Medical Practice Integration: A Guide for MSOs

For management service organizations (MSOs), medical practice integration with one or more practices can feel like a Herculean task. 

It’s your job to dovetail:

• Legal
• Finance
• HR
• Culture
• Clinical operations 
• Administration operations
• Communication
• Sales and Marketing
• Technology
• Value Creation

A daunting to-do list. 

Still, with one year and many team members contributing, you can conquer each of these aspects to create value for your MSO and high-quality healthcare for a community. 

 “Inch by inch, life is a cinch,” as a famous cleric says. 

A medical practice integration takes time. MSO advisories don’t even envision the completion of the legal aspects of any merger until the fourth month. Full medical practice integration with the MSO isn’t typically completed for eight to 12 months. With patience and consistency, however, you will achieve a modern, cost-effective healthcare organization that fulfills its profit potential.

Going one by one through the medical practice integration steps listed here ensures you optimize all aspects of each acquisition before you lose focus and go hunting for another. 

Job #1: Aim to achieve stabilization after medical practice integration

As we urge in our “MSO Operations” post, stabilizing a new acquisition conveys more value in the long-term than picking up a new target right away. 

Following a new acquisition, your sales team may be eager to boost patient volume. However, it's crucial to understand that long-term success hinges on maintaining a well-organized practice that consistently delivers quality care. Without dedicated efforts toward stabilization, the organization may face confusion, inefficient processes, and substandard care. These issues can damage the practice’s reputation, particularly during a transitional period when word-of-mouth referrals are vital.

Expect an initial intensive medical practice integration phase that lasts three to six months. You will encounter some challenges along the way. Regular evaluations and adjustments will be essential as the practice and MSO work towards building a stable and mutually beneficial partnership.

Job #2: Vision + strategic planning  

During pre-closure negotiations, you most likely shared your goals for targeting the practice or physician group and listened to the practice owner’s goals as well. As you begin to integrate, it’s time to document an official outlook for your partnership. 

Clear vision and mission: According to HFMA, having a clear mission helps in aligning the goals and efforts of both organizations involved in the integration. Focus on improving patient care and operational efficiency. Emphasize that patients are the priority over profits. Recent legislative activity has targeted “corporate greed” in the PE-backed MSO space, so demonstrating your dedication to patients will help ease practice owner and staff concerns. At the same time, you will need to share that, after integration, the practice will be part of a system rather than an independent entity. Ultimate decisions will be based on benefits to both the practice and the MSO. 

Guiding Principles: In addition to a shared vision, you should establish guiding principles that will steer decision-making throughout the integration process. These should encompass quality, access, and cost goals, ensuring that every action taken aligns with the overarching objectives you’ve established. 

Goals: Work with the provider or physician group stakeholders to agree on goals. Get these goals into your business plan. Collaboratively creating a business plan ensures alignment between the acquiring firm and the physician group. This joint effort also lays the groundwork for strategic planning that considers the strengths, weaknesses, opportunities, and threats of the combined entity. It offers a clear roadmap for achieving both short-term and long-term objectives, which is essential for steering the organization post-acquisition.

Start with these common MSO-provider integration goals and build from here: 

Seamless operational integration: Align workflows, IT systems, and administrative processes to avoid any disruption in services and maintain continuity of care. 

Cultural alignment: Harmonize the values, norms, and practices of both entities to ensure a smooth transition and maintain staff morale. 

Financial optimization: Centralize administrative functions and leverage economies of scale to reduce operational costs and improve financial performance. 

Enhanced patient care: Avoid disruptions in patient services, improve access to care, and integrate clinical best practices across the organization. 

 Effective communication: Establishing robust communication channels to keep all stakeholders informed and engaged throughout the integration process. This includes regular updates and feedback loops with employees, physicians, and patients to ensure transparency and address any concerns. 

Regulatory compliance: Ensure that the integrated entity meets all regulatory requirements and standards. Update licenses, certifications, and compliance protocols to reflect the new organizational structure and practices. 

By focusing on these goals, MSOs can optimize provider group performance after acquisition. Together, you will build a partnership that enhances operational efficiency, improves patient care, and creates a cohesive organizational culture.

Job #3: Determine your integration team or manager

While many MSOs simply appoint a business manager and depend on in-house counsel and other existing professionals within their organization as needed, others may establish a dedicated integration management office (IMO).  MSOs that use an in-house integration team generally have the skill sets to run all of it, a drive to maintain control, and an intent to remain nimble and keep support close by. Your IMO may be made up of an IMO manager, an industry specialist, its attorney, and various team leads (finance, legal, sales, operations, marketing). 

Before unleashing them on the physician group, develop a work plan for achieving the agreed-upon goals for their specific function. Connect each with the point of contact in each area of the physician group (finance, legal, sales, operations, marketing). 

Job #4:  Divide and conquer all tasks for all provider group dimensions

While we list all necessary integration tasks here, to determine the initial steps, consider first identifying the top 10 most significant value drivers and the top 10 risk factors. Some risk areas may have been identified during the due diligence process, and if so, appropriate corrective actions may already be planned. Integration teams should be organized based on the key sources of value, ensuring they understand the specific value they are responsible for and how it will be unlocked.

This said, in the year ahead, gear up to tackle these tasks:

Legal

• Review purchase agreements
• Identify current and past legal issues
• Follow-up on red flags found during due diligence
• Conduct legal risk management
• Review integration contract law
• Review intellectual property (IP) rights (as needed)

Most medical practice acquisition advisors believe these tasks could take your legal team up to three months. 

Finance

• Review the financial audit executed during due diligence
• Audit and document accounting practices and policies. Create a list of changes necessary for integration with your organization. 
• Document and establish a management report structure. Include your IMO manager and any others involved on your end. 
• Examine organizational control.
• Consider and introduce any new customer financing systems that could benefit the practice and its patients. Implement your preferred accounting practices.
• Collect tax audit results
• Evaluate practice’s tax practices and policies
• Integrate taxation

Human Resource Management

• Evaluate the organizational structure and upper management
• Review, evaluate, and amend HR policies and practices
• Identify any employment legal issues (past and current)
• Evaluate HR metrics. Establish HR metrics if needed.
• Review benefits and compensation
• Determine whether current pension and benefits align with MSO
• Review miscellaneous employee insurance plans
• Review and adjust fringe benefits
• Agreements - employee, compensation, collective bargaining, severance
• Evaluate HRIS
• Examine whether performance appraisals and management align with MSO
• Create an organizational restructuring strategy

Communications

• Conduct meetings or send emails/letters to employees informing them of the acquisition and any coming changes
• Send emails/letters to patients relaying the same as above
• Send emails/letters to vendors and suppliers - same as above
• Send emails/letters to referral partners - same as above
• Survey employees on their views and concerns regarding the merger.
• Survey employees on what they think will help improve patient care and operations. Get feedback from all levels, including the front desk. 
• Create strategy to restructure communication practices. 
• Identify attitudes, opinions, and expectations of the practice by interviewing patients and families. 

Culture

In a survey of executives by merger and acquisition advisory Jabian, most respondents identified culture as the most important factor in a successful integration.

• Identify corporate identity and culture. Discuss MSO and provider culture differences and similarities with provider stakeholders. Communicate in a way that jibes with that culture, and work to modify it if necessary. Develop messages that align company history with MSO goals and values.
• Have IMO managers learn company history.
• Integrate culture and value structure

Clinical Protocols

• Initiate a dialogue with providers, staff, patients and their families
• Determine protocols ripe for change
• Conduct clinical rounds to note similarities and differences between current acquisitions and the new acquisition
• Utilize a variety of communication methods (chat room discussions, video, etc.) to determine imperative clinical changes 

RCM and administrative protocols

RCM, or revenue cycle management, involves the administrative activities for patient access, claims processing, payment, and revenue generation. Its goal is to identify, manage, and collect patient service revenue, ensuring facilities stay profitable while minimizing expenses and managing risks.

Essential tasks include scheduling, insurance verification, patient account setup, claim submissions, charge capture, reimbursement calculations, denial management, collections, and accounts receivable supervision. Pre-registration activities like gathering accurate information and verifying coverage upfront are key for timely reimbursements.

Given the impact of each process on the revenue cycle, examining them is imperative. The IMO manager must evaluate and improve protocols for: 

• Scheduling and appointments: with the goals of streamlining patient appointment scheduling, reducing no-show rates, and optimizing patient flow.

• Insurance eligibility verification so that patient insurance coverage is confirmed before services are rendered. Established coverage lowers claim denials, preserving revenues. 

•  Patient registration and account setup:  Establish accurate patient information collection to avoid denials and communicate effectively with patients.

• Charge capture:  Tweak the system that accurately records all billable services and procedures accurately. Evaluate coding accuracy (usually revealed via denials.) 

• Claims submission so that claims are prepared and submitted on time and in concert with payer requirements and regulations.

• Reimbursement calculations to align actual reimbursements with contracted rates, an important step in optimizing revenue.  

Take a quick, self-guided tour through a powerful contract management and underpayments recovery tool that automatically alerts you to payment variances:

• Denial management: to identify and address the reasons for claim denials. Find the root causes of denials (documentation errors, coding errors, prior authorizations, etc.)

• Accounts receivable supervision:  Delegate patient accounts according to specialist experience. Form a plan to reduce days in accounts receivable (AR) to improve cash flow.

• Compliance and risk management to ensure adherence to regulatory requirements and industry standards to minimize legal and financial risks.

•  Performance monitoring and reporting: Evaluate current OKRs and establish those that have proven to benefit the other entities in your portfolio. Generate regular reports to identify trends and areas for improvement.

• Patient engagement and communication: Enhancing patient communication regarding billing and insurance matters. Consider implementing patient portals. 

• Technology Integration to standardize and streamline RCM software and systems. Ensure interoperability with other healthcare IT systems.

• Collections processes:  evaluate upfront collections rates. With patients now providing 30 percent of provider revenue, more providers find collecting upfront helps keep accounts out of A/R and bad debt. Implement strategies for reducing outstanding balances and bad debt.  Consider establishing new upfront collections protocols. A meaningful number of self-pay patients or individuals requesting pre-service estimates necessitates patient cost estimate software. 

Take a quick tour of how you can simplify upfront collections when you automate eligibility verification and estimate generation here:

By addressing these tasks, an MSO can help healthcare practices optimize their revenue cycle, improve financial performance, and enhance operational efficiency.

Technology

• Assess results and findings from due diligence
• Integrate/implement technology systems
• Create post-integration technology portfolio
• Evaluate R&D capacity and capabilities
• Evaluate documentation practices

Value Creation

• Identify how together you can create the most value for the patient community, the provider and your MSO
• Evaluate cost-ineffective services to phase out
• Calculate total integration costs and expenditures

Job #5: Consider an integration plan

Each member of your IMO team should have clearly defined responsibilities and goals. If you don’t have an IMO team, your business manager will juggle all areas. With your leader(s) in place, the smart next step is to create an integration plan. 

Business plan v. integration plan

A business plan outlines the overall strategy and direction, including mission and vision statements, market analysis, strategic objectives, operational and financial plans, marketing strategies, SWOT analysis, and performance metrics. It focuses on long-term goals, growth, and market positioning. 

In contrast, an integration plan is designed to merge the acquiring firm and the physician group. It covers integration objectives, organizational structure, cultural alignment, communication strategies, operational and financial integration, legal and compliance issues, risk management, and change management. The integration plan emphasizes the short- to mid-term process of combining entities. It includes detailed plans for redesigning each aspect to add value to the system and align to the agreed-upon guiding principles, vision, mission, and goals.

In short, the business plan provides a broad, strategic roadmap, while the integration plan focuses on specific steps and considerations.

The integration plan establishes budget

Every integration plan requires its own budget. Initial estimates of integration costs can be made during the transaction or purchase phase. However, the integration manager or IMO team should review and refine these estimates in the initial days of the integration project. The integration manager is responsible for preparing and updating the integration budget, as well as tracking activities and costs against it. The project owner or the steering group then approves the budget. 

When developing integration action plans, leaders should assess capital needs across the enterprise and establish objective criteria for prioritizing and allocating resources. These criteria should be widely communicated to ensure transparency and consistency in decision-making. Optimizing and rationalizing capital across multiple sites is challenging but crucial for achieving the goals of most mergers.  

Typical integration costs include:

•  travel and meeting costs
•  legal costs
• tech infrastructure changes
• fees paid to advisors, consultants, and accountants
• insurance policy change costs
• human resources costs (search fees, redundancy costs)  
• costs related to new or changed services/procedures
• staff training
• new marketing initiatives
• communications 

The new model of healthcare organization 

All of these tasks involve a great deal of planning and work. Still, one of the few ways today’s healthcare organizations can modernize, streamline, and even survive is with the help of management services organizations. 

The increase in MSO acquisition of private practices in the past three years reflects the model’s success and bright future. Grandview Research predicts the MSO acquisition trend will continue, growing by nearly 13 percent every year until 2030. 

Healthcare consolidation is raging through the industry for several reasons. Supply and labor costs are soaring, consumers are living longer and demanding expensive, cutting-edge procedures, and many are struggling to afford their rising healthcare expenses.

Over the past decade, private-equity-backed MSOs have invested nearly $1 trillion in approximately 8,000 healthcare deals, with specialty physician groups being their most frequent targets.

Healthcare organizations face challenges in securing adequate reimbursement from both private payers, which profit in the millions and billions annually, and government entities like Medicare, which reimburses only 82 cents for every dollar spent on care. 

Physician groups and practices can achieve fair fees and terms only by growing larger. Additionally, larger entities are better equipped to select and integrate the automation, AI, and other technological advances essential for practice survival.

The shift toward value-based care models, which prioritize quality and outcomes over volume, makes management oversight delivered via an MSO a quick and convenient path to practice success. This has prompted MSOs to adapt their services to meet the changing needs of healthcare providers and payers.  

Support your new medical practice acquisitions with revenue-optimization software

Integrating new practices into an MSO is a multi-faceted process that requires strategic planning, operational efficiency, and strong leadership. You can support the staff and the revenue at your new acquisition and ease the burden on your workforce with user-friendly software. 

Today's rapidly evolving financial landscape in healthcare makes collecting patient payments upfront more important. Patient payment estimates (good faith estimates) delivered before treatment provide the transparency patients need to plan payments. MD Clarity's Clarity Flow system offers precise and easy-to-understand cost estimates, enabling patients to pay portions of their bills in advance. We saved a women’s reproductive health group hundreds of thousands of dollars in new hire costs by automating their patient payment estimates. 

MD Clarity is also dedicated to optimizing provider revenue by keeping payers honest about paying their contracted rates. Payer underpayments are widespread in the healthcare sphere. Using our revenue recovery software RevFind, we helped one large orthopedics practice recover $10 million in underpayments. Contract management and underpayments tool, RevFind, processes, digitizes, and analyzes payer contracts. It compares each payment against contract terms and alerts staff to any discrepancies. By addressing underpayments, organizations can increase recovered cash and improve profit margins. They can also compare payer contract performance, a step that provides the data to negotiate for better contract terms and fees. 

‍Schedule a demo to see how you can improve your upfront collections and revenue with Clarity Flow and sweep in full revenue per your contract terms.