By Kelsey Smart and Daniel Colacurcio, PhD
A significant feature of the gastroenterology practice landscape is the ongoing consolidation process, seen at both national and regional levels. Central groups driving this trend are management service organizations (MSOs), which play a crucial role in practice consolidation along with an array of internal changes among growing rosters of member practices. These MSOs (also referred to as practice networks, aggregators, or super-groups) continue to expand their reach and influence through consolidation of member practices, but also lead “top down” changes among members. MSOs are increasingly investing in practice infrastructure, driving standardization of care, leveraging clinical specialists, and promoting data collection and clinical trial initiatives. Simultaneously, these larger consolidated groups are also exerting influence on relationships with regional payers and pharma.
As these MSOs continue to shape the gastroenterology practice sector, pharma is adapting to address this evolving customer segment. Here’s what these shifting dynamics mean for pharma manufacturers.
Consolidation & Expansion: Private Equity & MSOs in Gastroenterology
Private equity firms have made significant investments in the gastroenterology practice space, with MSOs as the primary groups driving change. Since 2016, several MSOs have emerged, with most backed by large private equity firms. Major players like GI Alliance, the largest physician-owned GI services group in the U.S. that represents over 800 gastroenterology specialists, and GastroHealth (which has acquired over 120 practices and 350 gastroenterology specialists) are large and unified groups compared to their smaller and more fragmented predecessors.
After acquiring small to mid-sized practices, PE firms and MSOs aim to streamline internal operations, create efficiencies, reduce costs, and enhance negotiating power with payers. For example, a large MSO may have a dedicated office of prior authorization specialists which can support prescribers across an entire network of practices, reducing the time which the gastroenterologists previously had to devote to administrative tasks. When successfully applied, such approaches allow gastroenterologists to focus more on patient care, particularly when “per hour” practice financial efficiency is closely linked to HCP availability to perform medical procedures and dedicate time to their patients.
Centralization & Efficiency: MSO Impact on Member Practices
MSOs provide critical administrative support across member practices, from billing and IT/EHR, to human resources and hiring. MSOs usually follow a centralized structure, which allows their network of practices to focus on specific treatment areas—such as inflammatory bowel disease through hiring and leverage of specialists. The dedicated focus on “center of excellence” development within practice networks has significant potential to consolidate leading clinical specialists in the community setting, parallel to those seen in academic-aligned hospital systems.
MSOs can accelerate the integration of novel treatments into clinical guidelines though organizational support for newer types of treatments, including biologics and recently-FDA approved options. Simultaneously, cutting-edge patient support and monitoring approaches can be formally put into practice to aid in the administration of these newer therapies. An MSO can also leverage their key opinion leaders to create internal referral networks to support HCPs across the organization for specialized consults, allowing “top down” influence of recognized clinical thought leaders and reduced variability in care across individual HCPs and practices.
Shifting Dynamics: What Does This Mean for Pharmaceutical Manufacturers?
As gastroenterology practice consolidation continues, pharmaceutical manufacturers face both opportunities and challenges to effectively support customers within these changing models in several key areas:
1. Prescribing Patterns and Drug Utilization: As practices consolidate, a more standardized approach to care emerges. Select networks are piloting treatment protocols and influencing prescribing patterns by specifying in-house experts to be consulted on specific disease areas or complex cases. Pharmaceutical manufacturers must be aware of these trends to engage effectively with these networks and ensure their products are included in future treatment guidelines and algorithms, the early foundations of which are already being developed at some practice groups. Payer utilization management remains a key factor in prescribing decisions. While some MSOs are exploring internal specialist committees and data-driven treatment guidelines, payer coverage policies and cumbersome prior authorization processes continue to shape which therapies gastroenterologists prescribe. This is particularly true for newer specialized and high-cost product types. Even with MSO support through dedicated prior authorization teams, providers cite difficulties in navigating payer coverage for desired regimens. This underscores the importance of understanding local payer dynamics when developing engagement strategies and deploying effective strategies to support the providers in mitigating significant payer coverage and reimbursement challenges.
“The whole idea is to have more influence to ensure better, quality patient care. As the alliance becomes stronger, we may have some more influence on payers and the prior authorization process”
-MSO Affiliated Gastroenterologist
2. Value-Based Care, Standardization & Quality: With MSOs capable of focusing more on value-based care, providers are incentivized to improve patient outcomes and reduce costs. By collaborating with large gastroenterology networks, manufacturers can demonstrate the effectiveness of their therapies in achieving better clinical outcomes and cost savings, increasing value recognition in the broader interests of MSOs. Increasingly, the use of generics and biosimilars, consideration of purchasing contracts, and formal value-based partnerships with payers will all inform practice network-level decisions.
3. Clinical Trials & Data Generation: With the consolidation of gastroenterology practices, networks have access to larger potential trial populations, creating attractive opportunities for clinical trial sites in collaboration with pharma. For example, GI Alliance offers robust clinical trial infrastructure across its practices, making it easier to recruit patients for studies. This reduces drug development timelines and enhances post-marketing surveillance, to help collect valuable real-world data on drug efficacy and safety. Larger networks also provide opportunities for pharmaceutical manufacturers to partner and collect data in new ways, providing valuable insight into the long-term effectiveness of therapies in diverse patient populations, which can support ongoing clinical research and long-term product value proposition, particularly in chronic disease areas with significant payer access burden, such as Crohn’s disease or ulcerative colitis. A future scenario could be considered where pharma companies collaborate with networks to generate real-world clinical and economic outcomes data, and then leverage data in interactions with payers to help alleviate coverage concerns for specialized and high-cost therapies.
4. The Evolving Pharma Strategy: The rise of MSOs and the breadth of their influence requires that pharmaceutical manufacturers adjust their engagement strategies. MSOs vary widely in their organizational structures, clinical focuses, and regional payer dynamics, but a general trend is the consolidation of “top-down” clinical and operational decision-making and emergence of population health decision-makers who will drive organization-level decisions bridging patient care with provider priorities and practice network sustainability. Decisions from these groups will impact across large numbers of practices, physicians, and patients. Pharmaceutical manufacturers will benefit from tailoring their engagement approach based on the specific needs of each MSO. Examples of tailored MSO engagement include working with specialist committees and new population health decision makers, aligning with value-based care goals, and navigating payer policies – all which can vary across different MSO groups. Recognizing these variations in MSO priorities can ensure more effective market penetration, drug adoption, and customer support.
Pharma Relationships with a Changing Gastroenterology Practice Sector
Private equity and management services organizations are reshaping the gastroenterology practice landscape. The increasing consolidation and internal transformation of practices, in context of novel treatments and payer utilization management, will collectively inform how pharmaceutical manufacturers approach this space. By building strong relationships with key stakeholders, aligning with new organizational goals, identifying MSO-specific regional payer interactions, and understanding drivers of prescribing and new drug adoption, pharma will be able to better support gastroenterology providers and patients.
Find out how The Dedham Group can support your gastroenterology practice outreach strategies. Contact us.
About the Authors
Kelsey Smart is a Consultant at The Dedham Group. Email her at kelsey.smart@dedhamgroup.com.
Daniel Colacurcio is an Associate Partner at The Dedham Group. Email him at daniel.colacurcio@dedhamgroup.com.
