Brian Hurley, OneGroup, Senior Vice President Health Care & Business Specialist
Private equity (PE) investment in healthcare has grown quickly, reshaping how medical practices run day to day. For physicians and practice owners, selling to a PE firm is a complex decision. It can open doors for growth and support, but it also brings challenges. —offering strategic advantages and potential pitfalls. In New York State, strict regulatory constraints add another layer of complexity that need to be understood before moving forward.
The Three-to-Five-Year Plan
Most PE firms typically work on a three-to five-year investment plan and during that time they focus on raising the value of the practice thru steps such as: Consolidating smaller practices into larger networks
• Streamlining administrative functions via Management Services Organizations (MSOs)
• Improving billing and coding practices
• Introducing performance metrics and financial targets
While this model can drive short-term profitability, critics argue it may prioritize financial returns over long-term patient care and physician autonomy.
Advantages of PE Ownership
• CAPITAL INFUSION:
Immediate financial resources for technology upgrades, service expansion, or debt reduction.
• OPERATIONAL SUPPORT:
MSOs take time-consuming tasks off your plate providing centralized human resources, IT, andcompliance services, reducing administrative burdens and letting you focus more on patient care.
• NEGOTIATING POWER:
Larger networks often secure better rates with insurers and suppliers.
• EXIT STRATEGY:
Helpful for physicians planning retirement or a transition with financial upside.
Disadvantages and Risks
• LOSS OF AUTONOMY:
Physicians may have less say in clinical decisions and staffing.
• PRESSURE TO PERFORM:
Aggressive financial targets can lead to higher patient volumes and shorter visits.
• STAFFING CUTS:
Cost-cutting measures may impact morale and the patient experience.
• REGULATORY CHALLENGES:
In New York, corporate ownership restrictions require creative structuring through MSOs or joint ventures.
MSOs:
Navigating Compliance
MSOs handle non-clinical operations while physicians stay in charge of medical decisions. This model lets private equity groups support and influence the business side without violating state rules that limit non-physician ownership.
New York’s Landscape
The state’s corporate practice of medicine doctrine limits direct ownership by nonphysicians. This means PE firms often succeed by focusing on specialties like dermatology and ophthalmology, where economies of scale and centralized services offer clear advantages.
Final Thoughts
Private equity can provide growth, efficiency, and financial stability—but not without trade-offs. It can also change how physicians work and make decisions. The best approach is to balance the financial upside with the impact on autonomy and patient care. In regulated environments like New York, success depends on thoughtful structuring and a commitment to patient care.
Thinking about how private equity could impact your risk exposure or insurance needs?
OneGroup’s Risk Management and Insurance team can help you sort through your options and stay compliant as you plan for the future.
OneGroup is uniquely qualified to help physicians and medical practices with all of their business challenges. If you have any questions or would like additional information, please feel free to reach out to Brian Hurley at 315-708-3635, bhurley@ onegroup.com or Lynn Trentini 518-698- 9997, ltrentini@onegroup.com.
References
Commonwealth Fund. (2023a, November). Private equity’s role in health care. https://
www.commonwealthfund.org/publications/explainer/2023/nov/private-equity-role-health-care
Medical Economics. (2023). Navigating the pros and cons of selling your medical practice to private equity. https://www.medicaleconomics.com/view/navigating-the-pros-and-cons-ofselling-your-medical-practice-to-private-equity American Journal of Medicine. (2023). What happens when private equity firms sell medical practices. https://www.amjmed.com/article/
S0002-9343(23)00589-2/fulltext
Commonwealth Fund. (2025, May). How private equity deals are reshaping your health care [Podcast]. https://www.commonwealthfund.org/ publications/podcast/2025/may/how-privateequity-deals-are-reshaping-your-health-care Harvard Business School Library. (n.d.). What happens when private equity firms sell medical practices. https://www.library.hbs.edu/workingknowledge/what-happens-when-private-equityfirms-sell-medical-practices