Quick Answer: Buying, selling, or merging a medical practice in Florida requires more than a standard business purchase agreement. The parties must address fair market value, federal Anti-Kickback and Stark rules, Florida’s Patient Self-Referral Act and Patient Brokering Act, clinic licensure under the Health Care Clinic Act, Medicare and Medicaid change-of-ownership filings, payer contract assignments, medical record custody, malpractice tail coverage, and physician employment and restrictive covenant terms.
Florida’s physician practice market has never been more active. Retiring physicians are looking for exit strategies. Hospital systems are acquiring independent practices to build referral networks. Private equity-backed management services organizations are rolling up dermatology, ophthalmology, orthopedic, dental, and behavioral health groups. Younger physicians are forming new practices or joining established groups as partners. In Palm Beach, Broward, and Miami-Dade counties, where the population skews older and demand for specialty care keeps rising, practice transactions happen constantly.
Each of those deals sits at the intersection of business law and health care regulation. A transaction that would be routine for a restaurant or a software company can create serious exposure when the buyer and seller are in a position to refer patients to one another, bill Medicare, or hold protected health information.
Nason, Yeager, Gerson, Harris & Fumero, P.A., a Palm Beach Gardens law firm founded in 1960, represents physicians, medical groups, ambulatory providers, and health care businesses in transactions, compliance, and disputes. As a South Florida healthcare law firm with business, real estate, employment, and litigation capabilities under one roof, the firm guides clients through each stage of a practice transaction. This article explains the key issues.
Common Practice Transaction Structures
| Structure | How It Works | Typical Use |
|---|---|---|
| Asset purchase | Buyer acquires equipment, goodwill, records, contracts | Most common for small practices |
| Equity purchase | Buyer acquires ownership of the entity | Preserves contracts and provider numbers |
| Merger | Two practices combine into one entity | Peer groups seeking scale |
| MSO model | Investor buys non-clinical assets; physicians keep clinical entity | Private equity platforms |
| Hospital employment | Practice sold, physicians become employees | Health system integration |
Asset Purchases
In an asset purchase, the buyer takes only the assets and liabilities it chooses. That limits the buyer’s exposure to the seller’s historical billing errors and lawsuits. However, contracts, payer agreements, leases, and licenses may not transfer automatically, and the buyer may need new Medicare enrollment or must accept assignment of the seller’s provider agreement along with its history.
Equity Purchases
An equity purchase keeps the existing entity intact, which can preserve payer contracts and enrollment. The trade-off is that the buyer inherits everything the entity has done, including overpayments, compliance problems, and pending claims. Thorough due diligence and strong indemnification provisions are essential.
Management Services Organization Arrangements
Private investors that are not licensed physicians typically use an MSO structure. The investor owns a management company that provides billing, staffing, real estate, technology, and administrative services to a physician-owned professional entity under a long-term management agreement. Florida does not have the strict corporate practice of medicine prohibition found in some states. Even so, the arrangement must respect physicians’ independent clinical judgment, follow licensure and fee-splitting rules, and set management fees that comply with fraud and abuse laws. Fee structures based on a percentage of collections deserve particular scrutiny.
Valuation and Fair Market Value
Health care transactions between parties who may refer patients to each other must generally be priced at fair market value and must not reflect the volume or value of referrals. That principle drives many of the most important decisions in a deal.
Why Valuation Is a Compliance Issue
If a hospital pays a physician more than fair market value for a practice, and the physician then refers patients to the hospital, regulators may view the excess as payment for referrals. The same concern applies to post-closing compensation, consulting fees, and earn-outs. An independent valuation by a qualified health care appraiser provides important documentation.
Earn-Outs and Contingent Payments
Earn-outs tied to post-closing revenue are common in other industries. In health care, payments that rise with the number of procedures a selling physician refers or performs can create risk. Earn-outs based on metrics that do not reflect referrals, or structured to fit within regulatory exceptions, are safer.
Federal Fraud and Abuse Laws
The Anti-Kickback Statute
The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), makes it a felony to knowingly and willfully offer, pay, solicit, or receive anything of value to induce or reward referrals of items or services payable by federal health care programs. Violations can lead to criminal penalties, civil monetary penalties, exclusion from Medicare and Medicaid, and False Claims Act liability. Safe harbors exist for practice sales, employment, personal services, and other arrangements, but only if each condition is met.
The Stark Law
The federal physician self-referral law, commonly called the Stark Law, 42 U.S.C. § 1395nn, prohibits a physician from referring Medicare patients for certain designated health services to an entity with which the physician or an immediate family member has a financial relationship, unless an exception applies. Designated health services include clinical laboratory, imaging, physical therapy, durable medical equipment, and hospital services. Stark is a strict liability statute. Intent does not matter, and even technical violations can require repayment of all affected claims.
Florida Health Care Laws That Affect Transactions
Florida layers its own rules on top of federal law, and several of them apply regardless of whether Medicare or Medicaid pays for the services.
The Florida Patient Self-Referral Act
The Patient Self-Referral Act of 1988, Section 456.053 of the Florida Statutes, restricts referrals by health care providers to entities in which they hold investment interests for designated health services and certain other services. Unlike the federal Stark Law, it applies to all payers, including commercial insurance and self-pay patients.
The Florida Patient Brokering Act
The Patient Brokering Act, Section 817.505, makes it a crime to offer or pay any commission, bonus, rebate, kickback, or bribe to induce the referral of patients to or from a health care provider or facility. Like the self-referral law, it applies to all payers. The statute has been used aggressively against marketing arrangements in the substance abuse treatment and laboratory sectors.
Florida’s Anti-Kickback and Fee-Splitting Rules
Section 456.054 prohibits kickbacks by licensed health care practitioners, and the Florida Board of Medicine regulates fee-splitting. Revenue-sharing arrangements between physicians and non-physicians, including some management fees, must be reviewed against those rules.
The Health Care Clinic Act
Florida’s Health Care Clinic Act, Part X of Chapter 400, generally requires health care clinics to be licensed by the Agency for Health Care Administration (AHCA) unless an exemption applies. A common exemption covers entities wholly owned by licensed health care practitioners who supervise the business activities. A sale to a non-physician owner, an MSO restructuring, or a private equity investment can eliminate that exemption and trigger a licensure requirement. Operating without a required license can make claims unenforceable and expose the clinic to penalties.
A Palm Beach healthcare attorney reviewing a proposed deal will check every one of these state laws, because a structure that satisfies federal rules can still violate Florida law.
Due Diligence Checklist
Buyers should investigate the target practice thoroughly before signing. Key areas include:
- Licensure of every physician, advanced practice provider, and facility, including any disciplinary history with the Florida Department of Health
- Billing and coding through a sample audit to identify overpayments and documentation problems
- Exclusion screening of all owners, employees, and contractors against the OIG List of Excluded Individuals/Entities and state Medicaid lists
- Financial relationships with referral sources, including leases, medical directorships, and marketing arrangements
- Payer contracts and whether they require consent to assign or change control
- Pending or threatened litigation, malpractice claims, and government inquiries
- HIPAA compliance, including risk assessments, business associate agreements, and prior breaches
- Employment agreements, compensation models, and restrictive covenants
- Real estate leases and their compliance with fair market value requirements
- Controlled substance registrations with the DEA and Florida requirements for dispensing practitioners
Regulatory Filings and Approvals
| Filing | Agency | Timing Consideration |
|---|---|---|
| Medicare enrollment change | CMS / Medicare contractor | Generally reported within 30 days |
| Medicaid enrollment | AHCA | Varies; plan in advance |
| Clinic license or exemption | AHCA | Before operating under new ownership |
| DEA registration | Drug Enforcement Administration | Registrations are not transferable |
| Payer notices or consents | Commercial insurers | Per contract terms |
| Hart-Scott-Rodino | FTC / DOJ | Only for transactions above federal thresholds |
Missing a filing can interrupt cash flow for months. Claims submitted under the wrong enrollment can be denied or later recouped.
Medical Records and Patient Notice
Patient records are both a valuable asset and a legal obligation. Florida law requires physicians to maintain medical records for at least five years after the last patient contact, and the Board of Medicine has specific rules about notifying patients when a physician leaves a practice, terminates a practice, or relocates. Purchase agreements should identify who will be the records custodian, how patients will be notified, how copies will be made available, and how electronic records will be migrated. A buyer that becomes custodian also becomes responsible for HIPAA-compliant handling of those records.
Florida law also requires that electronic health records maintained by certain health care providers be physically stored in the continental United States, its territories, or Canada. Buyers migrating records to new platforms or offshore vendors should confirm compliance.
Physician Employment and Compensation After Closing
In most acquisitions, the selling physicians keep practicing as employees or independent contractors of the buyer. Their agreements are as important as the purchase agreement itself.
Compensation Models
Common models include base salary, productivity compensation based on work relative value units (wRVUs), collections-based compensation, and quality incentives. Compensation must generally be consistent with fair market value and must not take into account the volume or value of referrals for designated health services. A Florida physician contract attorney reviews compensation formulas against applicable Stark exceptions and Anti-Kickback safe harbors.
Restrictive Covenants for Physicians
Florida generally enforces reasonable noncompete agreements under Section 542.335. Physicians, however, are subject to special rules. Section 542.336 makes restrictive covenants unenforceable against physicians who practice a medical specialty in a county where one entity employs or contracts with all physicians practicing that specialty in the county. In a practice sale, covenants tied to the sale of a business generally receive more favorable presumptions than employment covenants. The interaction among these statutes, Florida’s 2025 CHOICE Act, and any later legislation affecting health care practitioners should be reviewed carefully for each deal.
Malpractice Tail Coverage
Many physicians carry claims-made malpractice coverage, which protects only against claims made while the policy is in force. When a practice is sold, someone must buy an extended reporting endorsement, often called tail coverage, or the buyer’s policy must provide prior acts coverage. Tail coverage can be expensive, so who pays for it should be negotiated in advance.
Antitrust and Market Concentration
Most physician practice acquisitions are too small to require federal premerger notification under the Hart-Scott-Rodino Act. Even so, the Federal Trade Commission and state attorneys general have increased scrutiny of serial acquisitions in health care, including private equity roll-ups in concentrated specialties. Several states have adopted health care transaction notice laws. Buyers making repeated acquisitions in the same specialty and region should evaluate antitrust risk and monitor developments in Florida law.
The Real Estate Side of the Deal
Medical office space is often owned by the selling physicians or by an affiliated entity. When the buyer leases that space after closing, the lease must be in writing, cover all space and equipment, run at least one year, and set rent at fair market value without regard to referrals to meet Stark and Anti-Kickback requirements. Lease terms that are too favorable to the physician-landlord can be treated as disguised payments for referrals.
Post-Closing Integration
The work does not end at closing. Successful integrations require:
- Credentialing of physicians with payers under the new entity
- Compliance program onboarding, including training and policy adoption
- Billing system transition to avoid gaps in claims submission
- Employee transitions consistent with employment law, including benefits continuation
- Monitoring of earn-outs and covenants to confirm compliance over time
A Boca Raton medical practice lawyer can also help practices that are acquiring smaller groups or bringing in new partners to build governance documents that manage buy-ins, buyouts, disability, death, and retirement.
When to Involve Counsel
Counsel should be involved before a letter of intent is signed. Letters of intent often set price, structure, and key employment terms, and those terms are difficult to renegotiate once the parties have agreed in principle. Early involvement lets the parties choose a compliant structure, plan for required filings, and identify problems in due diligence while there is still time to resolve them.
Practices that want ongoing oversight after a transaction often engage a healthcare regulatory compliance law firm South Fl to monitor financial relationships, conduct periodic billing audits, and update policies as laws change.
Frequently Asked Questions
Can a non-physician own a medical practice in Florida?
Florida does not broadly prohibit the corporate practice of medicine, but non-physician ownership can trigger clinic licensure under the Health Care Clinic Act and must respect fee-splitting rules and physicians’ clinical independence. Many investors use an MSO structure.
Does my practice sale need a fair market value opinion?
It is strongly recommended when the buyer is in a position to receive referrals from the seller, such as a hospital, health system, or another physician group. Independent valuation helps document compliance with federal and Florida fraud and abuse laws.
Who keeps the medical records after a practice is sold?
The purchase agreement should designate a records custodian. Florida requires records to be retained for at least five years after the last patient contact, and patients must have continued access to copies.
Do Medicare billing numbers transfer to the buyer?
It depends on the structure. In an equity purchase, enrollment may continue with a reported change of information. In an asset purchase, the buyer may accept assignment of the provider agreement and its history, or enroll separately.
Is a noncompete enforceable against a physician who sells a practice?
Often yes, especially when tied to the sale of the business. However, Florida’s special physician rule in Section 542.336 and other statutes can limit enforcement in certain specialties and counties.
What is tail coverage and who pays for it?
Tail coverage extends a claims-made malpractice policy to cover claims reported after the policy ends. Responsibility for the cost is negotiated in the purchase or employment agreement.
Key Takeaways
- Practice transactions must comply with federal and Florida fraud and abuse laws.
- Fair market value supports both the purchase price and post-closing compensation.
- Florida’s self-referral and patient brokering laws apply to all payers.
- Ownership changes can trigger AHCA clinic licensure.
- Records custody, tail coverage, and restrictive covenants must be negotiated early.
Contact Nason Yeager
Nason, Yeager, Gerson, Harris & Fumero, P.A. serves clients throughout Florida from four offices. Website: nasonyeager.com
Palm Beach Gardens: (561) 686-3307 | Seacoast National Centre, 3001 PGA Boulevard, Suite 305, Palm Beach Gardens, FL 33410
Boca Raton: (561) 982-7114 | 750 Park of Commerce Boulevard, Suite 210, Boca Raton, FL 33487
Fort Lauderdale: (561) 686-3307 | 110 East Broward Boulevard, Suite 1010, Fort Lauderdale, FL 33301
Tampa/St. Petersburg (By Appointment Only): (561) 686-3307 | First Central Tower, 360 Central Avenue, Suite 800, St. Petersburg, FL 33701
This article provides general information and is not legal advice. Consult a qualified attorney about your specific situation.
Sources and Further Reading
- Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) – U.S. Code
- Physician Self-Referral Law (Stark Law), 42 U.S.C. § 1395nn – Centers for Medicare & Medicaid Services
- Patient Self-Referral Act of 1988, Section 456.053, Florida Statutes – Florida Legislature
- Patient Brokering Act, Section 817.505, Florida Statutes – Florida Legislature
- Health Care Clinic Act, Part X, Chapter 400, Florida Statutes – Agency for Health Care Administration
- Restrictive Covenants, Sections 542.335 and 542.336, Florida Statutes – Florida Legislature
- Medical Records Rule 64B8-10.002, Florida Administrative Code – Florida Board of Medicine
- Medicare Enrollment for Providers Who Change Ownership – Centers for Medicare & Medicaid Services
- List of Excluded Individuals/Entities – HHS Office of Inspector General
- Premerger Notification Program – Federal Trade Commission
