1. The Power of Partnership:
Doctors and Hospitals Benefit from
Management Services Organizations
a report by Keith E. Chew, CMPE, Senior Consultant
McKesson Practice Consulting Solutions, Revenue Management Solutions
As the day-to-day operation of physician Because the MSO provides an ideal Since hospitals and health systems
practices and ancillary services becomes conduit for implementing an electronic generally have the financial wherewithal
increasingly complex and costly, health record (EHR), hospitals benefit to capitalize development of a
management services organizations from MSO development by more communitywide EHR, many successful
(MSO) are emerging as ideal vehicles effectively aligning with the local MSOs are anchored by a hospital.
for addressing the needs of physician provider community and improving However, physician groups also are
groups, other service providers and continuity and quality of care. establishing MSOs. Regardless of whether
hospitals alike. the entity is organized by physicians
The EHR Platform or a hospital, MSO participation can
MSOs are partnerships that offer a range The emergence of the EHR has been include other community health
of support services to independent a primary catalyst behind the current organizations, such as imaging centers,
physician and ancillary service provider interest in MSOs. Unlike stand-alone, physical therapy centers, rehab facilities,
groups. MSOs frequently include a hospital-based EHRs developed in ambulatory surgery centers and more.
hospital ownership interest and are isolation, EHRs implemented within Ownership typically will reflect the capital
designed to assist providers with basic the framework of the MSO are more contributions of the members.
business functions like purchasing, likely to generate the critical mass of
equipment leasing, contracting and participation necessary to succeed
human resources. They can also deliver because providers will be attracted to
mission-critical services such as billing both the MSO-based EHR’s connectivity
and regulatory compliance. and its support services.

2. An Array of Services Similarly, state-of-the-art revenue in attracting physicians to align with
In the past, some hospital-driven MSOs cycle management practices, rigorous the hospital. The sharing of protected
have fallen short of their potential by compliance programs and experienced health information that would occur is
mandating the services that participating managed care contracting may simply only possible by adhering to the Health
providers were required to use as be beyond the reach of the small- to Insurance Portability and Accountability
participants of the MSO. Increasingly, medium-sized practice except through Act (HIPAA) requirements. However, this
however, MSOs are being structured an MSO or an expensive consulting adherence is not problematic under an
to provide member groups with full arrangement. MSO structure.
flexibility in selecting only those services
they need or desire. This à la carte MSOs frequently contract with Meeting the Challenges of
approach allows independent provider outsourced medical management Today’s Market
groups to choose from a range of companies capable of providing the For smaller provider groups, the
offerings, including: heavy lifting required to operate the challenges of operating a successful
entity on a day-to-day basis. National practice continue to mount. From
- Billing and accounts receivable vendors often can deliver a depth of growing regulatory requirements and
management resources and experience generally not aggressive enforcement to flat or falling
available with smaller, local firms. reimbursements and rising expenses,
- Human resources/personnel
management many groups are being squeezed as
The Power of Many never before.
- Equipment leasing and maintenance By bringing the weight of multiple
- Purchasing practices to vendor negotiations, MSOs Fortunately, MSOs can serve as a
are in a position to save groups money critical lifeline for practices in today’s
- Regulatory compliance
on everything from medical supplies to tumultuous market. MSOs not only
- Financial management equipment leasing. Some MSOs also are help control costs, boost revenue,
- Managed care contracting authorized to negotiate and contract improve quality and reduce regulatory
with managed care companies on behalf risk but also allow providers to focus
- Services contracting of their participating provider groups. their limited time and energy less on
- Information technology The collective marketshare can provide routine business matters and more on
- Accounting and payroll the MSO with the muscle to win higher the services they are best equipped to
reimbursements for their member provide — the delivery of patient care.
- Strategic planning provider groups.
- Management
Provider groups also benefit from
The aggregation of these services
access to a robust EHR system. Through
under the MSO umbrella gives provider
connectivity with referring physicians,
practices access to resources and
independent laboratories, the hospital
expertise they might not otherwise be
and other providers, the physician
able to afford. For example, a small
group is in a position to more effectively
physician group likely wouldn’t be able
manage and provide patient care.
to hire a full-time practice manager
Likewise, for the hospital, the continuity
with a master’s degree in health services
of care that the EHR system produces
administration. But through the MSO
not only boosts the hospital’s public
structure, that capability is readily
standing from a quality standpoint, but
available on a part-time or full-time
can also serve as a key differentiator
virtual basis.
McKesson Provider Technologies
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