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 grown larger in recent years as complex EMRs were installed and reimbursement procedures grew ever more complicated.

In some cases, practices have lagged behind in such areas as strategic planning and billing and collections because they could not make the necessary investments in technology. And looming on the horizon is perhaps the biggest time and technology challenge of all: managing the clinical data needed to participate in value-based care.

As a result, more and more practices are turning to Medical Services Organizations (MSOs), which perform the “back office” functions for physician practices on an outsourced 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.

Increasingly, the favored solution is a fully integrated MSO, which not only performs the traditional outsourced functions outlined above but can also provide an EMR system, negotiate with payors, and provide access to a clinical data system that will meet the requirements of value-based care. An advantage of a one-stop shop is that all of the MSO’s systems “talk to each other,” eliminating the inefficiencies and hiccups that occur in trying to tie together the variety of 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.

One example is data analytics. A physician practice that we work with was, for the first time, able to get detailed analytics on the profitability of the various services they offered. That allowed them to strategically plan in a way they never could before and make informed decisions on how they could grow.

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 reimbursed. Systems that generate this data are very sophisticated and, as a result, often costly. Contracting with an MSO can provide cost-effective access to a clinical data system.

As practices go down the road towards value-based reimbursement, the cost of these clinical data systems will likely be greater than most practices are willing to invest.

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

Additionally, other services offered by full-scale MSOs include:

• Revenue cycle management,
• Procurement,
• Coding/Compliance program,
• Physician compensation modeling,
• Physician and Mid-level credentialing,
• Professional employer organization health benefits,
• Human resources consulting,
• Valuation,
• Tax, and
• Cybersecurity.

Another factor driving the rise of MSOs is the plateauing of the full-employment model by hospitals, health systems and other healthcare organizations. For a long time, the ranks of hospital-employed physicians grew as doctors sought 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. An MSO might well make more sense than the large capital investment physicians would need to create their own back office functions.

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.