- Millions of people suffer from chronic or intractable pain that seriously reduces their quality of life. While pain was once poorly understood and treated, it is now recognized as a serious medical condition. - Effective pain management requires an interdisciplinary approach with specialists providing advanced treatment when primary care has not helped. This has led to the emergence of over 3,000 pain treatment centers in the US. - Developing a successful pain clinic requires considering the needs of patients, referring physicians, and payers. It must provide comfortable, accessible care and close communication to satisfy all stakeholders.

1. NEW CHALLENGES IN ANESTHESIA:
NEW PRACTICE OPPORTUNITIES zyxwv
0889-8537/99 zyx
$8.00 + .OO
A BUSINESS PLAN
FOR A PAIN CLINIC
Wendye Robbins, MD, and Peter Staats, MD
Millions of people suffer from chronic or intractable pain.
Persistent pain varies in etiology and presentation. In some cases,
symptoms and signs may be evident within a few weeks to a few
months after the occurrence of an injury or the onset of disease.
The cause of pain is not always known or apparent. For many
patients, initial medical evaluation and treatments effectively
relieve pain that might otherwise become chronic.
Like many illnesses that at one time were not well understood,
pain and its many manifestationsmay be poorly treated and
seriously underestimated. Inappropriately treated pain seriously
compromises the patient’s quality of life, causing emotional
suffering and increasing the risk of lost livelihood and social
integration. Severe chronic pain affects both the pediatric and adult
population, and often leads to mood disorders, including
depression and in rare cases, suicide . . .
Each physician bears the responsibility to evaluate and treat
persistent pain as a serious medical condition. Principal treatment
physicians must approach each patient with respect and urgency
and provide appropriate and timely referrals to a pain medicine
specialist when primary medical care has not been effective. Such
referrals are appropriate because pain medicine specialists can
provide a more advanced level of treatment to patients suffering
from chronic or intractable pain . . . As physicians, we are trained
to preserve patients’ quality of life and relieve their pain and
suffering. We must use all avaitable resources to achieve these
goals for our patients. (Adapted from the American Academy of
Pain Medicine. Position Statement.February, 1997.)
From the Department of Anesthesiology and Perioperative Care, The University of Califor-
nia San Francisco, San Francisco, California (WR); and the Departments of Anesthesia
and Critical Care Medicine and Oncology, Johns Hopkins University School of Medi-
cine, Baltimore, Maryland (PS)
ANESTHESIOLOGYCLINICSOF NORTH AMERICA
VOLUME 17 * NUMBER 2 -TUNE 1999 zyxwvu
407

2. 408 zyxwvutsr
ROBBINS zyxwvuts
& zyxwvut
STAATS
Pain management is an emerging discipline emphasizing an interdisciplin-
ary approach with a goal of functional restoration, and reduction of pain and
suffering. In 1976, the United States Social Security Administration officially
recognized chronic pain as a significantform of morbidity in the aging American
population. This decision extended benefits to cover chronic pain and rehabilita-
tive treatment, and produced an explosion of providers and centers dedicated
to its mission.More than 300 centers opened their doors that first year. Since that
time, a diverse group of pain treatment centers have emerged in communities
throughout the United States. In 1998, the American Pain Society reports there
are more than 3000 clinical entities with the focus of treating chronic pain in the
United States, up from an estimated 1500 centers reported in 1987.’ Only a
fraction of these entities are truly multidisciplinary in orientation.
Pain centers are specialized entities set up to evaluate and treat patients
with complex, intractable, and disabling problems. In designing a pain practice,
it is important to keep the following in mind. A pain center has three customers:
the patient, the referring physician, and the payer.
Many patients are referred to these specialized entities as the “court of last
resort.” Patients with chronic pain are often bitter, having failed under the care
of primary medical providers. They are also cynical about spending large
amounts of time in doctors’ offices. A successful pain center will be designed to
put such patients at ease. The facility will be approachable, provide telephone
access between patients and care providers around the clock, communicate
frequently with other treating physicians, provide comfortable waiting areas, be
accessible to transport teams (including ambulances), and generally make pa-
tients feel welcome.
Referring physicians want to know that their patients are being cared for
effectively. Close communication with other treating doctors is also essential.
General questionsare asked of the pain physicianby first-time referring doctors.
It is important for the new pain practitioner to be respectful and accurate when
responding to these queries. Additionally, payers are interested in cost-effective
care. Patients with pain use a great percentage of health care dollars? Payers are
concerned about providing quality care in a cost-effective manner. Strategiesfor
demonstrating to the payer outcomes and benefits of pain therapies will need
to be rapidly developed. In summary, a successful pain practice will keep all
users satisfied (referring physician, patient, and payer).
ONE MODEL
The University of California, San Francisco (UCSF)/Mt. Zion Pain Manage-
ment Center began operating in 1992. Prior to beginning operations, arrange-
ments were made with the local hospital to perform all patient billing. Initially,
the pain service existed as an in-hospital consultative service, staffed by one
anesthesiologistand one physician assistant (PA).Initially, the practice provided
mostly perioperative care to surgical inpatients. Within a few weeks, outpatient
consultationswere started in vacant office spaces when the anesthesiologistwas
available. Within 4 months, a full-time nurse was hired to assist with inpatient
rounds, ordering supplies, and monitoring outpatient procedures.
Within 1year, the practice was too busy for the founding PA and anesthesi-
ologist team. An anesthesia fellowship position was added. Shortly afterwards,
a psychologist was hired part-time. After 18months, a bricks and mortar outpa-
tient clinic containing examination rooms, procedure and recovery rooms, and
medical offices officially opened its doors. Also during that year, an additional

3. A zyxwvu
BUSINESS PLAN FOR A PAIN CLINIC zy
409
psychologist, two anesthesiologists, a neurologist, and an internist were added
to the program.
Networking began from the first day with physicians from the local medical
community. As each new practitioner joined the practice, they too took on
networking activities on a regular basis. Clinical research trials were begun at
the center in 1996. Publications from these research trials also helped to enhance
the reputation of the center and ensure ongoing referrals of patients.
Since 1992, approximately 20,000 individuals with a variety of pain disor-
ders have been evaluated at the center. Many more patients request treatment
than is possible, however, because of physical space limitations. There are also
several private pain practices in existence in the area, which are also apparently
successful. Outcomes and other pertinent data are collected, and the center
continues to expand its physical plant and develop its reputation at the time of
this writing.
DEVELOPING A BUSINESS PLAN FOR A PAIN CLINIC
During the earliest phases of organizing a pain treatment center consider-
ation must be given to the existing local resources. Bad planning, including the
inclusion of physical therapists and psychologists without formal pain experi-
ence; understaffing; undercapitalization; and lack of available reimbursement
can produce failure. Instead, careful analysis of existing needs, guaranteed
support from hospital administrators, and credibility of care providers are re-
quirements for beginning a successful program.
There are many types of pain programs. Consideration should be given to
the reimbursement environment in designing the specifics of the practice. In a
fee-for-service environment, behaviorally based programs do not generate the
same revenue stream as interventionally based programs (i.e., procedures are
better reimbursed than evaluative and cognitive approaches). Although behav-
iorally based programs have discouraged neural blockade interventions,modern
theories advocate medical procedures designed to minimize the nociceptive
input.3Incorporatinginterventional therapies into a pain practice is good medi-
cine and makes good business sense.It remainsto be seen if behavioralprograms
are more, or less, cost-effective than interventional programs in a capitated
market. Once the initial requirements are met, the founding team must under-
take to develop a mission statement, analyze requirements for capitalizationand
fund sources, identify key collaborators, and assess the market potential.
THE MISSION STATEMENT
Define Short-Term Goals to Address the Mission zyxw
A set of goals must be developed to direct the focus of the new pain
treatment center. Such goals might include the phased development of a pain
program. Phase I would include an inpatient service, which would provide
consultative perioperative pain management services. Phase I1 would involve
the establishmentof an outpatient program in a nearby location to continuecare
for discharged patients. Phase I11 would involve the addition of behavioral
therapists and other specialists to treat patients with ongoing pain disorders. At
this stage, a large, multi-office treatment site would be necessary. A mission
statement should draw attention to the unique attributes that the new pain

4. 410 zyxwvuts
ROBBINS zyxwvuts
& STAATS
program will offer. There should be recognition of unmet patient needs, and a
plan for meeting those needs through services provided. zyx
Set Intermediateand Long-Term Objectives
The intermediate and long-term objectives for the new practice might in-
clude the following: approach financial break-even by some set amount of time
while increasingpresence within the local medical community;identify and hire
pain professional staff with diverse talents and interests; achieve cost benefit
through increased efficiency and expanding case load; and develop a scientific
research program to publish results in the clinical literature and enhance the
center’s credibility.
Many academic pain programs have a difficult time maintaining cash flows
and eventually fail. There are several reasons for this including the improper
anesthesiologistmodel, the patient mix, and the lack of incentive rewards. Many
established academic pain programs are based on an ”anesthesiologist”model.
In this model, the physician is instructed to show up at his/her location and
perform a service. Instead, effective pain physicians must function as indepen-
dent consultants and develop skills at long-term patient follow-up. The financial
success of the program depends on their ability to evaluate patients in a timely
fashion, provide a service to the patient and referring physician, bill correctly,
provide the right mix of procedures and evaluations, and assure follow-up on
billing practices.
Secondly, academic centers generally exist in urban, low-income areas near
many poorly insured or uninsured patients. Patients in these communities have
inadequate access to health care and are frequently sicker than in other places.
Caring for these local patients exclusivelycan be expensive and time consuming,
without providing a high return. Efforts must be undertaken from the first days
of the practice to ensure that an appropriate mix of patients is obtained. The
academic practice that is managed on a private practice model will have a
greater likelihood of succeeding. Physicians should be rewarded for seeing
that extra patient, billing appropriately, and following through on obtaining
appropriate authorizations. This is a business, and the success of the practice
depends on hard work and attention to detail. Also, careful attention should be
paid to what is reimbursed by various payers. Many of the procedures per-
formed can legally and ethically be billed for under a number of codes. Billing
the appropriate codes will optimize revenue.
In most practices there are two sources of revenue that can be used to
support the facility and staff professional fees and facility fees. The successful
practice will determine the revenue and cost (profitand loss) for both functions.
In most communities, the facility fees generated are high compared to profes-
sional fees. Expenses required for success should be shared by the facility and
not be borne only by the physician.
ADDRESS CAPITAL NEEDS AND SOURCES
Phase I Start-up Expenses
A key to success for the new entity will be the ability to attract the
initial capital to begin operations. In the first phase of providing consultative
perioperativepain services,significantfunds will be needed. These requirements

5. A zyxwv
BUSINESS PLAN FOR A PAIN CLINIC zy
411
will probably include monies for part-time clinician salary support, nurse inser-
vicing, pain questionnaire forms, textbooks, and other supply items, and new
equipment including patient-controlled analgesia (PCA)pumps. Other start-up
expenses will include consulting and advisory fees for preparation of the busi-
ness plan, structuring of capitalization agreement and legal work, and leasing
of space within a hospital. zyxwv
Phase II Expenses Summary
In the second phase of developing an outpatient program, there will be
capital requirements for leased office space and capital improvements, hiring
and training of staff, procurement of medical and office supplies, and medical
equipment items needed for examining patients. Also required will be the
initial cash needs of the clinic, including monies to pay for communication and
correspondence, utilities, salaries, drug inventories, and janitorial support.
Developing a Financial Plan
Initial capitalization, including the founder’s seed funding, should be
pegged at a realistic amount. This capitalization should be intended to grow a
clinical entity with retained equity. The company will be debt-free at that point
(barring any interim management decisions to accelerate growth further).
Projecting Cash Flow
Cash flow is the most critical indicator of an entity‘s success. At no point
should the practice run out of cash. Significant margin for error should be
considered. Initial and second-round investment should be arranged prior to
need, and allowing for potential lag time to close. All future growth projections
should be based upon a debt-free, internally funded model. Attainment of
projected revenues should ensure the accumulation of required cash to meet
operating costs, pay salaries, and protect against unexpected revenue shortfalls.
Identifying Sources of Funds
Once the business plan is developed and capital requirements are deter-
mined, potential sources of funds should be investigated. Hospital boards, local
medical societies, and local specialty practices may be willing to fund a clinical
entity that is well thought out and meets a critical need. In a market with
opportunity for significant profitability through reimbursements, private capital
sources such as angel investors and venture capitalists may also be tapped.
Directories of potential investors are listed in many. places, including on the
World Wide Web. (Try: America’s Business Funding Directory at zy
http:// z
www.businessfinance.com/index.shtml,Money Hunter at http://www.moneyhunter.com/,
or Capital Markets Directory at http://www.dgtlmrktplce.com/capitalmar~ts/~d/
venture.funds/index.html.)

6. 412 zyxwvuts
ROBBINS zyxwvutsr
& zyxwvut
STAATS zyxwvut
Pricing ConsultativeServices
Anticipated pricing for initial clinical services should be determined during
the formulation of the financial plan. The billing office of the affiliated hospital
may be willing to discuss comparable International Classification of Diseases
diagnosis and current procedural terminology (CPT)coding and price structures
for consultative evaluations by other specialists.Additionally, management con-
sultants may be helpful in identifying nearby pain practices and their pricing
strategies.
IntegratingFacility Fee
Recently, many hospitals have found that pain practices are generating high
facility fees. Procedures performed in operating suites, fluoroscopy suites, and
other procedure areas can generate large fees. It is important to share expenses
with the facility, which can generate upwards of a million dollars per pain
physician, depending on the volume and type of practice.
DEFINE EARLY TEAM MEMBERS
Adequate professional and ancillary staffing will be essential in starting a
pain practice. Generally, the first clinician to participate in a pain program is an
anesthesiologist. Prior to beginning the first phase of the practice, discussions
should be held within the existing anesthesia group to determine the amount of
time that can be devoted to pain work, and the back-up support that will be
provided. Additionally, support staff resources should be committed to answer
calls, process forms, and assist in administrative operations during the early
phases.
Define the Members of the Phase II and 111 Practice
Pain-oriented clinicians draw from diverse backgrounds. During the second
and third phases of the developing pain practice, addition of professionals with
pain experience from these fields should be considered. Seventy percent of
patients with chronic pain are treated by anesthesiologists. In addition, other
practitioners, including movement therapists, acupuncturists, massage thera-
pists, chiropractors, dieticians, and herbalists also consider themselves members
of the pain team and should be considered as resources (Fig. 1).
Prioritizethe Team’s Activities
To ensure that a developing pain practice will thrive, issues such as ongoing
marketing of services to an expanding referral base, addition of compatible
services, and tracking of clinical outcomes must be in the forefront. From the
earliest days of the practice, consideration must be given to prioritizing activities,
leaving available work time for attention to these goals.

7. A BUSINESS PLAN FOR A PAIN CLINIC zy
413 z
Figure 1. Health care specialists for chronic pain in 1997. zyx
(Data zyx
from American Pain
Society,Raleigh,zyxwvu
NC, 1997.)
RESEARCHING THE MARKET
The initial target market should be the medical and patient community that
is known to the practitioners.An important component of starting a new clinical
entity involves knowing the demographics of the local population and referral
providers. It also involves knowing the payers and their policies. Finally, a
market study of the competition is useful. A management consultant may be
helpful in developing a comprehensive market study.
GETTING ACCREDITED
Recognition of a pain practice by a medical board attests that the program
has met peer-established quality. Requirements for recognition should be consid-
ered prior to starting the practice, with the goal of becoming accredited at the
first possible opportunity. Accreditation of a program implies that at least a
reasonable standard of care is provided by the practice. This will assist in
marketing the practice, provide public and peer recognition, and provide lever-
age with payers.
STRATEGIC ALLIANCES
There can be several strategic alliances developed to assure a busy and
lucrative practice. Orthopedic and neurologic surgery may want to refer their
diagnostic and therapeutic neural blockade. This can be a significant source of
revenue for an interventional pain specialist. In turn, these referring services
may ask for assistance in medical management on those who fail surgical

8. 414 zyxwvuts
ROBBINS zyxwvuts
& zyxwvut
STAATS
procedures. Spinal cord stimulation and the implantation of intrathecal pumps
can be used after medical therapies have failed. In some centers, performing
this surgerywith the spine surgeonstrengthensthis relationship.In this scenario,
a pain physician may bill for trials, insertion of the catheter or electrodes, and
the spine surgeon may assist with pocket formation and bill for this facet of the
procedure. When evaluating pain patients invariably the question of further
surgery will arise. Referrals to your spine surgeon will strengthen these ties. z
SERVICE AND SUPPORT
Just as it is important not to undercapitalize, it is important to invest in a
front staff, billing staff, and support personnel. Most physicians have at least
one nurse or nurse practitioner. Others have upward of four physicians’ exten-
ders per physician. In the beginning, one nurse or nurse practitioner will suffice.
Nurses can facilitatenew evaluations,follow-ups, and procedures performed by
the physician. Nurse practitioners can bill 85% of a physician on evaluation and
management codes. They can practice shoulder-to-shoulder with the physician,
but every step does not have to be supervised. Referring physicianswill be kept
happy if they don’t have to prescribe controlled substances for their patients,
and your staff can manage them safely and effectively. However, physician
extenders are only valuable if the volume is present in the practice to support
their activity.
ORGANIZATIONAL STRUCTURE
Initially, the founding clinical team may manage the clinic’s growth jointly
as managing partners. However, once schedulesare busy and time is committed,
a management professional or management team should be obtained to z
run
the entity.
References
1. Brena zyxwvuts
S: Chronic Pain: America’s Hidden Epidemic. New York, Atheneum, 1978
2. Fishbain DA, Goldberg M, Meagher BR, et al: Male and female chronic pain patients
3. Staats PS, Hekmat H, Staats AW Psychologic behaviorism theory of pain: A basis for
4. US Department of Health and Human Services: Report of the Commission for the
categorized by DSM I11 psychiatric diagnostic criteria. Pain 26:181-197, 1986
unity. Pain Forum 5:194.-207, 1996
Evaluation of Pain. Washington, DC,US Government Printing Office, 1987 zyx
Address reprint requests to
Wendye Robbins, MD
Assistant Professor of Anesthesia
Department of Anesthesia
Box 0648
University of California San Francisco
San Francisco, CA 94143

9. A BUSINESS PLAN FOR A PAIN CLINICzy
415 z
APPENDIX
Individual Societies and Pain
Associations
1. American Academy of Orofacial Pain
10 Joplin Court, Lafayette, CA 94549-1913
Phone: 510-945-9298
Fax: 510-945-9299
2. American Academy of Pain Management
Richard S. Wiemer, PhD, Executive Director
13947 Mono Way #A, Sonora, CA 95370
Phone: 209-533-9744
Fax: 209-533-9750
Jeffrey W. Engle, CMP, Account Executive
4700 West Lake Avenue, Glenview, IL 60025-1485
Phone: 847-3754731
Fax: 847-3754777
P.O. Box 135, Pasadena, MD 21222-0135
Phone: 410-255-3633
Fax: 410-255-7338
Penny Cowan
P.O. Box 850, Rocklin, CA 95677-0850
Phone: 916-632-0922
Fax: 916-632-3208
Judy Wilbank, Secretary
107Maple Ave, Silverside Heights, Wilmington, DE 19809
Phone: 302-792-9280
Fax: 302-792-9283
7. American Pain Society
Richard G. Muir, Executive Director
4700 West Lake Avenue, Glenville, IL 60025-1485
Phone: 847-3754715
Fax: 847-3754777
P.O. Box 3046
Williamsburg, V
A 23187
e-mail: skipb@widomaker.com
Belinda Puetz, Executive Director
7794 Grove Drive, Pensacola, FL 32514
Local Number: 850473-0233
Fax: 850484-8762
e-mail: aspmn8aol.com
10. American Society of Regional Anesthesia
Denise Wedel, MD, Current President
P.O. Box 11086
Richmond, V
A 23230-1086
3. American Academy of Pain Medicine
4. The American Back Pain Association
5. American Chronic Pain Association
6. American College of Osteopathic Pain Management zyx
& Sclerotherapy
8. American Society for Action on Pain
9. American Society of Pain Management Nurses

10. 416 zyxwvuts
ROBBINS zyxwvutsr
& STAATS
Phone: 804-282-0010
Fax: 804-282-0090
Louisa E. Jones, Executive Officer
909 NE 43rd Street, Suite 306
Seattle, WA 981054020
Phone: 206-547-6409
Fax:206-547-1703
Michael Troyer, Director
P.O. Box 274
Millboro, V
A 24460
Phone: 540-997-5004
13. The Neuropathy Association
60 E. 42nd Street, Suite 942
New York City, NY 10165
Phone: 212-692-0662
Stewart A. Hinckley, Executive Director
P.O. Box 11086
Richmond VA, 23230-1086
Phone: 804-2824011
Fax: 804-282-0090
David Waldman, J.D., Executive Director
1
1
1
1
1Nall, # 202
Leawood, KS 66211
Phone: 9134914451
Fax: 913-491-6453
16. Trigeminal Neuralgia Association
Claire W. Patterson, President
P.O. Box 340
Barnegat Light, NJ 08006
Phone: 609-361-1014
Fax: 609-361-0982
e-mail: tna@csionline.net
1
1
. International Association for the Study of Pain
12. National Chronic Pain Outreach Association
14. New England Pain Association
15. Society for Pain Practice Management