A Management Services Organization (“MSO”) is an organization owned by a hospital physician group or other group of investors that provides management and administrative support services to individual physicians or small group practices.

One purpose of MSOs is to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice. In some cases, MSOs simply provide business services to providers for a fee. In other cases, MSOs purchase the tangible assets, such as buildings, equipment and supplies, of their client physicians and lease these assets back to the physicians. In these situations, the physicians continue to own their own medical records and health plan contracts and continue to practice in their own offices. This arrangement relieves physicians of yet another non-medical aspect of running a practice.

Benefits of An MSO Structure:

• Market Share

A primary objective of healthcare executives is increasing market share by creating financial and strategic alignments with physicians. An MSO is the typical vehicle of choice for accomplishing this critical objective.

 

• Health System and Physician Alignment

MSOs eliminate hospital-based bureaucratic and slow decision-making processes, complex reporting requirements, and corporate allocation of overhead that can often add cost and do not consider the unique characteristics of physician practices.

 

Fixed salary based physician compensation typical to employment do not incentivize physician productivity or involvement in practice operations. MSOs favor gaining physician buy in, involvement and structuring physician compensation models to foster increased volume and practice based revenue while controlling practice costs.

 

• Administrative Business Function Integration

MSOs are set up as new, separate organizations that integrate business functions and provide support serving many participating organizations. Through this model, administrative efficiency is attained while allowing the participating organizations to maintain complete programmatic independence.

 

• Economies of Scale

The inherent integration of previously separate business services results in cost savings passed on to physicians, health plans and healthcare purchasers.

 

• Economies of Scope

By combining and sharing the cost of resources spread out to serve multiple participating organizations, higher level specialized and experienced professionals such as managers adept in physician practice management, Information technology specialists and similar skilled professionals required to establish and maintain a profitable practice can be accessed. “One size fits all” staffing is eliminated.

 

Additionally, ancillary services ownership and management and management for specialists’ services can be better harnessed to yield greater profit for health systems

 

• Outsourcing Options

Profitable practice development and management requires expertise in numerous areas including, among others, managed care contracting, financial management, business development, marketing, fee setting, billing and collections.

 

Through its outsourcing options, Innova Hospital Practice Solutions LLC provides affordable staff and capabilities required to navigate the complex and highly dynamic healthcare environment to practices of all sizes. Additionally, Innova adds value derived from its founders, experienced practice management healthcare consultant executives.