Laws generally prohibit physicians from making designated health service referrals to organizations with which those physicians (or an immediate family member) have a financial relationship, unless under an exception as the law applies”. The good news is pain management ASCs fall under safe harbor regulations. Required elements for safe harbor are found in the Federal Register 42 C.F.R. 1001.952.
2. Risks associated with a CON state. The arguments by CON supporters is health care cannot be considered a typical economic product, most health services are ordered by physicians; patients generally do not shop for the best deal on an x-ray or lab studies, CON states can distribute care to medical care deserts that could be otherwise ignored, and the American Health Planning Association states CON limits health care spending. Those wishing to abolish CON argue CON creates a de-facto monopoly and therefore keeps prices high when consumers have no choice, newer payment models (ACO/CIN) make external regulatory controls moot by sensitizing health care organizations to market pressures, or there may be CONs awarded to institutions based on political pressure, intuitional prestige, or other factors apart from the best interest of the community. Regardless of your position on CONs, it is essential you understand the specific rules in your state.
3. Financial risk. It’s important to build a detailed proforma; ASCs are expensive to build and maintain. There are initial architectural, licensing, and construction fees. There are significant differences between building in shell space or upfitting existing space. Shell is generally less expensive. Ongoing fees include maintenance, facility insurance, debt service, staff, equipment, and supplies. As with any construction project, it may take twice as long to build and exceed your original budget. Factor this into your proforma for planned ASC construction or upfitting.

Physician incentives based on practice location.

If you don’t own your own solo practice, be sensitive to your bonus structure. Usually, your bonus will be based on either RVUs generated or a percent net collections model. There are issues with both models; RVU based encourages physicians to perform procedures based on volume. Percent net collections can translate to care disparities based on insurance class. Unfortunately, in 30 years, I have seen both become an issue. A blended bonus plan based on RVU and percent net collection is ideal. This applies to private practice, PE owned, or even in some cases hospital-employed physicians.

In summary, there are a variety of practice models for interventional pain medicine physicians all with advantages and disadvantages. It is essential the physician chooses a model that best suits their objectives and personality.