> A new startup model has emerged as an alternative to PE ownership: the MSO (Managed Service Organizations) model.
> The MSO model enables doctors to run their own clinics by (1) providing them software that can handle back office tasks such as billing and scheduling and (2) channeling patients to them.
> These functions are largely what PE ownership provides. Doctors who are part of an MSO model can continue to run small, physician-owned practices while competing successfully with large, PE-owned conglomerates.
I feel this is building off a false hypothesis. PE isn't out-competing independents. Sure, there is a tiny bit of synergy and some bargaining power that comes with the scale of having a portfolio of clinics. But most independents concerned with that have joined one of the numerous GPO/networks that exist. What's really happening is there is a huge generation of providers reaching retirement age and PE is a well capitalized buyer for them to sale their practice. New doctors are more likely to be employees versus being entrepreneurial in the past. I think for this to work, you would want to find ways for new providers to own a practice which means taking on debt that would out bid PE. It might be that the startup that gets this right, provides said financing with the management fee income as an addition to the debt service/income for risk. This could be interesting and new doctors might see this as an attractive path towards practice ownership; but getting the financial model for all constituents to be attractive is going to be tough IMO.
MSO for back office synergies is possible, but from what I've seen it's usually more cost effective to have your under-utilized receptionist wear many of these hats and that's what independents tend to do.