Medical Practices for Sale and Acquisition in California

Buyers should expect a competitive, well-informed seller pool and strong demand across major metros — along with the need for thorough due diligence given the state's regulatory landscape.

Yes — concierge and membership-based models are well suited to California's markets, particularly where patients value personalized, high-touch care and are willing to pay for it.

The most active buyers right now are hospitals and health systems, physician groups backed by private equity, Federally Qualified Health Centers (FQHCs) and individual physicians who want to own a practice.

California has 170 federally funded health center organizations (HRSA, 2025), and about 51% of people on Medicare in the state are in Medicare Advantage or other private plans (KFF, 2024). That makes groups focused on value-based care especially interested in primary care practices with many senior patients. Because California limits ownership of medical practices to licensed physicians, investor-backed buyers usually work through a management company that partners with a physician-owned practice.

We can tell you which buyer types are most active for your specialty and location.

Not directly. California has a strong ban on the corporate practice of medicine: physicians must own at least 51% of a medical corporation, and certain other licensed professionals, such as nurses, physician assistants and psychologists, may hold up to 49% combined. Regular LLCs cannot practice medicine in California. Investors usually work through a management services organization (MSO) that charges a physician-owned medical corporation a flat, fair market fee.

What changed recently: since April 2024, larger health care entities must notify the Office of Health Care Affordability 90 days before certain deals. From January 1, 2026, AB 1415 extends that notice to private equity groups and MSOs, and SB 351 bars private equity groups and hedge funds from controlling clinical and key business decisions in physician practices. Rules like these change often, so have a health care attorney review the deal structure.

Most practices are valued on their adjusted yearly profit, often called EBITDA or seller's discretionary earnings, times a multiple. The multiple goes up with steady revenue, a loyal patient base, providers and staff who will stay, clean financial records and a practice that does not depend only on you. It goes down with heavy reliance on one payer, falling patient numbers or a short lease.

In California, Medi-Cal runs mostly through managed care plans, so your mix of Medicaid, Medicare and commercial patients and the plans you contract with weigh heavily in the price. The state has 661 primary care shortage areas, and practices that serve these communities often draw strong buyer interest because patients have few other options.

A confidential valuation is the best way to see where your practice stands.

All three can work, and the right choice depends on your goals and the buyer. Selling the building with the practice gives you one clean exit and more cash at closing, but some buyers cannot finance both. Leasing it to the buyer gives you steady income and often makes the practice easier to sell, as long as the rent and terms are at market rate and the lease is long enough for the buyer's lender. Keeping the building and leasing it to someone else is also an option if you want to hold it as an investment.

California taxes capital gains as ordinary income, with a top rate of 13.3%, so the timing and structure of a building sale can make a real difference. We help you compare the options with your CPA before the practice goes to market.

California bans non-competes for employees, including physicians. The main exception is the sale of a business: when you sell the goodwill of your practice or all of your ownership interest, you can agree not to compete within a reasonable area (Business and Professions Code 16601).

Buyers almost always ask for this, so your attorney should make sure the terms fit the exception.

Since January 1, 2024, failing to keep adequate records for at least 7 years after the last date of service is unprofessional conduct for California physicians.

There is no specific law requiring a private practice to notify patients when it closes, but notifying them and keeping records available protects you from patient abandonment claims. In a sale, the buyer usually becomes the custodian of the records, and we make sure this is written into the purchase agreement.