Management Services Organization (MSO)

A long-standing concern for physicians in private practice is the amount of time they must spend away from patients tending to the business side of their practice, and that concern has only been exacerbated in recent years as managing a medical practice is even more complex than ever before. An MSO can enhance the overall operational and financial performance of your practice by enabling professionals to provide these services.

As a result, more and more physician practices are turning to Medical Services Organizations (MSOs), which perform the “back office” functions for physician practices on a partnered basis. Outsourcers have long been available to physician practices for specific functions. A practice might contract with one company to do its accounting, another to manage its technology and a third to handle billing and coding. The LBMC MSO model is differentiated from other outsourcing models in that we partner with you via these services to better position you and your practice for future successes.

Increasingly, the favored solution is a fully integrated MSO, which not only performs the traditional back-office functions outlined above but can also provide consulting services to include, but not limited to:

• coding compliance audits/education
• compensation modeling
• cybersecurity
• data analytics and dashboarding
• IT solution selection
• M&A
• payor negotiations/contracting
• practice assessments
• strategic planning
• tax
• wealth advisory

A major advantage of a ‘one-stop shop’ approach is all of the MSO’s business components “talk to each other,” eliminating the inefficiencies and hiccups that occur in trying to tie together the variety of services and systems that are deployed when tasks are outsourced to multiple vendors. MSOs also provide physician practices with access to sophisticated technology they might not be able to afford on their own. And with the increasing deployment of value-based reimbursement, physician practices will need to provide detailed information about treatments and outcomes in order to be appropriately reimbursed for their hard work.

Access to purchasing power expertise are other potential advantages of using an MSO. A truly full-service MSO provides group purchasing, which provides savings on supplies and equipment that are available to organizations such as MSOs that can negotiate on behalf of a larger group of providers.

Factors driving the rise of MSOs include the consolidation of medical practices to gain leverage with payors and to gain greater buying power, a desire for enhanced financial performance along with the plateauing of the full-employment model by healthcare organizations that are not owned in part by physicians. Further, private equity has utilized MSOs in order to remain focused on portfolio growth and profitability. For a long time, physicians sought employment to free themselves of the administrative burden of running a practice. More recently, the trend towards employment has flattened, and we now are entering a period in which these organizations are conducting those difficult contractual renewal discussions that could lead to more shared risk on the financial front. Physicians wishing to regain some autonomy and independence might be facing additional financial risk in exchange for those.

While employing physicians helps shore up competition and physician shortage issues, hospitals are finding that because of reimbursement cuts, they may not be able to afford the current full-employment model. A return to a fully independent private practice – or perhaps in a joint venture with the hospital – means those physicians will need to set up their own businesses while remaining ‘hospital-friendly’. Utilizing the services offered by an MSO makes more sense than making the large capital investment necessary to form a new medical practice.

And with physicians in short supply, it only makes sense for them to spend the maximum amount of time possible doing what they do best – taking care of patients. MSOs help make that possible.