With many physician-hospital organizations losing money and falling apart, equity-based management service organizations may be a more attractive option.
Jeffrey Ramos, vice president of operations and business development at JFK Health Network, Edison, N.J., will speak on "The Pros and Cons of Equity-Based MSOs" at the Medical Group Management Association conference Monday, Oct. 5, at 3: 45 p.m.
Equity-based MSOs can increase revenues, decrease expenses and create aligned incentives between hospitals and medical groups, Ramos says.
PHOs negotiate managed-care contracts but cannot always generate enough revenues to support operating costs, Ramos adds.
An MSO can negotiate malpractice discounts, develop joint ventures, build its own billing and collections component, get discounts through group purchases, provide practice management services, generate efficiencies through information support systems and identify opportunities for health insurance products.
The JFK Health Network was a PHO and has made the transition into an MSO.
With the change, "there's been more of an acceptance on the physician side in regard to services offered," Ramos says.
The JFK Health Network has contractual relationships with Edison-based Solaris Health System and the doctors associated with Solaris' JFK Medical Center in Edison and Muhlenberg Regional Medical Center in Plainfield, N.J.
An equity-based MSO offers more benefits than other forms of MSO ownership do. When the physician group and the hospital have equal ownership, both parties' incentives are aligned, Ramos says.
"Through joint ownership of the organization, there isn't a sense of one having dominance over the other," he says.
In addition, if an MSO is to be successful, physicians should understand how it operates, Ramos adds.
"Having equity in the organization gives physicians more education, awareness and experience of how to run the business of an MSO," he says. "It's important for physicians to continue to practice medicine efficiently, but it's also important that physicians understand not only the business of their practice but also of the organization of the MSO."
Equity-based MSOs may have problems if the physicians and the hospital have different goals. For example, "if the hospital doesn't feel that physicians, in their leadership role, are beneficial to the hospital, it might have some issues there," Ramos says.