The country is $40T in debt Our medical costs are expanding at least in part due to consolidation of physicians into insurers and hospitals Fixing budget neutrality and meaningfully tying physician payment would significantly help turn the tide on medical expenses through pushing doctors into independent practices and out of more expensive practice arrangements. Medicare Advantage takes nearly half of its money from the physician fee schedule. Rewriting the rules would save $1T over 10 years, only a fraction of which would be needed to fix budget neutrality and physician payment. The rest could be used for other debt reduction projects. It’s time for action. CBO Analysis suggests $1T in Medicare Advantage Overpayments crfb.org/blogs/cbo-analysis-…

Day 2: Why MSO’s are Necessary An MSO, when properly structured, does not practice medicine. It handles everything surrounding the practice of medicine so physicians can focus on what they trained and are licensed to do. The services that flow through a management services agreement typically include revenue cycle management and billing compliance, EHR implementation and optimization, facility leasing and management, HR administration for non-clinical staff, marketing and patient acquisition, credentialing and payer enrollment, IT infrastructure, financial reporting, shared vendor purchasing, and strategic business development including value-based care contracting support. The physician-owned professional entity retains exclusive authority over clinical decisions, physician hiring and supervision, and clinical standards. While that is the design, in practice it can work much differently. For small and mid-sized independent practices, these services address a real and growing problem. The administrative burden in medicine has expanded dramatically as payer requirements have multiplied and the technology investment required to participate in quality reporting and value-based contracts has grown well beyond what a small office can manage internally. A three-physician primary care group or a single-specialty surgical practice cannot afford a full revenue cycle team, a compliance officer, a population health analyst, and an IT director. An MSO spreads those costs across dozens of practices and delivers the capability at a fraction of what each group would spend building it independently. Capital access matters just as much. Independent practices that want to grow, through adding providers, opening additional sites, acquiring technology, and building out ancillary services face a financing environment that is not designed for them. Hospital systems access tax-exempt bond financing and health system credit. Private equity-backed platforms have institutional capital. Independent physician groups have bank loans against personally guaranteed assets. An MSO partnership with real capitalization can change that equation, letting a group invest in growth without selling the practice or accepting employment. Scale for payer negotiation is the third benefit, and increasingly the most important one. A physician-owned MSO that aggregates twenty or thirty independent practices has a fundamentally different payer contract conversation than any of those practices could have individually. The concentration problem I described yesterday does not go away, but the gap narrows when physicians operate at meaningful scale in the same ballpark as hospitals or insurers (but clearly substantially smaller). The benefits are real, and independent practices that access them through well-structured MSO relationships can survive and grow in a market that is otherwise structured to push them toward consolidation or employment. The problem is that every single one of those benefits is also what makes independent practices attractive acquisition targets. The same structure that can preserve independence can be engineered to eliminate it. Tune in tomorrow for more discussion on the downsides.