7 Options for Physicians Wary of Employment

Kenneth J. Terry, MA


January 13, 2016

In This Article

Management Services Agreements

A prime challenge in private practice is the growing cost of overhead. Many smaller practices have outsourced their billing or their revenue cycle management (RCM) in an effort to reduce overhead and cope with the increased complexity of billing. Management services organizations (MSOs) have traditionally offered not only RCM services but also supply purchasing and other back office services.

According to LaPenna, MSOs are growing again because information technology has become too complex for most private practices. In some cases, this is just a matter of independent practices sharing back office and IT functions, perhaps through an IPA. Entrepreneurs are also starting MSOs that manage small practices, he says.

LaPenna is also seeing hospitals use MSOs or MSO-like services to provide technical support to practices that have received Stark subsidies from those hospitals to purchase EHRs. In that case, the practice must pay for the technical support at fair market value. If the hospital can get the practice on the same EHR that its employed physicians use, the independent practices are more aligned with the hospital.

Some hospitals may provide additional management services, he notes, or manage entire practices. The fee for doing the latter can range up to 15% of practice revenue.

Zetter agrees, noting that hospitals may provide these management services in lieu of purchasing the practices. But Gosfield says that the MSOs she sees are usually created by IPAs rather than by hospitals.


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