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Determining the Right MSO Structure for Your Healthcare Practice

Posted by Erick Cutler, CPA on Mar 16, 2020 10:57:00 AM

As healthcare practice owners seek to improve revenue cycle management and overall practice efficiencies, management service organizations (MSOs) play an instrumental role in streamlining operations and enabling physicians to focus on patient care. Consolidation within the medical industry and changing regulations are further driving the need for assistance with practice management and administrative support services.

The extent to which a practice outsources tasks depends on various factors including size, scope of services and specific operational objectives. The good news is that there is no one-size-fits-all approach—contracts with MSOs can be streamlined to specific needs.

Related Webinar on Demand: What Is Revenue Cycle Management and Why It Is More Important Now Than Ever?

Types of MSO Structures

There are plenty of choices when it comes to working with MSOs. Some practices even contract with several MSOSs for different needs, all in an effort to keep costs down.

Physician-owned MSOs can be designed to give private practice physicians full clinical autonomy while optimizing operating efficiencies through shared services. For example, services may include:

  • Coding, billing and collection services
  • Financial management
  • Electronic health record (EHR) and equipment savings
  • Office space management
  • Group purchasing

Practices may also look to the MSO to provide additional services, including staff training, HR management, regulatory compliance oversight and overall risk management.

Other MSOs own the tangible assets of the practice and directly manage everything from supplies and equipment to the office space itself. The physicians still own their medical records, staff and maintain insurance contracts, yet they don’t bear the administrative burden of managing these assets. These arrangements tend to be “stickier” than the first model because it can become disruptive to the practice to terminate the contract.

Value-Based Care and MSOs

As insurers increasingly tie reimbursement to quality care and outcomes, physicians can feel the strain of tracking their performance and providing metrics—all on top of the administrative tasks they already have. MSOs have had to adapt to these changes so that they can offer solutions that meet clinical measures. Some now provide clinical guidelines and care coordination services to their members as well as group savings offered by insurers.

Contract Considerations

Clearly there is a growing need by medical providers to outsource administrative services to better manage revenue cycles and provide patients the time they need. MSOs can provide the solution to meet these objectives, but it is essential to determine which services make sense to outsource and how much independence you want to maintain.

Complex regulatory requirements call for tightly structured MSO agreements. For example, both parties must ensure that the federal anti-kickback statute isn’t violated.

Practice owners must understand exactly what is included in the contract. For example, which services are being purchased? What are the terms of the contract? Are there any limitations? For example, is the MSO managing billing and insurance company collections but not patient collections? If the agreement is terminated, what procedures are in place to repurchase assets?

Physician-led MSOs should share the practice’s objectives in providing patients with quality care. From a business perspective, they will focus on pooling resources to help the practice grow revenue and help contain costs. Practice owners should consult with their business advisors to ensure the partnership works to their greatest advantage.

Do you have questions about running your medical practice? The medical practice accounting team at GPP can help. Contact Erick Cutler at 214-635-2541.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

Topics: Medical, MSO, Management Service Organizations