Holden Godat, Taylor Anderson, CVA, and Trent Fritzsche, writing for VMG Health:
With the emergence of private equity (PE) firms attempting to align with physician practices, VMG Health has seen an increase in the number of management services agreements (MSAs). Due to the highly fragmented and regulated nature of healthcare, PE investment in healthcare is not as straightforward as in other industries. In states with some level of corporate practice of medicine (CPOM) adoption, PE’s interaction with physician practices usually involves a “Friendly PC” model with an affiliated management services organization (MSO) [1]. In return for providing most of the non-clinical assets and services to a physician practice, the MSO charges a management fee via an MSA. To better understand how these arrangements are structured in the market, VMG Health experts have outlined their findings from valuing over 120 MSAs and offer insight into how to generate more value from these agreements.