A Management Services Organization (MSO) is a separate entity that contracts with a physician-owned professional corporation (PC) to handle the non-clinical side of a practice — staffing, assets, office space, billing, and collections — in exchange for a management fee, typically a percentage of collections. It's the structure corporate buyers commonly use to invest in practices without violating corporate-practice-of-medicine rules.

What is the Corporate Practice of Medicine (CPOM)?

CPOM doctrine prohibits non-licensed individuals or companies from owning or operating a medical practice, to protect physicians' clinical autonomy. Restrictions vary by state — California and New York are strict, while states like Arizona and Florida are friendlier to corporate ownership.

Is selling to an MSO better than a doctor-to-doctor sale?

It can mean a higher price, less administrative burden, and better staff benefits — but at the cost of physician autonomy and potential changes to how the practice operates. Whether it's better depends entirely on your priorities, the deal terms, and how much of the consideration is cash versus equity.

How should I treat MSO equity offered in the deal?

Equity in the MSO can be valuable if the company grows, but it's hard to value and you don't control it. The prudent approach is to aim to receive at least your practice's fair market value in cash and treat any equity as a potential bonus — not the core of the deal.

Selling a Practice · February 13, 2025

Five Things to Know Before Selling Your Practice to an MSO

Selling your medical practice to an MSO? Learn how MSOs and CPOM work, the benefits and drawbacks, and why to insist on fair market value in cash.

By Alexey Nechay, CVA · Updated June 2026 · 6 min read

In January 2024, the share of U.S. physicians employed by corporate entities was 22.5%, up from 15.3% in 2019.¹ After several years of rapid growth, corporate physician employment has leveled off — but it remains a defining force in how practices change hands.

If you’re considering selling your medical practice to a corporate entity, here are the five things you should know.

Item #1: Who Are the Corporate Buyers, and What Is CPOM?

Corporate buyers of medical practices include health insurers, private equity firms, and umbrella entities that own multiple physician practices. This growth is happening despite the fact that most states impose some form of restriction on the Corporate Practice of Medicine (CPOM).

CPOM restrictions essentially prohibit non-licensed individuals or companies from owning or operating a medical practice. The rationale is to protect physicians’ autonomy to make medical decisions based on what’s best for the patient, free of corporate influence focused on profitability. Restrictions vary by state: California² and New York³ are very strict, while states like Arizona and Florida are friendlier to corporate ownership, allowing non-licensed individuals ways to hold a stake in medical practices.

Item #2: What Is an MSO, and How Does It Work?

One way corporate buyers navigate CPOM restrictions is by creating a separate entity — typically a Management Services Organization (MSO) — and contracting with it to help run the practice.

The typical structure: a Professional Corporation (PC), owned by “friendly” physician(s), enters into a Management Services Agreement with an MSO. The agreement generally works like this:

The PC holds the insurance contracts and employs clinical staff — physicians and advanced practice providers (NPs, PAs).
The MSO employs non-clinical staff, owns the tangible assets, leases the office space, and handles billing and collections on behalf of the PC.
In exchange, the PC pays the MSO a management fee — typically a percentage of collections.

This creates a binding relationship between the practice and the MSO, giving the MSO’s investors comfort with their investment.

Item #3: Potential Benefits of Selling to an MSO

Selling to an MSO can offer several advantages over a traditional doctor-to-doctor sale:

A higher purchase price. MSOs often have access to greater financial resources and may pay a premium for a well-established, profitable practice.
Less administrative burden. MSOs typically handle billing, collections, HR, and other non-clinical functions, freeing you to focus on patient care.
Better employee benefits. MSOs frequently offer improved benefits packages, which help attract and retain talent and support continuity of care.
Possible equity upside. The deal may include equity in the MSO itself, which could be valuable if the company grows.

That said, assessing the value of MSO equity is challenging, and it won’t always prove to be a good investment. Evaluate the terms carefully and seek advice from a professional appraiser before deciding.

Weighing an MSO offer? Before you sign an LOI, get an independent read on whether the deal is fair. Schedule a call.

Item #4: Potential Drawbacks of Selling to an MSO

Pressure to generate returns. MSOs must produce returns for investors, which can drive changes — higher patient volume, more procedures, optimized physician time — that may affect quality of care and work-life balance.
Loss of autonomy. Physicians may lose control over hiring, firing, and practice culture — hard for owners who built the practice around a specific vision.
Misalignment with employed physicians. Associates working toward ownership themselves may feel discouraged competing with an MSO buyer, which can lead to turnover and disrupted continuity of care.
A more complex transition. A sophisticated buyer means longer, more extensive due diligence and a more complicated close.

Item #5: Key Considerations and Recommendations

Before selling to an MSO, evaluate your objectives and priorities carefully — retirement savings, post-sale compensation, practice value, potential loss of autonomy, and work-life balance. This introspection tells you whether an MSO sale aligns with your long-term goals.

One of the most critical parts of due diligence is understanding the total consideration you’ll receive. If that includes equity in a new or existing MSO, valuing it is difficult given the lack of transparency and control. To manage that risk, aim to receive at least your practice’s fair market value in cash, and treat any additional consideration as a potential bonus. A valuation professional can provide the insight to make that call.

Throughout due diligence, engage a skilled attorney to review contracts. MSO buyers are sophisticated and their information requests can be extensive — experienced professionals on your side protect your interests.

Conclusion

Selling your medical practice to an MSO is a complex, highly personal decision. By thoroughly evaluating your objectives, understanding the total consideration, and engaging the right professional support, you can make an informed decision that aligns with your long-term goals and financial well-being. Taking the time to conduct due diligence and seek expert advice helps you navigate the process with confidence — and protect yourself, your staff, and your patients.

Alexey Nechay, CVA, is the principal of Nechay Advisors, a medical practice valuation and brokerage firm in Newport Beach, California. Schedule a confidential call at (855) 955-2565.

Physicians Advocacy Institute, PAI-Avalere Study on Physician Employment & Practice Ownership Trends, 2019–2023. Accessed February 9, 2025. ↩
California Hospital Association, BRG CPOM Report. Accessed February 9, 2025. ↩
New York State Education Department, Corporate Practice of the Professions. Accessed February 9, 2025. ↩