The Consolidating Health Care Industry and Management Services Agreements

The health care industry is consolidating at all levels. As such, it is important to understand direct-care practices are combining into single and multi-disciplinary practices at record rates. In many cases, the new larger physician groups create a management service organization (MSO) to provide nonclinical services to the practices. The MSO, unlike the physician practice, can be owned by nonphysicians, thus enabling business individuals who are not health care professionals to participate in health care derived profits.

The management company enters into a contract with the health care practices known as a management services agreement (MSA). Included in the services provided are management functions such as financial planning and budgeting, accounting and tax preparations, patient billing, medical records maintenance, HIPAA compliance (laws generally dealing with patient privacy), marketing, negotiation and oversight of managed care contracts, human resources, risk and facilities management … essentially, all services other than patient medical care. The purpose of an MSA is to replace management by health care practitioners with management by business professionals.