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MSO increases practice revenues, flexibility

Article-MSO increases practice revenues, flexibility

Newport Beach, Calif. — Growing plastic surgery practices can maximize earning power while satisfying professional goals under a medical services organization (MSO), which provides for a single owner contracting with other physicians, R. Merrel Olesen, M.D., says.

"There are many good physicians who have found they want to be doctors, not businessmen," he says. "Practicing in an MSO model, I make all the investment, and the physicians associated with the practice have no business responsibilities other than to turn out high-quality results."

Dr. Olesen presented his experiences with various types of practices, including solo, group clinics, partnerships and MSOs, here at the recent seminar "Cosmetic Surgery 2005: The Art of Business Building 2."

"Over the years, I have been involved in all these arrangements," he says, "and there are advantages and disadvantages to all of them. I think the MSO model has a lot to recommend it."

His current practice at the La Jolla Cosmetic Surgery Centre, La Jolla, Calif., where he is medical director, includes seven physicians who are either plastic surgeons or cosmetic dermatologists.

A total of 12,000 square feet is in two offices within the same building on a hospital campus in La Jolla. There are four operating rooms and two laser treatment rooms providing facilities for treating or operating on 40 to 50 patients per week.

Going it alone

With a solo practice, the physician/owner makes all decisions. However, maintaining an operating room is expensive, especially when it is "dark," which can be up to 40 percent of the time while the surgeon is in the clinic seeing new patients and follow-ups.

Other overhead, including quality staff such as managers and registered nurses, can also weigh down expenses. Keep up with marketing efforts and taking personal time also become difficult.

"I have an associate who was in practice by himself for 15 to 20 years, who was considered one of the 'good guys,'" Dr. Olesen says. "He had a great office, a nice OR and good staff. But because he ran a quality practice with resulting high overhead, too much of his income went to his practice. He joined us and his economic success now matches his clinical skills."

Unlike with the solo physician model, Dr. Olesen says he plans to maintain majority ownership of the MSO as he retires.

"The exit strategy becomes very different than someone who practices alone with no one to replace him. Maybe he sells his charts to someone, or patients seek another physician in the community. This happens to many physicians," he says.

Banding together

The trend in sharing expenses with other physicians in some way, including MSOs and partnerships, is increasing. Up to 23 percent of plastic surgeons practice in groups, according to Dr. Olesen.

"I suspect it will get bigger," he says. "There is a comfort zone and an economy of scale in a group practice. They won't all be MSOs, but I think we'll see more plastic surgeons practice in groups because of the economic and medical advantages.

"In our practice, we have proven we can run the business side in the MSO and physician compensation exceeds what any of us can do on our own. When you hear that some group or partnership is breaking up, you can be sure there is inequity someplace. Predictably, it is usually related to money and power. Certainly some doctors want to be in a partnership arrangement, and for those people this (MSO) is not a good idea."

He converted to an MSO 17 years ago after his partnership "broke up over practice style issues. Not all partnerships are successful, and certainly ours wasn't. Single ownership eases the decision process while taking advantage of the positives of size," he says.

Not enough support

Describing his experience with a large multi-specialty group, Dr. Olesen says he found that cosmetic surgery failed to receive enough organizational support and marketing.

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