What Is an MSO in Healthcare? Explanation and FAQ
Healthcare facility leaders are responsible for juggling many time-consuming clinical duties. Ensuring patient safety, satisfaction, and wellness can be demanding, so adding administrative tasks to their workload can not only decrease their organizational productivity and effectiveness, but also harm patient care. A management services organization (MSO) can help facilities manage non-clinical duties and achieve business goals.
You may be wondering — What is an MSO in healthcare settings? These companies provide managerial support services to medical practices, easing the burden on facility leaders. We discuss how working with an MSO can impact organizational efficiency and review the advantages and disadvantages of incorporating an MSO into your facility’s business plan.
What Is the Role of an MSO in Healthcare Facilities?
An MSO provides the essential administrative infrastructure, technology, and resources necessary to run a healthcare facility. These services provide the following functions:
- Human resources and personnel management
- Billing and collection services
- Purchasing and managing electronic health records (EHR) and other IT services
- Regulatory compliance oversight
- Medical equipment and clinical space rental
- Financial and operational management
- Healthcare marketing
- Staff training and continuing education
- Population health analytics and measurement of clinical effectiveness
How Can an MSO Help Facilities?
Most states limit medical practice ownership to licensed physicians and other authorized healthcare providers. Prohibiting involvement from outside investors reduces the amount of money organizational leaders can spend on items like diagnostic machines, charting systems, and high-quality professional staff.
While these laws were initially created to protect patient care from becoming monetized, they can inadvertently limit the quality of care a facility is able to provide. By subcontracting administrative duties, facilities are able to transfer a percentage of company ownership to the MSO.
Outsourcing funding and investment potentially increases the amount of money that can go into an organization and can help facilities maximize their ability to provide safe and reliable care. Physicians who may not specialize in tasks like revenue cycle administration and care management can benefit from a partnership with an expertly run MSO.
How Does an MSO Make Money?
After learning about facility MSO partnerships, organizational leaders may be wondering — What is an MSO in healthcare’s main goal and how do MSO companies benefit from partnering with medical practices?
MSOs can be made up of physicians, private equity investors, venture capitalists, and hospitals. They run physician-led organizations like other business ventures. Prior to establishing a formal relationship, the MSO and healthcare organization form a management services agreement (MSA) which governs services and payments rendered between the parties involved.
Under the management services agreement (MSA), the MSO and the healthcare organization negotiate terms, including the purchase of assets and the commission based on collected fees for services. MSOs often buy office space or medical equipment and lease it back to the managed healthcare organization.
Physicians who may not be able to afford these expensive line items are able to pay the MSO a management fee — either via company shares or monthly payments — to gain access to treatment items necessary for value-based care. MSO-provider relationships are mutually-beneficial when they’re well managed and enhance treatment services without compromising person-centered care.
Advantages and Disadvantages of Using an MSO
When establishing an MSO healthcare business plan, it’s important to assess the benefits and liabilities involved with outsourcing company ownership. Facilities that perform this risk analysis can maximize earning potential, optimize patient care quality, and reduce financial and legal risks involved in running a medical business.
| Advantages | Disadvantages |
|---|---|
| MSO bulk orders allow for highly discounted equipment, IT, and insurance packages. | Poorly regulated MSOs increase an organization’s legal and financial risk. |
| Administrative burdens are removed so physicians can focus on direct patient care. | Physicians often lose purchasing power or control over business-related decisions. |
| Assets are protected and malpractice risk is reduced. | High monthly management fees reduce profits earned from patient services. |
| Organizations who wish to stay independent from major healthcare brands are able to do so with funding from MSOs. | Reduced administrative flexibility (benefits packages, wage offerings, etc.) due to uniformity of MSO standards. |
Which Organizations Benefit Most From an MSO Partnership?
You may be able to answer the question: What is an MSO in healthcare? but it’s also important to know whether your organization is in a position to benefit from this type of venture.
Physicians looking to leave their practice but still maintain partial ownership of their business may view forming an MSO as an opportunistic way to stay involved. Additionally, small or single-physician practices that wouldn’t be able to afford necessary space or equipment could benefit by working with an MSO.
Any medical practice considering a partnership with an MSO is urged to seek legal counsel prior to establishing a contractual relationship. Ensuring that your organization has the necessary safeguards in place to protect you from regulatory scrutiny is key to long-term success.
Discover More Ways to Improve Asset Management and Optimize Care Quality
Answering the question, What is an MSO in healthcare? is the first step to reducing organizational liability and improving regulatory compliance at your facility. Finding accurate and up-to-date information can be challenging, but our expert team has you covered. Our newsletter provides additional resources and healthcare management strategies for your facility — at no cost to you.
Legal Disclaimer: This article contains general legal information, but it is not intended to constitute professional legal advice for any particular situation and should not be relied on as professional legal advice. Any references to the law may not be current, as laws regularly change through updates in legislation, regulation, and case law at the federal and state level. Nothing in this article should be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed to practice in your jurisdiction.