The Role of Management Service Organizations (MSOs) in Supporting Independent Pediatric Practices
Summary of presentation from Susanne Morgana-Brenan from The Verden Group / IPMSO at the 2025 PMI Conference
As independent pediatric practices face increasing operational and regulatory complexities, many physicians struggle to balance high-quality patient care with the growing demands of running a business. At a recent PMI conference session, experts highlighted the role of Management Service Organizations (MSOs) in supporting these practices. This article explores what MSOs are, why they have become vital in today’s healthcare landscape, the different types available, how to evaluate their value, and what the future holds for MSOs and private practices.
Management Service Organizations (MSOs) are third-party entities that provide non-clinical administrative and management support for physician practices. Their primary goal is to alleviate the business burdens that often fall on doctors, such as HR, compliance, billing, technology, and regulatory navigation. MSOs have evolved significantly since their inception in the 1990s, moving beyond basic billing services to offering robust technological solutions, vendor negotiations, and revenue cycle management, all of which free up physicians to focus on patient care.
The need for MSOs has soared, with the market estimated at $46 billion in 2023 and expected to grow by 13% annually through 2030. This growth is propelled by rising costs for medical supplies and vaccines, increasing complexity in billing and claims, difficulties in third-party contract negotiations, and the overwhelming administrative responsibilities placed on small practices. Without adequate support, many independent physicians experience burnout or even consider selling their practices, exacerbated by a lack of succession planning and reluctance from younger doctors to take on operational headaches.
MSOs come in various forms. Supportive MSOs primarily focus on securing lower costs through buying groups and providing basic administrative support, while management-centric MSOs deliver comprehensive packages that include EMRs, revenue cycle management, payroll, HR, and benefit administration. Care management MSOs go a step further by assisting with population health management, risk contracts, and pay-for-performance programs, ensuring doctors can maximize upside incentives and protect against downside financial risk. Each type offers a different balance between maintaining practice autonomy and outsourcing management tasks.
When considering an MSO, practices should conduct thorough needs assessments, focusing on areas like cost savings, efficiency, HR and staffing, and compliance. Evaluating potential partners requires a close look at contract flexibility, fee structure, transparency in reporting, and proven expertise in your specialty. Practices are advised to prioritize an à la carte model that allows scaling services over time and to ask for detailed cost-benefit analyses to ensure a genuine return on investment. Negotiation and reference checks are paramount, as is demanding proactive customer support.
**Five Practical Takeaways for Independent Practices Considering an MSO:**
1. **Assess Your Needs First:** Before engaging an MSO, identify areas—such as billing, HR, vendor contracts, or compliance—where you need the most support.
2. **Prioritize Cost-Benefit Analysis:** Always compare your current costs and operational burdens to the proposed savings and efficiency MSOs offer. Require concrete data and projected ROI.
3. **Insist on Flexible, Transparent Contracts:** Favor MSOs that allow you to select only the services you need and avoid long-term contracts with steep exit penalties.
4. **Verify Industry Specialization and References:** Choose organizations with a proven track record serving practices like yours, and contact current clients (including cold calls) for honest feedback.
5. **Negotiate and Monitor Performance:** Don’t accept the initial proposal—negotiate terms and set measurable benchmarks. Demand transparent, real-time reporting to ensure you’re getting value.
While the landscape of MSOs continues to evolve, with innovations in technology and consolidation on the horizon, their value proposition for independent practices remains clear: providing the efficiency, expertise, and support needed to stay independent and thrive amidst the increasing complexity of healthcare business management.
