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Published May 7, 2026 Author: Patrick Formato. Executive Partner and Director of the Healthcare Law Practice at Abrams Fensterman, LLP. 516-328-2300 |
How Do You Buy or Sell a Medical Practice in New York?
Buying or selling a medical practice in New York requires navigating the corporate practice of medicine rules, valuing the practice’s assets and goodwill, transferring patient records in compliance with state and federal privacy laws, and securing the required regulatory approvals. Abrams Fensterman guides physicians through due diligence, deal structuring, and closing to protect their interests.
Who Is Legally Allowed to Own a Medical Practice in New York?
New York restricts ownership of medical practices under the corporate practice of medicine doctrine. A practice must generally be owned by a licensed physician or organized as a professional corporation (PC) or professional limited liability company (PLLC), which limits who can serve as an equity owner even when non-physicians handle management or administrative services. Buyers structuring a deal around a management services organization need to keep this ownership line clear from the start.
What Should a Buyer Investigate Before Purchasing a Practice?
A buyer’s first task is confirming the target practice is a fit, both clinically and financially, before signing anything.
Due diligence typically covers:
- Payer contracts and reimbursement history
- Outstanding regulatory or licensing issues
- Existing employment agreements
- Equipment and lease obligations
- Pending or historical compliance matters
Skipping this review is one of the more common ways a buyer inherits a problem they didn’t know existed.
How Is a Medical Practice Valued for Sale?
Valuing a practice starts with its tangible assets, files, equipment, and accounts receivable, and extends to intangible value like patient goodwill and referral relationships. Sellers and buyers frequently rely on an independent valuation to set a defensible price, since a practice’s worth depends heavily on payer mix, patient volume, and location, not just its physical assets.
Should a Practice Sale Be Structured as an Asset Purchase or an Entity Sale?
Most medical practice transactions in New York are structured as asset purchases rather than sales of the corporate entity itself, largely because of the ownership restrictions under the corporate practice of medicine doctrine. An asset purchase lets a buyer acquire specific assets, contracts, and goodwill while leaving certain liabilities behind, though the right structure depends on tax treatment, licensing continuity, and how existing contracts are assigned.
What Happens to Patient Records When a Practice Is Sold?
Patient records must be transferred, or their custody addressed, in a way that satisfies New York state requirements and HIPAA, including patient notice of the change in practice ownership. The purchase agreement should specify who retains custodial responsibility for records after closing and how patients are notified, since mishandling this step creates both regulatory and malpractice exposure.
Do Non-Compete Agreements Apply When Selling a Medical Practice?
Restrictive covenants are common in practice sale agreements, requiring the selling physician to refrain from competing within a defined geographic area and time period after closing. These provisions protect the goodwill the buyer is paying for, though their enforceability depends on being reasonable in scope, and they should be negotiated carefully alongside any employment arrangement the seller retains post-sale.
How Are Payer and Insurance Contracts Transferred in a Sale?
Payer contracts, including Medicare, Medicaid, and commercial insurance agreements, generally cannot be transferred automatically and often require separate assignment, re-credentialing, or a new enrollment process with each payer. Building this timeline into the transaction early prevents a gap in reimbursement after closing.
What Should Be Included in the Purchase Agreement?
A medical practice purchase agreement typically addresses:
- The assets being transferred
- Purchase price and payment terms
- Representations and warranties
- The practice’s compliance history
- Allocation of liabilities
- Patient-record custody
- Post-closing restrictive covenants
- Transition services
A letter of intent is often signed first to establish the key deal terms before the parties move to a full purchase agreement.
How Long Does a Medical Practice Sale Take?
Timelines vary with the complexity of the deal, but due diligence, regulatory approvals, payer re-credentialing, and contract negotiation typically mean a sale takes several months from letter of intent to closing. Practices with cleaner records and fewer regulatory issues tend to move faster.
What Tax and Liability Issues Come Up in a Practice Sale?
Tax treatment varies depending on whether the deal is structured as an asset or an entity transaction, and sellers should also consider whether tail malpractice coverage is needed to address claims arising from care provided before the sale closes. Both issues are typically addressed alongside a tax advisor and, where malpractice tail coverage applies, the seller’s insurance carrier.
Frequently Asked Questions
Do you need a lawyer to buy or sell a medical practice in New York?
Given the regulatory restrictions on practice ownership and the number of moving pieces in a transaction, most physicians work with an attorney experienced in New York health law to structure and close the deal.
Can a management company own a medical practice in New York?
No. A management services organization can provide administrative and business support, but equity ownership of the practice itself must stay with a licensed physician, PC, or PLLC under the corporate practice of medicine doctrine.
What is the difference between a letter of intent and a purchase agreement?
A letter of intent outlines the key business terms both parties have agreed to in principle, while the purchase agreement is the binding document that finalizes price, representations, liabilities, and closing conditions.
Contact Our Law Firm
To learn more about how we can help you buy or sell a medical practice, please contact Abrams Fensterman to schedule an initial consultation.
The appropriate structure and requirements for a medical practice transaction depend on the facts of the proposed deal.
