Home Insights Bulletin Board Testing the Stickiness of MSO / Provider Relationships – Keys to Building Value & Culture

Testing the Stickiness of MSO / Provider Relationships – Keys to Building Value & Culture

From having run a large MSO, you should expect to face this question – “Who is the MSO?” – increasingly over time and in different forms. The underlying question is more directly stated as “what have you done for me lately?”

There is an implicit and delicate social contract between the field (i.e., providers) and the central corporate team (i.e., MSO). Initially, the social contract is the MSO pays the provider a purchase price and the provider agrees to commit the MSO. Over time, the social contract evolves. The field (i.e., the providers) will increasingly ask if that original social contract terms continue to make sense.

Why does the question of “what have you done for me lately” get asked more over time?

MSO’s over the past several years are mostly vehicles that tie together a disparate network of affiliate practices. Yes, the central MSO is providing services, but those services are often largely administrative in nature. Across many MSO’s, a meaningful portion of the real strategic value – for example, the referral streams, provider recruitment & succession planning. etc. – often still resides in the local markets.

Because of the recency of these transactions, the central MSO is often still viewed today as internal- i.e., on the same team as the clinic affiliates. Over time, the MSO is likely to be increasingly viewed through two lenses:

When viewed from the second lens, the terms of social contract will periodically be revisited. At that moment – what type of service provider do you want your MSO to show up to the discussion as?

Option 1: Show up prepared to respond as a base level service provider with strong services but mostly relegated to the realm of administrative tasks. Ok, that leaves you with a justified -10% of revenue share for standard corporate services relative to the MSO’s actual holdings that are probably more in the range of at least 25-35% of revenue assuming -10% corporate overhead service fees plus 51% ownership of an aggregate 30% pre-compensation earnings margin business.

Option 2: Show up as a value-add partner with compelling strategic leverage. Option 2 leaves the MSO with a greater chance of preserving the MSO share of the aggregate pie over time.

3 Recommendations To Consider In Striving For Option 2

1. Value Add Initiatives

  • Consider initiatives that lever MSO scale and strategic positioning for unique same-store growth opportunities that would not be possible outside of the MSO. For example:
  • Wholesale strategic partnerships
  • Strong marketing program under the MSO brand
  •  Economies of scale savings that would be lost if the provider were to leave the network.

2. Brand & Culture

  • Invest in MSO brand development. While it may be the path of least resistance, and one that many MOs are seemingly taking in the initial phase of MSO development, there is also a risk in building a strategy that proactively seeks to hide the MSO brand.
  •  Strong internal satisfaction programs – provider and employee – as well as a genuine culture of transparency and on-going performance improvement

3. Strategic Internal Marketing

  • Each MSO functional area needs to have a clear view of its unique and compelling value add. Push the corporate MSO team to prove their value analytically on an on-going basis across:
    • Payer strategy
    • RCM
    • Marketing
    • Corporate / Business Development
    • Clinic operations
  • Consider development of internal communications & formalized center of excellence programs. This may include:
    • Internal newsletters
    • Formalized case studies of on-going value add, realized wins and lessons learned.
    • Case studies that communicate the benefits of being part of the network- i.e., benchmarking, cost savings
  • Strong centralized provider recruitment program and wholesale recruitment partnerships
  • Strong organizational structure and governance that promotes efficient communication of MSO performance, strategy and value add to the “outer limits of the MSO empire” to keep constituents informed and engaged.
  • Invest in value-add opportunities to continually engage with, as well as train & professionally develop provider teams. Show the team that culture genuinely matters- that the MSO cares about holistic performance excellence, supports the team, and invests in the team.
0

Share

Leave a Reply

Your email address will not be published. Required fields are marked *

Log in

If you are a community member

Login SCALE Community

Or

Join SCALE Community

We are excited for you to share in the benefits of SCALE community’s healthcare focus materials. If you are not currently a member sign up now to get unlimited access to all our materials.