The physician equity option: an alternative to purchasing a practice

Traditionally, a healthcare organization acquires a physician practice by purchasing the practice's assets and then acting as an employer to the physicians. Another acquisition strategy is for a healthcare organization's medical director to purchase equity in a practice and then direct the physician partners. An alternative to these traditional strategies is the physician equity option, by which a healthcare organization purchases an option to acquire a physician practice at a future date. This strategy enables a healthcare organization to meet its goal of developing relationships with physician groups without the cash outlay involved in purchasing 100 percent of a practice outright.