Spine Centers as a Hospital Department, Joint Venture, Management Services Organization (MSO), or Research Facility

The Spine Center as a Department of a Hospital
The advantage of this structure is that the hospital can fund and staff the program. The physician members are those physicians on staff who wish to participate and no physician financial contributions are required. This structure works well for a program that is established principally as a marketing tool. It may not work well, however, for true centers of excellence that want to develop treatment protocols and exclude those physicians who do not choose to follow them.

The Spine Center as a Joint Venture
Where physicians are willing to fund their proportionate share of the costs of a Spine Center, this structure provides greater control over membership and thus the quality of care being provided within the Spine Center. Under this structure, a limited liability corporation is formed between the hospital and the participating physicians. Both the hospital and the physicians must share in the costs and the revenues directly attributable to the joint venture, including staff costs and marketing. Capital purchases made on behalf of the hospital to support the services provided by the member physicians, if made available to other staff physicians, do not have to be jointly funded. In this structure, internal staffing is kept to a minimum to keep overhead low. Hospital marketing that includes the Spine Center as one of its many programs, can be hospital-funded.

The Spine Center as an MSO
This structure works well in a mature physician/ hospital relationship where the hospital and the physician members of the Spine Center want to consolidate business functions, because it allows the greatest reduction in duplicated paperwork by having the Management Services Organization (MSO) bill globally for both the professional and facility components. This model requires the greatest commitment by both the physicians and the hospital as services and revenues will be consolidated. It also requires exceptional care in its structure and operation to remain within federal and state regulations governing hospital/ physician business relationships.

Development of a Research Facility
The development of a research facility in conjunction with the creation of the Spine Center can accomplish three goals.

(1) It allows the Spine Center physicians to position themselves at the cutting edge of advances in operative and non-operative care

(2) It provides a vehicle through which non-Spine Center physicians can be recognized by the hospital for their contributions

(3) It generates incremental revenue from the fees associated with the trials as well as in the development of patented technology from the Center’s basic science and clinical research projects

Structured as a Clinical Research Organization (CRO), this research facility can attract spinal, biomechanical, orthopedic, neurosurgical and pain management Phase I and Phase II Clinical Trial studies from pharmaceutical, medical device and instrumentation manufacturers. A panel of research specialists including both Spine Center and non-Spine Center physicians can be recruited to participate in these funded studies, thus promoting greater acceptance and utilization among non-staff participating physicians. The CRO’s projects should be included in the overall marketing and promotion plans for the Spine Center.

Updated on: 12/20/10
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Spine Centers: Use of a Nonprofit Organization

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