Medical practices nationwide are facing a seismic shift as an older generation of physician owners reach retirement age and capital is readily available for healthcare investment.
Nearly 47% of physician practice owners are over age 55 and actively exploring retirement options, according to a July 15 article published by The National Law Review. This raises significant questions about how ownership transitions might take place and where independent practices will stand on the other side.
Here are five notes on how physician practice ownership might look different after the projected retirement shift:
1. Younger generations of physicians often have different ideas about work-life balance. The authors assert that, for those who prioritize work-life balance and personal control, “the market is signaling that the window to maximize practice value has never been wider.”
2. However, recent medical graduates face “unprecedented” challenges in securing banking relationships and managing regulatory and administrative burdens associated with independent practice ownership.
3. A surge in capital on the buy side of the market is also shaping the growing dynamics. Healthcare merger activity surged in late 2024, fueled by institutional investors bringing new resources to practice acquisitions, according to the Review.
4. For physicians and practice owners preparing for this transition, familiarizing oneself with the regulatory and compliance landscape of these deals is essential. This includes corporate practice of medicine considerations, supervision requirements for non-physician providers and multi-state compliance issues for expanding organizations.
5. Many healthcare practice owners may have never navigated a business sale, which may be especially challenging for “lifestyle business owners,” or those who may place high priority on their work-life balance. The authors urge practice owners to seek the right legal partners to help avoid the friction that often arises in deals between lifestyle business owners and institutional buyers.
