Different Ways to Acquire a Medical Practice

 

Understanding the various paths physicians and healthcare organizations take when purchasing a practice

 

When people think about buying a medical practice, they often imagine a straightforward transaction where one physician sells their practice to another physician.

While that type of transition still occurs, today there are actually several different ways a medical practice can be acquired. The structure of the transaction often depends on the goals of the buyer, the preferences of the seller, and the financial structure of the deal.

Understanding the different acquisition pathways can help physicians who are considering selling their practice better anticipate the types of buyers they may encounter and the deal structures that may be proposed.

Each approach offers its own advantages and considerations, depending on the circumstances of the transaction.

 

Purchasing the Entire Practice

One of the most traditional forms of practice acquisition is the purchase of the entire medical practice.

In this type of transaction, the buyer acquires the practice’s core assets and operations. These typically include:

 

• The patient base and medical records
• Equipment and office furnishings
• Staff and operational systems
• Practice name and reputation
• Contracts with payers and vendors

The selling physician may remain in the practice for a transition period to ensure continuity of care and to introduce the new owner to patients and staff.

This approach is common when a physician retires and transfers the practice to another physician who intends to continue operating it independently.

 

Buying into an Existing Partnership

Another common path to practice ownership is purchasing an ownership stake within an existing medical practice.

In these situations, a physician may buy into a practice gradually, often beginning as an employed associate and later becoming a partner.

This structure allows the physician to:

 

• Learn the operations of the practice
• Build relationships with patients and staff
• Share financial and operational responsibilities with other partners

Over time, the ownership share may increase as the physician becomes more involved in the management and leadership of the practice.

Partnership buy-ins are frequently used as part of a long-term succession plan within established practices.

 

Merging with Another Practice

Instead of a traditional sale, some physicians choose to merge their practice with another medical group.

In a merger, two practices combine operations and share resources while continuing to provide care to their patient bases.

Mergers can offer several advantages, including:

 

• Shared operational costs
• Expanded provider teams
• Broader service offerings
• Increased negotiating power with payers

For some physicians, merging practices can create opportunities for growth and collaboration while maintaining some level of physician ownership.

 

Selling to a Medical Service Organization (MSO)

Medical Service Organizations have become increasingly active participants in healthcare acquisitions.

In this structure, the physician sells the business operations of the practice to the MSO, which then provides administrative services such as:

 

• Billing and revenue cycle management
• Human resources and staffing support
• Technology infrastructure
• Marketing and patient acquisition

The physician typically continues practicing medicine within the organization while the MSO manages the operational side of the business.

For some physicians, this structure allows them to focus more on patient care while reducing administrative responsibilities.

 

Joining a Private Equity–Backed Platform

Private equity–supported healthcare platforms have become significant buyers in many specialties.

These organizations often acquire practices as part of a broader strategy to build regional or national networks within a particular specialty.

Common specialties targeted by these platforms include:

 

• Dermatology
• Orthopedics
• Ophthalmology
• Dental
• Plastic surgery
• Medical aesthetics and med spas

In many of these transactions, physicians receive a combination of cash and equity in the larger organization.

This structure may allow physicians to participate in the future growth of the platform while gaining access to centralized management resources.

 

Selling to a Hospital or Health System

Hospitals and health systems sometimes acquire physician practices as part of broader efforts to expand access to care and strengthen referral networks.

These acquisitions may involve integrating the practice into the hospital’s network of physicians and outpatient facilities.

Physicians who sell to hospitals often transition into employed roles within the health system.

While this structure can provide financial stability and administrative support, it may also involve working within a more structured organizational environment.

 

Internal Succession Sales

In some cases, the buyer may already be part of the practice.

An associate physician, partner, or family member may gradually acquire ownership as part of a succession plan.

Internal transitions can provide several advantages:

 

• Familiarity between the buyer and seller
• Continuity for patients and staff
• A smoother leadership transition

These arrangements often involve gradual ownership transfers over several years.

 

Choosing the Right Path

Each acquisition structure offers different advantages depending on the goals of the physician.

Some physicians prioritize maintaining independence and community presence. Others prefer the resources and infrastructure of larger healthcare organizations.

Factors physicians often consider include:

 

• Financial goals
• Desired level of independence
• Long-term career plans
• Operational support needs
• The impact on staff and patients

Understanding these options can help physicians evaluate potential buyers and determine which structure best aligns with their goals.

 

What This Means for Sellers

The way a practice is acquired can influence everything from valuation to the physician’s role after the transaction.

By understanding the different acquisition pathways, practice owners can better anticipate the types of buyers who may be interested in their practice and the types of offers they may receive.

This knowledge also helps physicians approach negotiations with greater clarity and confidence.

 

 

Continue Reading

Now that you understand the different ways physicians acquire medical practices, the next step is learning how long the sale process typically takes.

Continue reading: Due Diligence: What Buyers Should Review When Acquiring a Medical Practice →

 

Explore the full guide series:

• The Complete Guide to Selling Your Medical Practice
• How Medical Practice Valuation Works
• How to Buy a Medical Practice: A Buyer’s Guide
• Medical MSOs and Platform Companies
• Medical Practice M&A and Market Trends
• Medical Practice Transitions and Patient Communication
• Selling to an Associate or Internal Buyer

 

Ready to Explore Your Options?

If you are considering selling your medical practice, understanding the different types of buyers and acquisition structures can help you navigate the process more effectively.

An experienced advisor can help evaluate potential buyers, structure the transaction, and guide you through each step of the practice transition.

Contact us today to begin exploring your options.