Keep Your Practice Alive by Partnering with a Management Service Organization

The level of complexity surrounding modern medical practices has skyrocketed since the days when most specialists ran their own solo offices with only a few employees. In place of these smaller, simpler setups are now multimodal clinics comprising higher numbers and more specialized assistants who command hefty wages. This shift in practice models creates an additional challenge for today’s practitioners to stay competitive while still providing quality healthcare services.

 

For physician owners facing growing expenses and decreasing revenue, retirement may seem like the only option. However early career professionals can often find more success tapping into additional resources for guidance instead of quitting entirely.

 

Recent developments in the private healthcare industry have resulted in an array of strategic changes, from group purchases by health systems to consortia mergers and acquisitions by private equity.

 

However, for many practices looking to gain expertise without relinquishing control over ownership, contracting with a Management Services Organization (MSO) is proving to be the most beneficial approach. Our article further discusses these trends and delves into how MSOs can help you grow your practice successfully.

 

Private sector providers must navigate a highly competitive landscape when it comes to attracting and retaining qualified staff – one which is heavily influenced by market forces such as the supply of personnel relative to demand.

 

When seeking talent, groups may find themselves competing for candidates in their local area due solely to the sheer number of eye-care businesses present. Ultimately, this could add extra strain on budgets with no guaranteed return.

 

The escalating competition among specialty care providers has led to an increase in wages, bonuses, and other benefits for staff. Unfortunately, these wage increases have not been accompanied by third-party reimbursements that keep pace with inflation or the rising cost of employee healthcare insurance premiums.

 

As a result, many healthcare professionals are facing financial insecurity with no sign of relief on the horizon – transforming how this essential service is delivered across the country.

 

Impact of Private Equity on Private Practice

Private Equity buyouts have gained significant traction in recent years as a viable exit strategy for medical practice owners. The advantages of selling to PE firms are vast: owners receive upfront cash payments, often equating to multiples of the value of their practice, with an ownership stake that keeps them invested in its future success; and they gain access to experienced business professionals equipped with the expertise needed more than ever to navigate today’s competitive healthcare environment.

 

PE has its disadvantages as well. With the PE model, the strategy of the buyer is to grow the new entity as much as it can over 5-7 years to make it appealing to sell to another, larger entity. Since the next entity is usually looking to do the same, it is possible that providers will work under a different ownership group every 7-10 years.

 

This cycle of recapitalization encourages PE groups to focus on short-and mid-range goals rather than plan for long-term success.

 

For providers considering the transition from ownership to employment, their financial investment in the practice may remain unchanged – yet they no longer have ultimate control over the business and clinical decisions. Initially-trained doctors must weigh up whether long-term security comes with working as an employee of a corporate entity or if owning part of a more traditional private group is the better option for them.

 

What Are Management Services Organizations (MSOs) in Healthcare?

Management Services Organizations, or MSOs, are entities that provide various types of support services to healthcare providers, such as hospitals, clinics, and private practices. MSOs are designed to help healthcare organizations focus on what they do best- providing high-quality patient care- while leaving administrative and business functions to a third-party provider.

 

What Services Do MSOs Offer?

MSOs can offer a wide range of services, depending on the needs of the healthcare provider they are working with. Some of the most common services offered by MSOs include:

 

Revenue Cycle Management

MSOs can help healthcare providers with billing and payment processes, streamlining revenue cycle management, and increasing efficiency.

 

Healthcare IT Support

MSOs can help providers set up and maintain electronic health records (EHRs), providing valuable technical support for technology-driven healthcare initiatives.

 

Human Resources Support

MSOs can help with employee recruitment, management, payroll, and training, taking the burden of HR off of healthcare providers and allowing them to focus on patient care.

 

Business Development

MSOs can help healthcare providers with marketing, strategic planning, and other strategic business functions to help them grow and improve their operations.

 

To know more about the inner workings of an MSO, check out this blog.

 

Benefits of Working with an MSO

Working with an MSO can provide a number of benefits for healthcare providers. By outsourcing administrative and business functions, healthcare providers can focus their resources on providing high-quality patient care. MSOs can also provide expertise and specialized support that healthcare providers may not have in-house, such as IT support or business development services.

 

Additionally, MSOs can help healthcare providers navigate the complex regulatory environment of the healthcare industry, ensuring compliance with state and federal regulations and avoiding costly penalties.

 

Considerations When Choosing an MSO

When choosing an MSO, healthcare providers should consider factors such as the MSO’s experience with healthcare clients, their range of services, and their reputation for quality and reliability. Providers should also consider the cost of the MSO’s services and ensure that they align with their budget and overall operations.

 

Essentially, Management Services Organizations are becoming an increasingly popular option for healthcare providers looking to streamline their operations and focus their resources on providing high-quality patient care. By outsourcing administrative and business functions, MSOs can help healthcare providers operate more efficiently while providing valuable expertise and support to help them succeed in an increasingly complex healthcare landscape.

 

How will an MSO support your Practice?

An MSO can support a private practice in many ways, with the most sought services being back-office expertise. An MSO can provide management-level assistance with office functions such as revenue cycle, information technology, human resources, wages and benefits, and accounting.

 

In addition to management assistance, most MSOs offer higher-level leadership services, such as strategic planning and financial forecasting. Other services offered vary among MSOs but can include practice assessment and evaluations, revenue management, design, marketing, physician recruitment, legal, professional development, and fundraising.

 

Some practices will contract with an MSO to supply these services in an à la carte fashion, choosing which services they need the most help with from a menu of offerings. Other practices may contract with an MSO to place a high-level manager in their practice if they cannot find or afford someone at the level that they need.

 

Working with an MSO can be a great way to benefit from professional expertise without making any long-term commitments. In comparison to being acquired by Private Equity, working with an MSO is like ‘catching up’ rather than entering into marriage – and neither partner needs to worry about red tape or restructuring when the time comes for them to go their separate ways.

 

Conclusion

Despite increased overhead costs due to larger staff sizes, inflation-busting salaries, and benefits, direct specialty practices are facing an uphill struggle for success in the future.

 

While physicians have traditionally managed their own businesses with relative ease – this may no longer be possible as expenses outpace earnings from patient visits. It’s a challenge that will continue to persist into 2023 and beyond – requiring innovative solutions if these medical professionals wish to stand strong against financial strife.

 

With the pressure of ever-changing market dynamics and growing administrative costs, physician ownership can come with many challenges. However, these obstacles don’t have to stand in their way; partnering up with a Management Services Organization (MSO) could be an ideal option for allowing physicians to maintain control over their practice while receiving invaluable guidance from experts who specialize in sustainability – ensuring active involvement every step of the way.

 

Are you a dedicated Specialist with a strong desire to be more active with your patient panel? Contact us at [email protected] and let us discuss how you can be an Independent Telehealth Physician in The VIOS Clinic platform.