MSO Model

MSOs may be independent organizations or may be owned by the hospital. MSO wholly owned by a hospital will still be faced with Stark regulations and may also find it harder to attract physicians to purchase services as it may be perceived that by doing to the physician is showing preference to that hospital.

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.

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