What Is an MSO? A Complete Guide for Healthcare Practices

As a medical practice owner, you may feel like you have to wear many different hats. You went to school to become a doctor and use your talents in patient care, but running a successful practice also requires you to become an expert in areas such as business management, marketing, and human resources.

If you would rather focus solely on patient care and transfer operational responsibilities to another entity, a management services organization (MSO) may be an attractive option. What is an MSO? This entity handles non-clinical operations and administrative tasks for medical practices, allowing you to focus your full attention on patient care.

Below, learn how an MSO can support your practice’s growth and explore whether this business model may align with your goals. Then discover how centralized systems, such as Weave’s communication platform, enhance MSO-supported organizations.

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What is an MSO in healthcare?

A management services organization, or MSO, is a business entity that handles the operational and administrative duties involved in running a medical practice. These entities manage everything from payroll and collections to marketing and technology, allowing you and your fellow providers to focus on patient care and clinical decisions.

Managing a medical practice can be overwhelming, and many healthcare providers lack the passion or skills to excel in this role. You may have started a practice years ago and have now decided that you no longer want the responsibility of running the organization. Or perhaps you feel you don’t have the time or expertise to manage administrative processes effectively.

MSOs provide infrastructure and operational support. Unlike DSOs, which typically purchase partial or full equity in the practice, MSOs allow you to retain full financial ownership of your practice. The MSO would only own the non-clinical assets, such as equipment, IP, and real estate.

One of the main reasons practices opt for the MSO model is to comply with corporate practice of medicine laws. These legal frameworks require that medical practices be owned by licensed physicians, thereby preventing private equity firms from owning them in compliance. Under an MSO, the practice would effectively be split into two entities:

• The Professional Corporation (PC), which is owned by a licensed physician
• The MSO, which can be owned by anyone and acquires the practice’s non-clinical assets

The two entities are bound through a long-term Management Services Agreement (MSA), under which the PC pays a fee to the MSO in exchange for administrative services.

How management services organizations work

Management services organizations provide business and administrative services to healthcare providers. The clinical practice retains full control over patient care, while the MSO handles non-clinical responsibilities.

The Management Services Agreement provides clarity about the services the MSO will provide and how it will get paid. MSOs often provide core services such as revenue cycle management, human resources, information technology, and other administrative functions.

The MSO may charge the practice through a fixed monthly fee or a percentage-based fee. Alternatively, some MSOs use the cost-plus method, in which they would be reimbursed for direct expenses plus a modest markup.

In addition to providing specific services, MSOs may provide resources such as equipment, staffing, and systems to support the healthcare facility. These organizations support long-term growth and operational efficiency by reducing administrative burdens and allowing the providers to focus solely on patient care.

Key services provided by MSOs

MSOs often handle a few key services for healthcare businesses, such as:

• Administrative services (scheduling, billing, regulatory compliance, etc.)
• IT infrastructure (EHR systems, data management, etc.)
• Marketing and patient acquisition
• Financial management and reporting

The exact support provided will depend on your needs and the MSA you develop with the organization. Some healthcare practices need more support for administrative tasks, while others prefer to outsource marketing and patient acquisition. Consider where the biggest roadblocks are in your practice and the types of tasks you would prefer to pass over to a third party.

Administrative and operational support

MSOs often provide comprehensive administrative and operational support for healthcare practices. This might include:

• Managing HR, payroll, and staffing
• Providing billing and scheduling support
• Offering regulatory oversight for compliance with federal and state regulations

Outsourcing these tasks can improve your workflow efficiency and even reduce overhead costs. MSOs often have access to group discounts and know the most efficient ways to handle key administrative processes. They can often provide comprehensive management while spending less time on tasks than your staff would.

Technology and infrastructure support

MSOs can also provide essential tools and systems to streamline tasks in your healthcare practice. They might introduce specific electronic health record (EHR) systems that simplify managing patient records. MSOs can also provide IT support to prevent the need for an in-house IT team.

Using advanced technology and equipment in your practice is important for staying competitive and saving time. You can use tools to collect and analyze data for performance tracking, support more strategic decision-making in your practice, and even improve the patient experience.

Benefits of partnering with an MSO for medical practices

Now that you know what an MSO is, you can consider whether this type of entity would be the right solution for your practice. A few key benefits of partnering with an MSO include:

• Reducing administrative workloads: By passing non-clinical duties over to the MSO, you and your other healthcare providers can focus solely on patient care.
• Improving access to capital, equipment, and resources: MSOs give you access to a range of tangible assets and digital resources that can improve your practice operations.
• Providing opportunities for scalability and growth: When you delegate some of your workload to an MSO, you will have more time and energy during the day to focus on scaling your business. MSOs make it easier to expand into a second location, and their support through marketing and patient acquisition helps you reach more patients.
• Improving operational efficiency: MSOs help you operate more efficiently, which can improve the patient experience by reducing wait times and providing faster responses to questions and communications.

Ultimately, an MSO can help you improve patient engagement and retention, leading to more sustainable business operations.

Challenges and considerations of MSOs

The MSO model is not right for every healthcare practice, and there are certain challenges you must consider to make an informed decision about partnering with this type of entity.

• The potential loss of control over business decisions, as the MSO may make decisions that you wouldn’t make for your practice
• Management fees and the financial impact of partnering with an MSO, which may ultimately be more expensive than handling tasks in-house
• The standardization limitations across practices, as the MSO may use standardized services that don’t align precisely with your processes

It is important to evaluate all risks before entering into an agreement that may be challenging to get out of. Consulting legal counsel can ensure that you fully understand the agreement and that it aligns with your goals.

Who should consider an MSO partnership?

An MSO arrangement is often best for:

• Small and mid-sized practices, rather than large health systems
• Practices looking to grow sustainably or expand into a second location
• Practices experiencing operational challenges that limit their growth or efficiency
• Physicians seeking partial ownership retention but looking to outsource much of the business management

The role of technology in MSO success

MSOs often introduce technology into healthcare practices to streamline operations. For example, they may require your practice to use a centralized communication system that automates tasks such as scheduling, sending reminders, processing payments, and managing reviews.

Integrating these tools into your existing workloads can further save time and improve efficiency. The right technology improves patient retention and satisfaction, supporting your practice’s growth.

Improving communication across teams and patients

Fragmented communication creates inefficiencies across a healthcare practice, whether you are outsourcing tasks to an MSO or handling administrative processes in-house. Looking for technology that combines phone calls, texting, emails, and scheduling into a single platform can be highly beneficial for improving operations and patient experiences.

These tools can automate reminders and follow-ups, reducing the time spent on patient communications. They also foster consistent patient interactions that build trust.

How Weave supports MSO healthcare organizations

Weave is an all-in-one platform that centralizes communication across teams and locations. Features such as two-way texting, scheduling, reminders, and payment processing save healthcare practices time while delivering more convenient patient experiences.

Weave helps reduce administrative burdens for a range of small and mid-sized healthcare practices. Our technology can help you improve patient satisfaction and scale your operations, even without an MSO.

Take the next step toward a more efficient practice

What is an MSO, and is this model right for your practice? If you are still deciding whether an MSO aligns with your goals, consider a simpler way to streamline administrative tasks first. Weave automates tasks ranging from communication to scheduling, helping your practice operate more efficiently and improve patient experiences.

Request a demo of Weave today to learn how our technology can support your healthcare practice.

Want to see
more about
Weave?
1 System for Phones, Texting, Payments, & More
 Access a full suite of patient communication tools with Weave! Texting, payments, reviews, & scheduling in one place. Get started today!
Get Started