Thinking about selling your medical practice?

Selling a medical practice usually starts with records: several years of financial statements, collections split by payer and by physician, payer contracts, and every financial relationship with a hospital or referral source. With those in hand, an advisor prepares a confidential profile, contacts buyers that fit, and negotiates the offers alongside the practice’s healthcare attorney and tax advisor. Owners who decide early how much longer they want to practice generally have an easier time choosing among buyers.

A medical practice valuation turns mostly on earnings after every physician is paid a market salary, not on collections alone. Buyers then weigh the payer mix, how much revenue depends on the selling physician, ancillary services, and compliance history. Rules of thumb based on a share of collections circulate, but two practices with similar revenue can end up far apart on value, which is why buyers ask first for results split by payer and by physician.

Either can help a physician sell a practice, and both generally keep the sale confidential. Medical practice brokers often work with smaller practices and individual physician buyers. An M&A advisor typically works with larger practices and runs a process aimed at private equity backed groups, health systems, and larger physician groups. The better fit depends mostly on the size of the practice and who is likely to buy it.

Where state law requires it, a private equity backed group buys the business side of the practice through a management services organization, while a physician-owned professional entity keeps employing the physicians and billing for their care. The physicians often accept a lower salary after closing, reinvest part of the proceeds in the larger company, and agree to stay for several years. The value of that reinvested stake depends on how the larger company performs.

A management services organization, or MSO, handles the business side of a medical practice: billing, staffing, leases, technology, and payer contracting. In many private equity deals the investor owns the MSO, and the physicians keep ownership of the professional entity that delivers care, which pays the MSO a management fee under a long-term agreement. The structure lets investors share in a practice’s economics in states that restrict who can own a medical practice.

The corporate practice of medicine doctrine, or CPOM, is a set of state laws that limit who can own a medical practice or employ physicians. The rules vary widely: some states enforce them strictly, others hardly at all. Where they apply, a buyer that is not owned by physicians typically uses an MSO structure rather than buying the practice outright, so the deal depends on state law and needs healthcare counsel early.

Both federal laws shape the price and the terms. The Stark Law bars physicians from referring Medicare and Medicaid patients for designated health services to entities they have a financial relationship with unless an exception applies, and the Anti-Kickback Statute makes it a crime to knowingly and willfully pay for referrals. In a practice sale, that generally means a price consistent with fair market value and set without regard to referrals, which is why many sellers get an independent valuation.

Some patient information can be shared. HIPAA counts due diligence for a sale to another covered entity, or to a buyer that will become one, as part of a practice’s health care operations. Sellers generally start with summary reports and share patient-level detail only when a review needs it, under a confidentiality agreement. Who keeps the medical records after closing depends on state law and the deal terms, which healthcare counsel can confirm.

Buyers usually ask for one, because the practice’s value depends on patients staying. Non-competes are set mostly by state law, and some states limit them for physicians, though one signed as part of selling a practice is often treated differently from one in an employment agreement. The FTC’s nationwide rule never took effect and was removed in 2026. Scope, length, and distance are negotiable, so review them with counsel before signing.

An earnout pays part of the price later if the practice hits agreed targets, and rollover equity means reinvesting part of the proceeds in the buying company. Both move some of the value into the future, and both carry risk: targets may be missed, and a rolled stake is worth what the larger company is later worth. In a practice sale, earnouts also need review under the referral laws, since payments generally cannot reflect the volume or value of referrals.

It depends on what the physicians want next. A health system sale usually means becoming an employee, with pay set at fair market value and less control over operations. A private equity sale usually means a lower salary, a stake in a larger group, and a possible second payout if that group is sold again. Comparing offers from both side by side is generally the clearest way for a practice to see the trade-offs.

Physicians who own their practice’s building through a separate company usually keep it and lease it to the buyer, or sell it separately. Either way, the rent has to be consistent with fair market value under a written lease, because a lease with a referral source is a financial relationship under the Stark Law. Keeping the building can provide income after the sale, and selling it can simplify the exit; a tax advisor can compare the two.