Joining a Management Service Organization (MSO) for Ophthalmology Practice

Doctor at a conference table

Medical practice has become an increasingly complex business. As the practices get larger, combine and re-organize, and have increasingly complex issues with revenue and compliance, the business demands of an individual or small group practice approach industrial scale. Gone are the days of the neighborhood doctor with the face-to-face friendly give and take. The technology of medicine has become so technically demanding that the doctor has become much more the scientist and much less the social worker and artist.

The healthcare system in the United States is being reshaped by industry megatrends like health care consumerism, digital health technologies, and value-based reimbursement that requires measured quality control. Physicians have been joining larger medical practices. A study of data from 154,728 practices found that the proportion of doctors joining practices of 100 or more rose more than 35 percent between 2013 and 2015. A large percentage of physicians are shifting from individual doctor ownership of their practice to ownership by hospitals or health systems. The percentage rose from 14 percent in 2012 to 26 percent in 2015. The study cited several drivers of the trend.

  • Financial and technical challenges of running a small practice.
  • Value-based reimbursement models that require larger patient panels to be successful.
  • The growing preference of younger doctors to work in larger groups.

The study concludes that the shift to hospital ownership from independent practice,

…can alleviate certain burdens of independent practice but raises costs for patients and the overall health care system.

Information technology (IT) has become an increasing burden on individual medical practice. Multi-specialty medical practices spent $32,500 per doctor in 2015 (increased more than 40 percent from 2009) on IT. Medical practice now requires secure electronic health records (EHRs) and online portals to connect patients with their doctors. These IT systems require expensive technical maintenance and development staff. Importantly, doctors in private practice are spending less time with patients and more time (about 50 percent) in their offices on medical records and “desk work.”
Management Service Organization (MSO):

The Management Service Organization (MSO) will step in to help your practice with the administrative and non-medical functions of running a practice. The MSO can help with operational issues, financial management, human resources matters, non-medical staff training, coding, billing and collections, managing office space or organizing new office space, electronic health records (EHRs), supporting medical electronics, aiding in medical compliance and oversight, contract management, credentialing, group purchases, and risk management. That’s a lot of potential advantage.

There are two kinds of MSOs. Your interest depends on how much you want the organization engaged in your practice. Some MSOs simply provide business support on a consultation basis. Other MSOs buy out your practice and manage it directly.

Stark Compliance:

One complication of corporate organization of medical practice is the ethical concern that a medical practitioner can make a referral with bias, to a facility or specialty in which the physician has a financial stake. In gross terms, physicians can make a referral to themselves. After Medicaid was enacted, the unethical practice which could generate revenue for the practice without regard to the welfare of the patient, was made criminal.

The Stark Act was first enacted by Congress in 1989 to ban collection of payment through Medicare and Medicaid for self-referrals. The act was related to Federal anti-trust efforts and the anti-kick-back law. Amendments, clarifications and extensions of the Stark Act continued revisions by Congress through 1995.

As medical practice got more complex and organized, physicians expressed concerns with the Stark formula, that it would impede the ability of physicians to participate in managed care. What constitutes a “financial stake” for compliance to the law? The final version of the Stark Law, Stark Phase III, passed in 2007 modified the regulations to reduce the regulatory burden on physicians and reduce some of the limitations.

Stark Law is a strict liability statute. Physicians can be punished for violations even if the prosecution cannot demonstrate intent. Penalties include fines and exclusion from federal health care programs, like Medicare and Medicaid.

One of the important advantages of the MSO is its support in managing compliance with the intricacies of the Stark Law and its exceptions, helping arrange compliant contracts, finding compliant leases, monitoring and managing the local “fair market value” of fees and charges, proving the arm’s-length distance for transactions where compliance could be questioned. According to one prominent physician,

“Doctors were never taught about this in medical school. They were taught to care for patients and save lives.”

Medical Practice Consultants:

The American Academy of Ophthalmology maintains a searchable database of “prescreened medical practice management consultants” to help practitioners begin to find the expertise needed in key areas such as business operations, finance, risk management, marketing, litigation and electronic data base compliance. These consultants are paid external consultants with special expertise in business practices and experience in ophthalmology in particular.

Emerging Medical MSOs:

Larger medical Management Service Organizations have been forming around the country because of the growing complexity of medical practice. One growing North Carolina MSO, formed in 2000, was the merger of three leading eye care service organizations to form an organization of 150 independent optometric and 13 ophthalmology practices, bringing members excellent economies of scale and needed management services.

Hospital based MSOs, such as the one established by Miami Children’s Health System, have begun to recruit “non-employed physician partners”. The hospital-based MSO supplies complete MSO services to other healthcare organizations and physician stakeholders. Discounts and rebates, environmental waste disposal discounts, preferred pricing for risk management and malpractice insurance, support for tele-medical services, compliance support, HR support. The MSO offers clinical integration within the organization, support for managed care, quality management and compliance support.

Advantage Administration, Inc. has developed the initial phases of an MSO for ophthalmology and optometric practices that is focused on reducing operating costs through its group purchasing arrangements with select vendors throughout the nation. To learn more and obtain a free analysis on how the Administrative Advantage MSO™ can possibly save you significant dollars for your practice and ASC, give us a call today.