This article is part of our complete legal guide to selling a medical practice.
How do the buyers compare?
| Factor | Hospital or health system | Private equity | Another physician or group |
|---|---|---|---|
| Typical structure | Asset purchase and employment | MSO structure, often with rollover equity | Asset or ownership purchase, sometimes over time |
| Price basis | Fair market value for assets, constrained by fraud and abuse rules | Often a multiple of adjusted earnings | Negotiated, often based on earnings or assets |
| Physician compensation | Employment with a fair market value pay model | Often reset after closing, with upside through equity | Owner or partner economics |
| Control | Hospital policies and management | Shared, through management agreement and control documents | Physicians retain control |
| Future upside | Generally limited to compensation | Potential second bite through rollover equity | Continued ownership value |
| Key risks | Loss of independence, compensation changes at renewal | Leverage, equity risk, management fees | Buyer financing and payment risk |
What should drive the decision?
- How long you plan to keep practicing, and on what terms
- Whether you want cash now, future upside, or both
- How much clinical and operational control matters to you
- How the offer treats your partners, staff, and patients
- The total value of the deal, including post-closing compensation, not just the headline price
Each path has its own guide. See selling your practice to private equity, what an MSO is, and, for physician buyers, what physicians should know before buying in.
Do the regulatory rules differ by buyer?
The same core laws apply to all of them, including the Stark Law, the Anti-Kickback Statute, and state corporate practice of medicine rules. They show up differently. Hospital deals are often shaped heavily by fair market value limits on price and compensation. Private equity deals are shaped by CPOM and the MSO structure. See our guides to Stark and the Anti-Kickback Statute and the corporate practice of medicine.
Related guides
- Selling a Medical Practice: The Complete Legal Guide (start here)
- 7 Common Mistakes Physicians Make When Selling a Practice
- Selling Your Practice to Private Equity
- What Is an MSO?
- How to Value a Medical Practice
- The Corporate Practice of Medicine in a Practice Sale
- Stark Law and the Anti-Kickback Statute in a Practice Sale
- Letters of Intent When Selling a Medical Practice
- Rollover Equity: What Physicians Should Know
- Your Employment Agreement After Selling Your Practice
- Non-Competes After Selling a Medical Practice
- F Reorganizations in a Medical Practice Sale
- Due Diligence When Selling a Medical Practice
About Med Contract Law. Med Contract Law is a focused practice group of McCormick Law & Consulting dedicated to physicians. We represent physicians and physician-owned practices in practice sales, private equity and MSO transactions, and hospital acquisitions. In these matters, we represent the physician side, not hospitals or health systems, so our focus is always on the physician's side of the deal.
If you are weighing offers from different types of buyers, physician-side counsel can help you compare them on the terms that matter. Schedule a confidential consultation to talk through your situation.
Unfamiliar with a term? See our physician contract and practice sale glossary.
Frequently asked questions
Who pays more for a medical practice? It depends on the specialty, market, and structure. Private equity offers can show higher headline prices, but post-closing compensation, rollover equity, and fees affect the total value.
Can a hospital pay more than fair market value? Hospitals generally must support both the price and post-closing compensation with fair market value under fraud and abuse laws. Tax-exempt hospitals also face private benefit, private inurement, and excess benefit rules under federal tax law, which can impose penalty taxes on the recipient of an excess payment in some cases.
Do I keep control if I sell to private equity? Physicians usually keep legal ownership of the clinical entity, but the management agreement and control documents can shift significant control to the MSO.
Is selling to another physician simpler? Often, but it can carry more payment risk if the buyer finances the purchase over time.