Management services organization

A management services organization (MSO) is an entity created to provide management and administrative services to other organizations.

A healthcare MSO is an organization owned by a group of physicians, a physician hospital joint venture, or investors in conjunction with physicians.

MSOs generally provide practice management and administrative support services to individual physicians and group practices. One purpose of MSOs is to relieve physicians of non-medical business functions so that they can concentrate on the clinical aspects of their practice.

Because MSOs purchase their services as a group instead of individually, they can generally achieve economies of scale. These cost savings may be passed on to physicians, who may use this cost advantage when negotiating with health plans and healthcare purchasers.

In some cases, MSOs simply provide business services to providers for a fee. In other cases, MSOs purchase the tangible assets, such as buildings, equipment, and supplies, of their client physicians and lease these assets back to the physicians. In these situations, the physicians continue to own their own medical records and health plan contracts and continue to practice in their own offices. This arrangement relieves physicians of yet another non-medical aspect of running a practice.

MSOs have been able to develop discounted outsourced billing, malpractice discounts, discounted equipment leasing, shared staffing and benefits, and EMR. In recent situations we have seen the core MSO operate as a "group practice without walls". The advantage is to develop clinical guidelines and care standards for the practices, thereby meeting clinical integration definitions, and also being able to harvest a shared savings relationship with third party payers, including insurance companies and employers.

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