If you are looking to start an MSO business, the key questions need to be addressed: “What is a management services organization?”, “How to form a management services organization?” For starters, a management services organization (MSO) is the term for a company that provides non-clinical services to medical practices, ambulatory care facilities, or other healthcare providers. MSOs have become ubiquitous in the healthcare industry, as they enable healthcare providers to focus on providing quality clinical care without the burden of administrative and management tasks.

These organizations may be owned by non-healthcare provider investors, hospitals, physician groups, joint ventures between hospitals and physicians, or even health plans. MSOs are evolving to tackle the growing demands of a value-based marketplace, where insurers tie reimbursement to quality and outcomes, making performance tracking and meeting clinical measures increasingly burdensome. By allowing healthcare providers to focus on patient care, MSOs can help improve the quality of care that patients receive.

Some of the areas in which a management services organization can assist practices include:

  • Operational issues
  • Financial management
  • Billing and collection
  • Accounts payable
  • Overall revenue cycle management
  • Payer negotiations and credentialing
  • Employment of non-clinical staff
  • IT services
  • C-suite administrative services
  • Human resources
  • Marketing
  • Space rental
  • Equipment rental

MSOs provide value in the healthcare system by enabling physician organizations to succeed in the assumption of financial and population risk, developing group purchasing, malpractice discounts, and data aggregation opportunities, and helping the practice achieve optimum levels of efficiency.

In this article, we will discuss the steps to create an MSO structure, including:

  1. Identifying the purpose and services
  2. Establishing an organizational structure
  3. Choosing an MSO structure
  4. Developing ownership documents
  5. Building a successful physician culture
  6. Ensuring compliance
  7. Marketing your MSO
  8. Implementing technology and systems for MSO operation

How to Form a Management Services Organization: Identifying the Purpose and Services

First, what is a management services organization? A management services organization (MSO) is a healthcare-specific administrative and management company that provides a host of non-clinical services to medical practices, ambulatory care facilities, or other healthcare providers.

The primary advantage of partnering with an MSO is to have access to management services and to ensure the best (lowest) pricing on supplies and services. MSOs can help practices achieve optimum levels of efficiency by developing group purchasing, malpractice discounts, and data aggregation opportunities.

Some of the services provided by an MSO may include:

  • Billing and Collection
  • Accounts Payable
  • Overall Revenue Cycle Management
  • Insurance/Payer Negotiations and Credentialing
  • Employment of Non-Clinical Staff
  • IT Services
  • C-Suite Administrative Services
  • Human Resources
  • Marketing
  • Space Rental
  • Equipment Rental

By offering these services, MSOs can help healthcare providers focus on delivering quality patient care while reducing the administrative burden associated with running a practice. When considering partnering with an MSO, it is essential for the physician to identify the specific services that a practice needs and ensure that the MSO can provide them effectively and efficiently.

Roles and Responsibilities of Key Personnel

Those who wonder how to form a management services organization should understand that creating a successful management services organization (MSO) requires a well-defined organizational structure that outlines the roles and responsibilities of key personnel.

The ideal MSO structure is a general stock corporation designed to support the MSO’s goals and ensure efficient management of its services. The following steps can help you establish an effective organizational structure for your MSO:

Governing Board

Form a governing board that is responsible for overseeing the MSO’s operations and making strategic decisions. This board should include individuals with experience in healthcare management, finance, and other relevant areas.

Key Positions

Identify the key positions within the MSO, such as the president, treasurer, and secretary. These individuals will be responsible for managing the day-to-day operations of the organization and ensuring that it meets its objectives.

Selecting Members

Choose members for the governing board and key positions who have the necessary skills, experience, and commitment to the MSO’s success. It is essential to select individuals you know and trust, as they will play a crucial role in shaping the organization’s future.

Define Roles and Responsibilities

Clearly outline the roles and responsibilities of each member within the organizational structure. This will help ensure that everyone understands their duties and can work together effectively to achieve the MSO’s goals.

Create a Reporting Structure

Establish a reporting structure that allows for clear communication and accountability among the various levels of the organization. This will help ensure that information flows smoothly and that decisions are made efficiently.

Establishing a well-defined organizational structure helps you create a solid foundation for your MSO’s success and ensures that it can effectively manage the various non-clinical services it provides to healthcare providers.

Choosing an MSO Structure: What is the correct MSO Model?

There are two main types of management services organization (MSO) structures, each with its own advantages and implications for healthcare providers. When creating an MSO, it is essential to choose the structure that best aligns with your goals and the needs of the healthcare providers you plan to serve.

Independent Practice Support

  • In this type of MSO, the organization provides business services to medical practices, allowing them to remain relatively independent.
  • The MSO offers non-clinical services such as billing and collection, accounts payable, revenue cycle management, payer negotiations and credentialing, employment of non-clinical staff, IT services, human resources, marketing, space rental, and equipment rental.
  • This structure allows healthcare providers to maintain control over their practice while benefiting from the support and resources of the MSO.
  • This type is appropriate for the 1-2 owner medical practice.

Asset Ownership and Management

  • In this structure, the MSO owns (buys) the tangible assets of practices and manages them directly.
  • The MSO owns the equipment, supplies, and office space and leases it all back to the physicians.
  • This arrangement can provide healthcare providers with access to better pricing on supplies and services, as the MSO can leverage economies of scale to obtain preferred pricing on everything from medical supplies to healthcare insurance.
  • However, this structure may involve a higher level of control by the MSO over the practice, which some healthcare providers may find undesirable.

Some people prefer a hybrid model where practice support and asset ownership and management are handled by one entity.

When choosing an MSO structure, it is crucial to consider the needs and preferences of the healthcare providers you plan to serve, as well as the goals and objectives of your MSO. It is also essential to fully understand the agreements you are entering into and to ensure that your MSO complies with all relevant regulations and laws.

Developing Ownership Documents

Once the management services organization (MSO) is formed, it is crucial to establish ownership documents that govern the rights and obligations of the MSO’s investors. These documents will form the basis of the business relationship between the MSO and the medical practices or facilities it serves, including the management fee. Properly drafted ownership documents can help ensure that the MSO operates smoothly and complies with all relevant regulations and laws.

Here are some key considerations when developing ownership documents for your MSO:

Define investor rights and obligations

Clearly outline the rights and obligations of each investor in the MSO, including their financial contributions, voting rights, and any restrictions on transferring their ownership interest.

Establish governance structure

Detail the governance structure of the MSO, including the roles and responsibilities of the governing board and key positions, as well as the reporting structure and decision-making processes.

Address profit distribution

Specify how profits will be distributed among the MSO’s investors, taking into account any applicable tax and regulatory considerations.

Include exit provisions

Outline the process for investors to exit the MSO, including any buyout provisions, rights of first refusal, or other mechanisms for transferring ownership interests.

Ensure compliance with regulations and laws

Ensure that the ownership documents comply with all relevant healthcare regulations and laws, including those related to the corporate practice of medicine, anti-kickback statutes, and Stark Law.

Seek legal counsel

Engage experienced healthcare counsel to help draft and review the ownership documents, ensuring that they are legally sound and protect the interests of the MSO and its investors.

By developing comprehensive ownership documents, you can create a solid legal foundation for your MSO and help ensure its long-term success in providing non-clinical services to healthcare providers.

How to Form a Management Services Organization and Build a Successful Physician Culture

A successful management services organization (MSO) must foster a strong physician culture within the organization, promoting tighter alignment of purpose and goals. This culture should emphasize collaboration, communication, and a commitment to providing high-quality patient care.

Here are some strategies to build a successful physician culture in your MSO:

  • Engage Physicians in Decision-Making: Develop a well-defined physician engagement strategy that includes mechanisms for soliciting physician input into decisions that affect their clinical practice. Ensure that physicians have a voice at the table and that their opinions are heard.
  • Promote Transparency and Communication: Establish effective communication channels between physicians and system administrators, fostering a culture of teamwork and respect. Transparency in decision-making processes and sharing information can help build trust and collaboration among team members.
  • Provide Necessary Resources: Ensure that physicians have access to the resources they need, such as staffing, equipment, and technology, to provide high-quality care to their patients. This support can help physicians feel more invested in the organization and its success.
  • Encourage Collaboration and Teamwork: Break down silos and hierarchies that may exist among different healthcare professionals. Encourage physicians to work collaboratively with other team members, sharing their expertise and actively participating in problem-solving and improvement efforts.
  • Offer Training and Support: Provide training and support to help physicians develop the skills needed to lead and participate in care teams effectively. This may include training in communication, collaboration, and leadership, as well as ongoing support to address challenges and opportunities for improvement.
  • Maintain Ethical Standards: Create an organization grounded in integrity and committed to the highest standards of ethical conduct. This foundation will help build trust and credibility among physicians and other stakeholders.

As you learn how to form a management services organization, you should also know the importance of fostering a strong physician culture. With this, your MSO can improve the quality of care provided to patients, enhance collaboration among healthcare professionals, and ultimately contribute to the organization’s success.

How to Form a Management Services Organization and Ensure Compliance

Compliance with healthcare regulations and laws is a critical aspect of operating a successful management services organization (MSO). These regulations are designed to protect patients, ensure the quality of care, and maintain the integrity of the healthcare system.

To ensure compliance within your MSO, consider the following steps:

  • Understand Relevant Regulations and Laws: Familiarize yourself with the various healthcare regulations and laws that apply to your MSO, including federal, state, and local requirements. These may include the corporate practice of medicine, anti-kickback statutes, Stark Law, and other regulations governing billing, privacy, and patient care.
  • Develop a Compliance Program: One of the key steps on how to form a management services organization is to establish a comprehensive compliance program that outlines the policies, procedures, and controls necessary to ensure adherence to applicable regulations and laws. This program should include regular training for employees, ongoing monitoring and auditing, and mechanisms for reporting and addressing potential compliance issues.
  • Appoint a Compliance Officer: Designate a compliance officer who is responsible for overseeing the MSO’s compliance efforts and ensuring that the organization remains up-to-date on regulatory changes. This individual should have a strong understanding of healthcare regulations and the ability to effectively communicate and enforce compliance policies and procedures.
  • Promote a Culture of Compliance: Foster a culture within your management services organization that emphasizes the importance of compliance and ethical conduct. Encourage employees to report potential compliance issues and provide them with the necessary resources and support to address these concerns.
  • Regularly Monitor and Audit: Conduct regular monitoring and auditing of your MSO’s operations to identify potential compliance risks and areas for improvement. Use these findings to update your compliance program and address any identified issues proactively.
  • Stay Informed: Keep up-to-date on changes in healthcare regulations and laws that may impact your MSO. Regularly review and update your compliance program to ensure that it remains current and effective in addressing new requirements.

By taking these steps, you can help ensure that your MSO remains compliant with all relevant healthcare regulations and laws, protecting your organization and the healthcare providers you serve from potential legal and financial risks.

Marketing Your Management Services Organization

Effectively marketing your management service organization (MSO) is essential for attracting potential clients, such as medical practices, ambulatory care facilities, or other healthcare providers. A well-planned marketing strategy can help create brand awareness, showcase the value of your services, and ultimately drive growth for your organization.

Here are some key steps to consider when marketing your MSO:

  • Identify Your Target Audience: Determine the specific healthcare providers and organizations that can benefit from your MSO’s services. This may include primary care practices, specialty clinics, or ambulatory care facilities, among others.
  • Develop a Unique Value Proposition: Clearly articulate the unique benefits and advantages that your MSO offers compared to competitors. This value proposition should highlight the specific services, expertise, and resources that set your MSO apart.
  • Create a Comprehensive Marketing Plan: Develop a marketing plan that outlines the strategies, tactics, and channels you will use to reach your target audience. This plan should include both online and offline marketing efforts, such as digital advertising, content marketing, social media, email marketing, events, and traditional media.
  • Build a Strong Online Presence: Establish a professional website that showcases your MSO’s services, expertise, and success stories. Optimize your website for search engines to increase online visibility and attract potential clients searching for management services and organization services.
  • Leverage Content Marketing: Create valuable and informative content that addresses the needs and challenges of your target audience. This content can include blog posts, whitepapers, case studies, and webinars that demonstrate your MSO’s expertise and thought leadership.
  • Engage in Social Media: Utilize social media platforms to connect with your target audience, share valuable content, and promote your MSO’s services. Regularly engage with your followers and participate in relevant online discussions to establish your MSO as a trusted resource.
  • Implement Email Marketing: Develop targeted email campaigns to nurture leads and keep your MSO top-of-mind for potential clients. Share valuable content, industry news, and updates about your MSO’s services to maintain engagement and drive conversions.
  • Measure and Optimize: Regularly track the performance of your marketing efforts and analyze the data to identify areas for improvement. Adjust your marketing strategies and tactics based on these insights to optimize your results and maximize your return on investment.

Implementing a comprehensive marketing strategy helps you effectively promote your MSO’s services, attract new clients, and drive growth for your organization.

Implementing Technology and Systems for Management Services Organization’s Operations

Incorporating technology and systems into your management service organization (MSO) operations is crucial for streamlining processes, improving efficiency, and ensuring compliance with healthcare regulations. By leveraging the right tools and platforms, your MSO can effectively manage various aspects of its business, from electronic health records to billing and collection software.

Here are some key technologies and systems to consider implementing in your MSO:

  • Electronic Health Records (EHR) Systems: Implement an EHR system to manage patient information, streamline clinical workflows, and improve communication among healthcare providers. EHR systems can also help ensure compliance with privacy regulations and facilitate data analytics for performance improvement.
  • Billing and Collection Software: Utilize billing and collection software to automate the invoicing and payment process, reducing errors and improving cash flow. This software can also help your MSO manage payer negotiations and credentialing, ensuring that healthcare providers receive timely and accurate reimbursements.
  • Data Analytics and Performance Improvement Tools: Implement data analytics tools to analyze and visualize performance data, identify trends and areas for improvement, and track progress toward organizational goals. These tools can help your management service organization optimize its services and demonstrate value to healthcare providers.
  • IT Services and Infrastructure: Establish a robust IT infrastructure to support your MSO’s operations, including secure data storage, network connectivity, and system maintenance. This infrastructure should be scalable and flexible to accommodate your MSO’s growth and changing needs.
  • Human Resources Management Systems: Implement a human resources management system to streamline HR functions, such as employee benefits, payroll, and performance management. This system can help your MSO manage its non-clinical staff more efficiently and ensure compliance with labor regulations.
  • Marketing and Communication Platforms: Utilize marketing and communication platforms to promote your MSO’s services, engage with potential clients, and maintain relationships with existing clients. These platforms may include email marketing tools, social media management software, and content management systems.

Implementing the right technology and systems can enhance your management services organization’s operations, improve efficiency, and better serve the healthcare providers it supports. This investment in technology can ultimately contribute to the success and growth of your organization.

Learn How to Start a Form a Management Services Organization and Create Your Path to Success

If you are determined to venture into the MSO industry, you need to learn thoroughly how to form a management services organization from experts and other available resources. Remember that creating a successful Management Service Organization (MSO) requires a comprehensive approach that encompasses the following steps:

  • Identifying the purpose and services
  • Roles and Responsibilities of Key Personnel
  • Choosing an MSO structure
  • Developing ownership documents
  • Building a successful physician culture
  • Ensuring compliance
  • Marketing your MSO
  • Implementing technology and systems for MSO operations

By understanding what is a management services organization and following these steps, your MSO can contribute to the overall improvement of patient care and the efficiency of medical practices and facilities. That’s not it. You need to maintain a strong focus on providing high-quality non-clinical services to healthcare providers.

It is crucial to fully understand the agreements you are entering into and to ensure that your MSO complies with all relevant regulations and laws. Engaging experienced healthcare counsel can help you navigate the complexities of forming and operating an MSO, ensuring that your organization remains compliant and well-positioned for success.

Invest in technology, foster a strong physician culture, and effectively market your MSO so you can drive growth and create a lasting impact on the healthcare providers you serve.

And while you start building your management services organization, you will need a legal team to help you with incorporation. Incorporation Attorney specializes in incorporating start-ups and California business laws. We can help you every step of the way. Call us and let’s discuss business at 714-634-4838.