The Revival of Management Services Organizations as a Growth Strategy
- January 11, 2022
Management services organizations (MSOs), entities that provide various administrative support services to physician groups, have grown significantly. While this trend is primarily linked to the influx of private equity (PE) activity in healthcare, many independent physician practices are considering their own MSO strategy. MSOs can be valuable vehicles through which PE firms or independent physician groups acquire or partner with multiple practices, scale services, and achieve operational efficiency for members.
Despite previous iterations of MSO-like companies failing in healthcare (i.e., physician practice management companies in the 1990s), the current wave of MSO activity may be in a better position for success. The shifting landscape of value-based reimbursement, the increased need to leverage technology to achieve efficiency, and the expansion of consumerism in healthcare all provide opportunities for MSOs to thrive in the current environment if properly executed.
This paper details the drivers that are leading to the recent MSO revival. Next, we outline the characteristics, structures, and strategies that define many MSOs in healthcare today. Finally, we explore unique MSO growth strategies for the current healthcare landscape.