Does the one-two punch of declining reimbursements and rising supply costs spell trouble for pain services? Some now consider pain a risky proposition while others insist it's an excellent revenue-generating addition. Here are 5 factors to consider when adding pain management to your facility.

1 Case selection
Most interventional pain procedures will be short in duration, involving mostly single-use, consumable supplies. Case costing is critical: Make sure that your supply and labor costs don't outweigh the expected reimbursement for the procedure.

Take, for example, percutaneous discectomy (CPT 62287), which Medicare pays at $1,440 (with a wage index of 1.0). The procedure requires the use of a single-use percutaneous discectomy probe, which can cost $1,200. When you add in additional case costs like staffing, sterile supplies and pharmaceuticals, as well as the indirect overhead such as equipment lease and utilities, the case costs begin to outweigh the expected reimbursement for this procedure.

Radiofrequency neurotomy is another example. This more advanced procedure requires single-use consumable supplies as well as special RF neurotomy needles and an RF generator, which will drive up the costs. If you're not hosting these cases frequently, the cost of purchasing the RF generator may be prohibitive to performing the procedure at your facility.

Also consider the duration of cases. Would the reimbursement for a single longer case be more than the sum of shorter cases that take up the same amount of time? While a single 60-minute procedure will not have the same challenges as a string of several back-to-back short cases, such as patient throughput and room turnover, the more complex cases might have increased supply costs that will cut into the expected reimbursement. You'll need to weigh all these factors and crunch the numbers to come up with a procedure mix that will be profitable for your facility.

2 Reimbursement issues
Medicare has cut reimbursements for pain management over the past several years, with many interventional pain practitioners who perform these procedures in the office-based settings suffering higher cuts than ASCs are (see "5 Common Pain Management Procedures: ASC vs. Office Reimbursement" on page 56). The increasing costs associated with capital equipment, staffing and supplies have led some physicians to determine that the costs of performing these procedures in their offices outweigh the reimbursement, prompting them to move cases into the ASC setting. While this provides a potential opportunity for ASCs, these facilities also have much to consider when it comes to reimbursements for pain management cases.

Since the majority of interventional pain procedures performed in an ASC fall under Grouper 1 and 2 categories, the typical procedure reimbursement will be on the lower end of the spectrum. Managed care contracts often use a grouper-based reimbursement system as well. Keep in mind that many pain management case encounters may involve more than 1 billable procedure. For example, a lumbar epidural steroid injection with a transforaminal approach may include 2 or 3 lumbar spine levels depending on the nature of the patient's pain. Under many managed care contracts, multiple procedure discounting will be applied to these encounters.

If you're considering hosting more advanced pain management procedures such as neurotomies, spinal cord stimulations and intrathecal drug deliveries, be aware that these cases come with additional costs for durable medical equipment and implants, which aren't always reimbursed well. Since Medicare and many other insurance companies have gone to a bundled payment system, all the case costs need to be managed by a single payment, including the implant. And since many managed care contracts do not have language in them regarding implants, you'll need to carve these cases out with the insurer to ensure a payment that will cover the case costs, which is no easy task. If you don't perform these procedures at a significantly high volume, they can become cost prohibitive due to the expense of the additional equipment required.

3 Capital equipment
The single largest expense associated with pain management is the C-arm, which helps fluoroscopically guide the placement of medications administered to the patient. Fluoroscopy is commonly used to identify landmarks and minimize complications associated with misplaced needles or the placement of anesthetics into vascular structures. In 2010, some procedure codes were even changed to require the reporting of fluoroscopy with the procedure.

If your facility already has a standard C-arm that's underutilized, adding pain management procedures is a great way to get some extra mileage out of the machine. But if you don't already have a C-arm, purchasing a new one (priced around $125,000 to $135,000) will be a significant upfront capital investment, especially if you can't use it for other service lines within your facility. To offset the cost, you may consider purchasing refurbished or used equipment, which can be found on the resale market for 30% to 40% less than the price of a new machine. Most used or refurbished machines that are available today will generally meet your needs for pain management. When buying a refurbished C-arm that has 5 to 7 years of use under its belt, it would be wise to place it under a preventative maintenance program. We recently had to make a repair to a C-arm where the part alone cost $18,000. The additional money spent on the maintenance agreement can save thousands of dollars in repairs.

If you expect to get a lot of use out of your C-arm, leasing may be another worthwhile option to reduce the upfront cost. Leasing generally requires a 48- to 60-month commitment, so be sure to weigh the volume of cases you expect to do and your facility's long-term commitment to the pain management service line before you go this route.

The only other piece of capital equipment you'll need specifically for pain management cases is a C-arm table, preferably one that tilts or is adjustable. You can use tables that don't adjust or tilt, but you'll need to use foam wedges to help position the patient. Several companies will offer the C-arm and table as an all-in-one package. But if you already have a table that is compatible with fluoroscopy, you may not need to purchase a new one. Like the C-arm, you may consider leasing or buying a refurbished table to offset the cost. A new C-arm table can cost as much as $20,000 to $25,000, while a refurbished or used table may cost $6,000 to $8,000.

4 Supply management
Most of the supplies and equipment you'll be dealing with in pain management, besides the C-arm and table, are such single-use items as epidural trays, spinal needles and skin prep kits. Many of these can be purchased individually or packaged in kits or procedure packs put together by manufacturers and distributors. "If you decide to put together a [procedure] pack or tray, you become the 'customizer,'" says Chase Lavigne, RT, purchasing supervisor at NovaMed Surgery Center in Baton Rouge, La. "Since your decisions will ultimately be factored into what the production costs become, assume that these will be passed on to you in your unit price." One way to avoid additional costs is to ask your distributors what trays are available; they may have already put together a custom kit for another facility that doesn't show up in a catalog. By taking advantage of ordering a kit that has already been produced, you may not see the same costs passed on to you.

Even if you do go the kit/procedure pack route, be aware that there will be many times when you'll need a supply that's not found in a kit. Mr. Lavigne recommends using a technique he calls "cherry picking": He will seek out the best price available on an item used with high frequency, even if it means that's the only thing he purchases from that vendor. For example, he says buying an anesthesia extension set "from our largest distributor may cost $2 apiece, but if I buy it from Company X it may only cost 79 ? each."

As with most supplies, buying in large quantities will reduce the cost of individual items. You should also try to make accurate estimates of your case volume so you can set realistic purchasing expectations with vendors. This planning will help ensure that you're properly managing inventory to keep large dollar amounts of supplies from just sitting on the shelf. Knowing how much you'll need and how much you're willing to spend can also help you in price negotiations with vendors.

In addition to your disposables, you'll need to purchase the medications, including sedatives, anesthetic agents and steroids, and radiological contrast used in your pain management cases. Factor in these expenses when you're doing case costing to develop accurate volume projections and negotiate competitive pharmaceutical pricing with vendors. One way to reduce medication costs is to standardize the formulary of drugs you use, which allows you to stop ordering drugs that aren't used frequently and increase the quantity of frequently used drugs that you order.

5 Maximizing throughput
Since reimbursements aren't very high for pain management cases, maximizing throughput is a big key to keeping this specialty profitable. Most successful pain management practices should be able to bill out at a minimum of 4 patient encounters per hour on average. Some common procedures, such as a typical epidural steroid injection, may take the seasoned interventional pain physician only about 5 minutes to perform. When allotting schedule time for such a case, you'll also have to factor in the pre-anesthesia assessment, post-procedure evaluation by the operative physician and the necessary room turnover time associated with these high-volume, short-duration procedures. Careful scheduling and a well-orchestrated patient flow design will help to reduce bottlenecking. Here are some strategies for streamlining patient flow:

• Take advantage of EMRs. When used to their fullest potential, electronic medical record systems help reduce data input redundancies. The less time staff have to spend filling out paperwork on the day of surgery, the more time they can spend calling upcoming patients, assembling pre-admit data and reinforcing patient instructions to help prevent time-consuming delays on the procedure day.
• Work out financials in advance. We have worked to streamline patient registration and admit processes by pre-verifying insurance benefits and informing patients of their financial obligations before they arrive at our facility.
• All-hands-on-deck turnovers. When we first began operations, we used dedicated staff — environmental service, case technicians — ?to clean and turnover rooms after cases. But since they weren't always available, for example when more than 1 room needed to be turned over at the same time, we adopted an all-hands approach to room turnover. It's very unproductive to have staff standing around waiting on a room to be cleaned by someone else. While it's not their primary responsibility, our radiology techs, surgical techs and nursing staff have all been trained to do room turnovers when needed.
• Solicit ideas from frontline staff. Energize your staff — the frontline folks who are actually performing the tasks that make up a patient encounter — to give suggestions as to how processes can be streamlined. The best suggestions I've received come from the people who are actually working with patients throughout the case. If you can find little ways to shed 1 minute here or 3 minutes there, it really begins to add up.

Start small
If you're considering adding interventional pain management to your facility, it may be better to begin with more common procedures, such as epidural steroid injections, dorsal medial nerve branch blocks and facet joint injections, which are generally short in duration and require only single-use supplies. By becoming comfortable with the more common pain management cases and doing them with increasing volume, you can improve upon efficiency in a short period of time. And once you've maximized this efficiency, you can begin to evaluate the feasibility and potential profitability of adding more advanced pain management procedures to your case mix.