Lost In Translation: Porous Definitions of Practice Structures and Otherwise Smart People

October 17, 2022

Quick! What do the following questions have in common?

A. What would you pay for a sculpture?
B. How much does the carrot on the plate in front of me as I write this weigh?
C. Is an MSO a good idea for your practice?

Each of them is a nonsensical question, impossible to answer without much more information.

However, the first two are rather harmless. In the absence of knowing what sculpture (e.g., a lump of clay shaped by yours truly or an authentic Botero), or what carrot (the universe of carrots ranges from a micro veggie to nearly as large as a tree’s taproot), there’s no way you could answer the question.

The third, “is an MSO a good idea for your practice?”, can be quite dangerous.

In a recent article in a national healthcare publication, multiple interviewed orthopedic surgeons gave all sorts of opinions on why MSOs are the future of orthopedic practice. Yet, if you paid close attention while reading, it quickly became apparent that they weren’t even talking about the same thing.

At its essence, an MSO is a “management services organization”, a supplier of a menu of management services to, in the case of the mentioned article, medical practices. Often the MSO is structured to provide the complete range of administrative services, from space to front office to back office, to billing and collection, and so on, a sort of turnkey, “just show up and practice medicine” structure. But it need not be that.

As was evident from the comments of the interviewed doctors, some spoke of a very different model, the sale of their practice in toto, or perhaps (they weren’t very clear) just of all of their non-practice assets (i.e., soup to nuts business assets and functions) to a “private equity” group, as if “private equity” is the universe of entities in the MSO business.

As I’ve discussed before (see Don’t Let An Acronym Dictate Your Business Structure) there’s an old saying that a person doesn’t really want a drill, they want a hole. But we can go deeper: why do they want the hole? Perhaps it’s to hang a painting.

The same idea holds true with many healthcare structures, whether it’s an MSO, an IPA (an independent practice association), an RBMG (a sort-of cousin to an IPA), a CIN (a clinically integrated network), and so on.

In our metaphor, none of them are the painting on the wall. In fact, they’re not even the hole. What they are is the drill. They’re tools that describe a method of getting you to the business entity or outcome that you seek to create or achieve. They’re not ends in and of themselves.

What’s most important for you is to first decide what it is, on a business level, that you’re trying to achieve.

Forget for the moment (but only for the moment!) about legal structure and compliance and the fact that it’s a “fill in the blank” such as an MSO.

Instead, simply concentrate on what it is, bottom line, that you want to achieve.

Then, and only then, should we ask the question of what tool or tools–the specific structure or structures–can be applied to get you there.

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