The effort to better manage physician practices through organizations that serve both medical practices and hospitals continues to gain steam, but few of the ventures are breaking even, according to a new study by Cleveland-based Medimetrix consultants.
The survey provides the first snapshot of the growth of hospital-sponsored organizations known as management services organizations. It's an industry in its infancy; of the 140 MSOs that responded to the survey, 82% are less than four years old.
Because there were few models to follow, many organizations have struggled to stay viable, according to the survey.
One problem is a number of the MSOs lack the sophistication in management information services necessary to support managed care. While 44% of the respondents indicated "clinical information" sharing is an important element in the formation of their MSOs, only 38% have attained the ability to share clinical data between MSO clients. And 62% are not electronically integrated with their hospitals.
Financing also continues to be a challenge. Initial capital start-up budgets vary widely; about 30% of respondents said they spent between $30,000 and $999,000 for start up costs. And 15% spent $3 million or more. Still, only one out of nine MSOs have achieved the break-even point, survey data indicate.
More than half the respondents said more physicians would have to use the MSO's services to justify the overhead and provide adequate operating profit.
The inability to operate in the black is not creating panic, however, because most MSOs were not established with the assumption that generating revenues would be a high priority. Some 74% of respondents said their main objective in establishing an MSO was to support their efforts to become vertically integrated.
Yet, more than half of all MSOs indicated their future success depends primarily on achieving their financial goals. Second on the list was improving physician satisfaction.
For more information, call Medimetrix at 216-523-1300.