How can a Management Services Organization reduce risk for a California medical practice?  What are some of the risks associated with a Management Service Organization or MSO, and how can the Watkins Firm help you to increase profitability while reducing risk and increasing the quality of your patient’s experience?

One of the hottest topics over the past few years in the business of healthcare has been the Management Service Organization or MSO.  The basic concept of an MSO is it provides additional opportunities to increase retained profits by structuring an entity or entities to manage various aspects of the business of delivering healthcare in San Diego and throughout California.  Increasing the quality of facilities and how they are managed as well as automation, Electronic Records Management (ERM), back-end services such as billing and accounting increase patient satisfaction and the satisfaction associated with each patient visit.  However, these arrangements must be precisely structured and monitored to avoid legal issues for majority or minority owners who are licensed California healthcare professionals.

How can a Management Services Organization reduce risk for a California medical practice or healthcare business?  The corporate veil of an MSO provides extensive additional protections for licensed medical practitioners.  However, there are inherent risks associated with the MSO which must be considered and carefully managed.  One of these is the Federal Anti-Kickback Statute which applies to any individual or entity receiving payments through federal programs such as Medicare.  California has established “safe harbors” which must be followed in order to structure legal transactions while protecting against civil and/or criminal liabilities.

The structure of your MSO must also give consideration to strict laws against the corporate practice of medicine in California.  It is vitally important to structure the entities themselves as well as any potential interactions between the MSO and the delivery of healthcare to ensure compliance with all federal, state and local laws and regulations.

Pro-Tip: “Consider an MSO like your administrator for your business. But if you’re in the healthcare business, your administrator can’t do it all. It’s complicated. And there are actual schools that can take people to learn some of the things that your administrators are supposed to do, like coding, like billing, like compliance, like HR, like leasing, like software programs. So many things that you have to deal with so many more clients, patients, you have to do so much that MSOs are a good option. Also, you can get non-doctors to partner with you and invest in your company to make you more profitable while you focus on being a doctor.

What’s the principle benefit of owning both a Management Service Organization and a separate entity for your practice?

Here’s one example: Let’s think of two dynamics here in how the government has established an MSO for doctors. On the one hand, the evil side, they don’t want doctors to have what is called corporate practice of medicine, right? That’s evil. Where corporations can say, you know, ‘the kidney’s fine, it costs too much to heal or replace.’ They don’t want that. So there’s all these laws stopping non-doctors, investors, entrepreneurs from coming into your practice and saying, ‘you can’t do that for this patient.’

Medical decisions are made by licensed medical professionals, period.

And those laws will continue to expand, as ‘big brother’ is the scariest thing when it comes to people and business. Now on the other side, business can really benefit a medical practice. All these technologies, all these experts there to help you as a doctor, they can really help. And you can bring in business expertise and resources, financial resources to make you stronger, more competitive. You can get better contracts with your payers. I mean, all those things can be accomplished by MSOs with qualified resources and people in them.

So in essence, the Management Service Organization takes over all the aspects of running the business and that really frees up the licensed professionals to do what they do best, which is care for patients. Some of your biggest organizations in the United States are run by MSOs or a combination of MSO and other entities. Sometimes you get so big you have to have individual contracting entities that just do that. Yes, they go out and find you the best pricing, or they’ll work with a multitude of other healthcare practices and do a group location of better pricing and contracts for the doctors.  This makes the ‘business side’ of things more efficient, effective and profitable.  The medical professionals focus on delivering exceptional healthcare.  In the end, you have better outcomes, better patient satisfaction scores, increased profits…” – Dan Watkins, Founding Partner

Can a Management Services Organization reduce risk for a California medical practice or healthcare business while increasing profitability and patient satisfaction?  Absolutely, but there are significant legal details which must be carefully managed and structured to protect the license of stakeholders while reducing exposures to civil or criminal liabilities.

We invite you to review our podcast Episode 30 – Management Services Organizations or MSOs as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.