Buying a Medical Practice in 2026: Goodwill, Credentialing & Stark Law

Healthcare is one of the most active M&A sectors in 2026 — and for good reason. An aging population, a wave of physician retirements, and private equity's sustained appetite for healthcare consolidation have created a market where well-run medical practices command premium valuations and close quickly when properly represented. But buying a medical practice is fundamentally different from acquiring a landscaping business or a restaurant. Federal healthcare regulations — Stark Law, the Anti-Kickback Statute, HIPAA — create compliance requirements that don't exist anywhere else in Main Street M&A, and getting them wrong exposes buyers to federal liability that can dwarf the purchase price.

This guide provides the framework for buying a medical, dental, or specialty practice in 2026: why the healthcare M&A market is booming, how payer contracts and credentialing affect deal viability, the regulatory compliance layer every healthcare buyer must navigate, and how primary care vs. specialty practice valuations differ. Whether you're a physician buyer, a non-physician investor, or a healthcare operating group, this is your roadmap.

The Healthcare M&A Boom: Why Practices Are Selling in 2026

Healthcare M&A activity at the practice level has been elevated for several years, driven by a convergence of demographic, economic, and regulatory factors that are accelerating in 2026.

The Physician Retirement Wave

According to the Association of American Medical Colleges (AAMC), more than one-third of currently active physicians are over 55 years old — placing the profession in the middle of a retirement wave that will accelerate through the late 2020s. Many of these physicians built practices over 20–35 years that represent the majority of their personal wealth. Succession planning, previously an afterthought, has become urgent. The result: an unprecedented supply of practices coming to market, creating acquisition opportunities across every specialty and region.

Private Equity Roll-Up Activity

PE-backed healthcare platforms — in dental, dermatology, ophthalmology, orthopedics, behavioral health, and primary care — have been aggressively acquiring independent practices since 2019. These platforms often pay premium multiples for high-quality practices in attractive markets, then provide shared administrative services, centralized billing, and negotiating leverage with payers. The entrance of institutional buyers has validated practice valuations and created a competitive market that benefits sellers.

Non-Physician Buyers and DSOs

In dental and some specialty sectors, Dental Service Organizations (DSOs) and similar management structures allow non-dentist entities to acquire practices while complying with corporate practice of medicine (CPOM) restrictions. This has dramatically expanded the buyer pool for dental practices beyond dentist-to-dentist transactions. Similar structures exist in other specialties under applicable state law.

Payer Contracts and Credentialing: The Revenue Infrastructure You're Really Buying

The most critical — and most overlooked — due diligence area in medical practice acquisitions is the payer contract and credentialing infrastructure. When you buy a medical practice, you're not just buying the equipment, the patient records, and the goodwill. You're buying the ability to collect revenue from insurance carriers. And that ability is not automatically transferred with ownership.

Understanding Payer Contracts

A medical practice's revenue depends on contracts with insurance payers — Medicare, Medicaid, and commercial insurers like Blue Cross Blue Shield, Aetna, United Healthcare, and regional plans. These contracts establish the reimbursement rates the practice receives for each procedure code (CPT code). The terms are not public — each practice negotiates (or inherits) its own rates, and those rates vary significantly by payer and geography.

Key payer contract due diligence questions:

What percentage of revenue comes from each payer (payer mix analysis)?
What are the reimbursement rates for the top 20 CPT codes billed by this practice?
Do the payer contracts include change-of-control or assignment provisions? Can they be assigned to the buyer?
Is the practice enrolled in Medicare and Medicaid? Are those enrollments current and in good standing?
Are any payer contracts under renegotiation or at risk of non-renewal?
Has the practice had any payer audits, recoupment demands, or billing compliance issues in the last 3 years?
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The Credentialing Gap: The Biggest Post-Close Risk

Credentialing is the process by which individual providers are approved to bill specific insurance payers. Credentialing is provider-specific — it follows the physician, not the practice entity. When a practice is acquired and a new physician becomes the provider-of-record, the credentialing process must be completed with each payer before the new provider can bill.

The credentialing timeline varies by payer: Medicare enrollment can take 90–120 days; commercial payer credentialing typically takes 60–90 days; some complex payer enrollments take 6 months or longer. During the credentialing gap, the practice may not be able to bill the buyer's credentials — meaning revenue collection is impaired or delayed until credentialing is complete.

Critical Post-Close Revenue Risk: A medical practice acquisition that closes without a credentialing transition plan can experience 60–120 days of severely impaired revenue collection as the new owner completes credentialing. Budget for working capital to cover this gap, negotiate a seller transition arrangement where the selling physician remains credentialed during the transition period, and engage a healthcare billing specialist to manage the credentialing process before closing — not after.

The Transition Physician Arrangement

The most common solution to the credentialing gap is a post-close transition arrangement where the selling physician continues as an employed or contracted provider for 6–12 months while the buying physician completes credentialing and the patient base is transferred. This serves multiple purposes: it maintains billing continuity, supports patient retention during the transition, and facilitates the relationship transfer that determines whether patients follow the selling physician or stay with the practice under new ownership.

Stark Law, Anti-Kickback Statute, and HIPAA: The Compliance Layer That Cannot Be Ignored

Healthcare acquisitions carry a regulatory compliance overlay that has no equivalent in other business categories. Three federal laws in particular create compliance requirements that every healthcare practice buyer must understand before closing.

The Stark Law (Physician Self-Referral Law)

The Stark Law prohibits physicians from referring Medicare or Medicaid patients to entities with which they have a financial relationship — unless a specific exception applies. In an acquisition context, Stark Law governs how the purchase price and any ongoing payments to the selling physician are structured. A purchase price that is not set at fair market value by an independent appraisal, or compensation arrangements with the selling physician that tie payments to referral volume, create Stark Law exposure.

Practical compliance requirements in a practice acquisition:

Obtain a fair market value (FMV) appraisal of the practice from a qualified healthcare valuation firm
Ensure any post-close compensation arrangement with the selling physician is structured to be FMV and not contingent on referrals
Consult healthcare counsel to confirm the acquisition structure fits within applicable Stark Law exceptions

The Anti-Kickback Statute (AKS)

The Anti-Kickback Statute prohibits knowingly offering, paying, soliciting, or receiving remuneration to induce or reward referrals of items or services covered by federal healthcare programs. In acquisitions, the primary AKS concern is that an above-market purchase price or below-market compensation arrangement could be construed as remuneration for the seller's referral stream. This is why independent FMV appraisals are non-negotiable in healthcare M&A — they document that the price paid was for the business value, not for access to referrals.

HIPAA and Patient Record Transfer

The Health Insurance Portability and Accountability Act (HIPAA) governs the transfer and handling of patient health information. In a practice acquisition, the patient records are among the most valuable assets — they represent the patient relationships that drive ongoing revenue. But their transfer must be handled in strict compliance with HIPAA.

Key HIPAA requirements in practice acquisitions:

Patient notification: Patients generally must be notified of the change in practice ownership and given the opportunity to transfer their records elsewhere
Business Associate Agreement: The buyer must execute BAAs with all vendors who handle PHI
Data security review: The buyer should conduct a HIPAA security risk assessment of the practice's IT infrastructure and EHR systems as part of due diligence
Records retention: The acquisition agreement should specify how pre-close patient records are retained and who bears responsibility for records requests during the transition

Primary Care vs. Specialty Practice: How Valuations Differ

Medical practice valuations vary significantly by specialty, driven by differences in revenue per visit, payer mix, procedure intensity, and market demand from acquirers.

Practice Type	Typical Revenue Range	2026 EBITDA Multiple	Key Value Drivers
Primary Care / Family Medicine	$500K–$2M	3x–4x EBITDA	Patient panel size, strong payer mix, location
Dental (General)	$800K–$3M	4x–6x EBITDA	Active patient base, hygiene revenue, technology
Dermatology	$1M–$5M	5x–8x EBITDA	Cosmetic vs. medical mix, ASC potential, PE demand
Ophthalmology	$1.5M–$8M	5x–8x EBITDA	Surgical volume, optical dispensary, ASC
Behavioral Health / Psychiatry	$500K–$3M	4x–6x EBITDA	Recurring patient relationships, group practice scalability
Physical Therapy	$500K–$2M	3x–5x EBITDA	Referral relationships, payer mix, PT retention
Specialty Surgery (ortho, GI, etc.)	$2M–$15M+	6x–10x EBITDA	ASC ownership, hospital independence, surgical volume

The Goodwill Question: Personal vs. Enterprise Goodwill

Medical practices carry two types of goodwill: personal goodwill (the value attributable to the selling physician's specific relationships, reputation, and referral network) and enterprise goodwill (the value of the practice as a going concern independent of any specific physician). This distinction matters enormously for both valuation and legal compliance.

In a practice where the selling physician is the sole provider and all patient relationships are personal to that physician, most goodwill is personal — and a buyer should be cautious about how much they pay for it, because that goodwill leaves with the physician post-close. In a multi-physician practice with a strong brand, systematized referral relationships, and institutional payer contracts, enterprise goodwill is higher and more defensible from a buyer's perspective.

For dental practices, see our detailed guide on buying a dental practice for the specific patient goodwill framework in dental acquisitions.

Frequently Asked Questions: Buying a Medical Practice

Can a non-physician buy a medical practice?

It depends on the state and structure. The "Corporate Practice of Medicine" doctrine in many states prohibits non-physicians from owning entities that employ physicians or direct clinical decision-making. However, Management Services Organization (MSO) structures allow non-physician entities to own the non-clinical assets of a practice and provide management services under a long-term management agreement with a physician-owned professional corporation that retains clinical control. Healthcare attorney review of state-specific CPOM law is essential before any non-physician acquisition structure is pursued.

How does the credentialing gap affect the acquisition timeline?

Credentialing with commercial payers typically takes 60–90 days; Medicare enrollment can take 90–120+ days. Buyers should begin the credentialing application process as early as possible — in some cases, before the purchase agreement is finalized. Negotiate a seller transition arrangement where the selling physician remains credentialed and continues billing under their NPI during the credentialing period, with revenue shared or allocated per an agreed formula. Do not close a practice acquisition without a clear credentialing transition plan in writing.

What is a fair market value appraisal and why is it required?

A fair market value (FMV) appraisal is an independent assessment of the practice's value by a qualified healthcare valuation expert. It is required in healthcare transactions because Stark Law and the Anti-Kickback Statute require that any financial arrangements involving referral sources (including the practice purchase price) be set at FMV. An above-market purchase price could be construed as remuneration for referrals — creating federal liability. FMV appraisals by AAPC, AHVAP, or similarly qualified valuation professionals provide the documentation that demonstrates compliance.

What payer mix is considered favorable in a medical practice acquisition?

Commercial insurance (private payers) reimbursement rates are typically 150–300% of Medicare rates for the same procedures. A practice with a high percentage of commercial insurance patients — as opposed to a heavy Medicare/Medicaid concentration — generally generates higher revenue per visit and has higher EBITDA margins. Optimal payer mix varies by specialty, but as a general benchmark, a commercial insurance concentration of 50%+ is considered favorable for most ambulatory specialty practices. Heavy Medicaid concentration (which reimburses at rates often below cost for many services) is the most challenging payer mix for practice economics.

How are medical practice assets allocated in an asset sale?

Medical practice asset sales typically allocate purchase price among: tangible assets (medical equipment, furniture, computers), patient records/charts (a small percentage of goodwill), covenant not to compete, and professional goodwill. The allocation has significant tax implications for both parties — equipment is subject to depreciation recapture (ordinary income) while goodwill is capital gain. Healthcare counsel and a CPA experienced in medical transactions should work together on the allocation strategy.

Should I use an SBA loan to buy a medical practice?

Yes — SBA 7(a) loans are widely used for medical and dental practice acquisitions under $5M. Key requirements: the buyer must have relevant clinical credentials (a physician buying a physician practice, a dentist buying a dental practice), the practice must demonstrate adequate debt service coverage, and the deal must be structured as an asset purchase or a qualifying stock purchase. SBA appraisal requirements in healthcare transactions must reflect the FMV standard — coordinate with a healthcare-experienced SBA lender who understands the nuances.

Conclusion: Healthcare M&A Rewards Prepared Buyers

The healthcare M&A market in 2026 offers exceptional acquisition opportunities — but only for buyers who understand and respect the regulatory complexity that makes healthcare transactions unique. Stark Law compliance, credentialing transition planning, HIPAA-compliant record transfer, and FMV appraisal requirements are not bureaucratic obstacles — they're the compliance infrastructure that determines whether your acquisition creates long-term value or exposes you to federal liability.

The buyers who successfully acquire and grow medical practices treat these requirements as professional obligations rather than inconveniences. They engage healthcare attorneys experienced in physician transactions, work with credentialing specialists before closing, obtain independent FMV appraisals, and structure post-close physician transition arrangements that protect revenue continuity. Done correctly, a well-structured medical practice acquisition is among the most durable, high-return investments available in the healthcare sector.

Whether you're a physician buyer seeking to acquire an independent practice, a non-physician investor exploring MSO structures, or a healthcare platform looking for add-on acquisitions, the team at Jaken Equities can help you navigate the complexities of healthcare M&A. Reach out for a confidential consultation, and review our specific guides on buying a dental practice and buying a general medical practice for specialty-specific frameworks.

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