Do not overlook the need to develop a strong Physician Leadership structure. May physicians will be attracted to this model as they believe it will allow them to defer all non-clinical decisions to the hospital. Employing large numbers of physicians who lack interest in the non-clinical elements of healthcare will result in physicians who are not vested in the success of the practice/clinic. Physicians must be partners in the process. The hospital must provide opportunity for leadership, management skills training and mentoring with skilled administrative team partners.
A sense of autonomy and control are the biggest barriers to physician interest in this model. A well structure Physician Leadership will contribute to the employed physicians gaining a sense of autonomy and control as they partner with the hospital to provide professional services in a model they participated in building, maintaining and growing.
Aligning financial incentives is also important in this model. Well developed incentive plans will reward the physicians for hard work and reinforce key initiatives of the hospital.
There are added legal implications to this model which cannot be overlooked and tend to make this model more cumbersome to execute and maintain.
The Foundation owns the clinics, the revenue stream and the insurance contracts. The physician group may find the lack of control over the revenue stream and insurance contract to be a dis-incentive to pursuing this model.
The physician group contracting to provide professional services to the Foundation clinics is responsible for developing and managing their own compensation model. Since the physician group has a separate management infrastructure than the Foundation under this model there is the inherent risk that the goals of the physician group and the goals of the Foundation may shift out of alignment. If this occurs the relationship between the physician group and the Foundation may be at risk. The two parties would need to work hard to maintain alignment in order for this model to succeed.
The success of an MSO is contingent upon achieving economies of scale and maintaining management team that holds the skill set necessary to manage professional service operations. Much of the literature indicates that a target physician customer base of at least 100 providers in necessary to begin seeing the economies of scale desired in this model. An efficiently run MSO provides physicians the opportunity to purchase services and potentially lease asset at a rate lower than providing those services or owning those assets independently.
A well run MSO will be appealing to physicians as it allows them to maintain autonomy, retain their professional fees, render ancillary services, retain the ancillary fees, and purchase management expertise that they may not otherwise be able to afford.