Short answer
You have more room than it feels like. Start by reading your employment agreement and equity documents for the term, the clawback, the non-compete radius and length, the good leaver and bad leaver rules, and any drag-along or information rights. Then get clear on your tax position: your rollover carries over your old basis, the second bite will likely be taxed at 23.8 percent federal, and a partnership holding company may send you K-1 income you never received in cash. From there, the practical moves are negotiating at renewal, using your information rights, gifting rollover units to a trust before the second bite, converting to Roth in lower-income years, and diversifying everything you own outside the platform. Several states have limited physician non-competes since 2025, though sale-of-business covenants generally still hold.
Key facts
- How often platforms resell
- 51.6 percent of private equity acquired dermatology, ophthalmology, and GI practices changed hands within three years for the 2016 to 2020 cohort, but recapitalizations fell from about 100 a year in 2021 and 2022 to 13 in 2024.
- Tax on the second bite
- Plan for 23.8 percent federal (20 percent capital gain plus 3.8 percent net investment income tax) on the full value, since your basis carried over from the practice.
- Texas SB 1318
- For agreements entered or renewed on or after September 1, 2025: one-year maximum, five-mile radius, buyout capped at one year's salary, void if you are terminated without good cause.
- California SB 351
- Since January 1, 2026, non-compete and non-disparagement clauses in a management contract for a physician or dental practice are void. Sale-of-business non-competes remain valid.
- Distress
- Bloomberg Law reported in July 2026 that clinics and physician practices made up about 30 percent of healthcare Chapter 11 filings with $10 million or more of liabilities in the first half of 2026.
- Envision
- Filed Chapter 11 on May 15, 2023 and emerged in November 2023 owned by its lenders, with debt cut about 70 percent. Ownership passed from the equity holders to the lenders.
First, a word about the decision you made
Most physicians who sold between 2019 and 2023 did so with a good reason, a banker or attorney at their side, and colleagues doing the same thing. The market has changed since then. Prices for ordinary practices have fallen, holds have stretched from 5 to 7 years to 8 to 10, and some platforms have run into trouble with their debt. None of that was knowable with certainty when you signed. This page is not about whether you should have sold. It is about the decisions that are still yours.
What do my documents actually say?
Start here, because most regret is partly about not knowing where you stand. You signed at least three documents that still govern your life: an employment agreement with the practice entity, an equity agreement (an operating agreement, shareholders agreement, or subscription agreement) covering your rollover, and a purchase agreement with a non-compete and perhaps an earnout or holdback. Pull them out and find the following.
| Term | Where it lives | Why it matters now |
|---|---|---|
| Employment term and renewal | Employment agreement | Your first real chance to renegotiate pay and schedule is at renewal. Note the date and the notice period. |
| Clawback | Employment or purchase agreement | What you repay if you leave early, and the schedule on which it declines. Three-year minimums are standard. |
| Non-compete radius and term | Employment and purchase agreements | Two covenants may exist: one from the sale of the business and one from employment. They can have different lengths and different legal status in your state. |
| Good leaver and bad leaver | Equity agreement | Decides whether your rollover is bought at fair value, at cost, or forfeited when you leave, retire, or die. |
| Drag-along | Equity agreement | Forces you to sell when the fund sells. Almost universal. Check whether it can also force you to re-roll into the next owner. |
| Tag-along | Equity agreement | Lets you sell alongside the fund on the same terms. Check whether you have it and whether it covers partial sales. |
| Information rights | Equity agreement | What financial statements you are entitled to and how often. Many physicians never ask for what they are owed. |
| Tax distributions | Operating agreement (partnership holding companies) | Whether the company must send cash to cover the tax on K-1 income. |
| Non-disparagement | Employment or equity agreement | Limits what you can say about the platform. Void in California management contracts since 2026; otherwise usually enforceable. |
If you cannot find a document, your attorney from the deal has a copy, and the platform's legal department can send you your equity documents on request. A one-hour review by a healthcare employment attorney who did not do the original deal is money well spent, because a fresh reader sees what the deal team took for granted.
What is my tax position now?
Three things about your taxes are probably true, and it helps to name them.
Your rollover has carryover basis
The portion of your price you rolled into the holding company was not taxed at closing, under Section 721 or Section 351. That deferral came with your old basis in the practice, which for most physicians who built rather than bought a practice was near zero. So nearly the entire value of your rollover is gain waiting to be taxed. Nothing was forgiven. The rollover equity page explains the mechanics.
The second bite will likely be taxed at 23.8 percent federal, not 20
When you sold the practice, gain from a business in which you materially participated was excluded from the 3.8 percent net investment income tax. That exclusion is gone now. You are a W-2 employee of the practice entity, not an active owner of the holding company being sold, so gain on your rollover is almost certainly net investment income. If the holding company is a corporation, its stock gain is investment income by definition. Plan on 23.8 percent federal plus state tax on the full payout. If the holding company is a partnership, some of the gain may be ordinary income under Section 751 for your share of receivables and depreciated equipment.
You may owe tax on income you never saw
If the holding company is taxed as a partnership, it sends you a Schedule K-1 each year allocating your share of its taxable income, whether or not it paid you cash. Physicians call this phantom income. Some operating agreements require the company to make tax distributions to cover it. Others make them discretionary or omit them. If you have been paying tax on K-1 income with no cash, check your agreement, and if there is no tax distribution clause, raise it with the other physician holders as a group. A request from twenty physicians is treated differently from a request from one.
What can I still do?
More than most physicians assume. The following are ordinary moves, available without any dispute with the platform.
Negotiate at renewal
Your employment agreement ends. When it does, the platform needs you more than you need the platform: recruiting is hard, and turnover is already high. A March 2025 Health Affairs study by Singh and colleagues found clinician turnover in ophthalmology practices rose from about 9 percent to about 22 percent after private equity acquisition. Use the renewal to fix the wRVU rate, set a schedule you can live with, define ancillary participation, and, in states where the law has changed, shorten the non-compete. Start the conversation six months before the term ends, not at the notice deadline.
Use your information rights
Your equity agreement likely entitles you to annual financial statements and possibly quarterly ones. Ask for them, every time. Read the debt schedule and the maturities. Look at whether the management fee has risen. The Commonwealth Fund's April 2026 review found that opaque accounting was a leading complaint of physicians inside these structures, and that satisfaction was highest where physicians held equity and board seats. If your platform has a physician advisory board, get on it.
Plan around the second bite before it is announced
Once a sale is announced, planning options narrow quickly. Before that, you can decide whether to hold or sell any portion you are permitted to sell, whether you would accept a re-roll into the next owner, and how the payout fits your retirement plan. Our second bite page covers what the data says about how often these payouts arrive and in what form.
Gift rollover units to a trust
Rollover equity is well suited to estate planning because it is illiquid, minority, and hard to value, all of which support a discount for gift tax purposes, and because its value may rise sharply at the second bite. The federal estate and gift exemption is $15 million per person in 2026, permanent and indexed after this year, with a $19,000 annual exclusion. Gifting or selling units to an irrevocable trust, such as a spousal lifetime access trust or an installment sale to an intentionally defective grantor trust, moves the future appreciation out of your estate. This requires a qualified appraisal and the platform's consent to the transfer, which most equity agreements allow for estate planning transfers. Our estate planning page explains it. New York residents, whose state estate exemption is $7.35 million with a cliff, have the most to gain.
Convert to Roth in lower-income years
Your income is lower than it was as an owner, and if you moved to a state without an income tax, lower still for state purposes. The years between the sale and the second bite may be the lowest-bracket years you will see before retirement. Converting part of a pre-tax IRA, including the practice retirement plan you rolled over at closing, to a Roth in those years can be worthwhile. Do the conversions before the second bite lands, since that year will push you into the top bracket. The W-2 planning page covers this along with the platform 401(k), asset location, and lost owner deductions.
Diversify everything else
You cannot sell the rollover, so treat it as a concentrated position you are stuck with and make the rest of your balance sheet compensate. That means less healthcare exposure elsewhere, less private equity elsewhere, more liquidity than you would otherwise hold, and a retirement plan that works if the rollover is worth zero. If the plan only works when the rollover pays, it is not a plan yet.
Has non-compete law changed since I signed?
Yes, in several states, though mostly for employment covenants rather than the covenant you gave when you sold the business. The federal picture is unchanged: the FTC dropped its appeals of the blocked nationwide non-compete rule on September 5, 2025 and now brings cases one at a time, and it formed a Healthcare Task Force on March 20, 2026.
| State | Rule | Does it reach a sale-of-business covenant? |
|---|---|---|
| Texas | SB 1318, effective September 1, 2025 for agreements entered or renewed on or after that date: one-year maximum, five-mile radius, buyout capped at one year's salary and wages, void if the physician is terminated without good cause. Extended to dentists, nurses, and PAs. | No. It applies to employment agreements and does not address sale-of-business covenants. |
| Minnesota | General ban on non-competes since 2023. | Sale-of-business exceptions generally survive. |
| California | Employment non-competes have long been void. SB 351, effective January 1, 2026, voids non-compete and non-disparagement clauses in a management contract for a physician or dental practice. | No. Sale-of-business covenants under Business and Professions Code 16601 remain valid. |
| Massachusetts, New Hampshire, Arkansas, Wyoming, Oregon, Colorado, Indiana | Bans or near-bans on physician employment non-competes (Indiana for health systems from July 1, 2025; Colorado and Oregon in 2025). | Colorado has an express business-sale exception; others vary. |
| Maryland, Pennsylvania, Connecticut, Louisiana | Duration caps, generally one year (Pennsylvania and Connecticut). | Generally employment only. |
| New York, Florida | No ban. New York's S9759 would ban non-competes for health professionals but is not law. Florida's 2025 CHOICE Act excludes licensed health care practitioners, so physician covenants remain under the existing statute. | Existing law applies. |
The practical point: if your agreement renews after your state's law changed, the new limits may apply to the renewed employment covenant, and that is a negotiation point. Texas is the clearest case, since SB 1318 reaches agreements renewed on or after September 1, 2025. Your sale-of-business covenant is a different matter almost everywhere.
What if the platform is in trouble?
Some are. Envision Healthcare, owned by KKR, filed for Chapter 11 on May 15, 2023 and emerged that November owned by its lenders with its debt cut by about 70 percent. Ownership passed from KKR and the other equity holders to the lenders. Radiology Partners, which employs roughly 70 percent of radiologists in private equity backed practices, completed a February 2024 restructuring that S&P called tantamount to default, then a $2.3 billion refinancing in July 2025 that pushed its maturities to 2030 through 2032, with leverage of 7.7 times at March 2025. Prospect Medical Holdings filed in January 2025 with more than 11,000 affiliated physicians. Bloomberg Law reported in July 2026 that clinics and physician practices made up about 30 percent of healthcare Chapter 11 filings with $10 million or more of liabilities in the first half of 2026. In dermatology, U.S. Dermatology Partners has been lender-controlled since a 2020 loan default, and in ophthalmology, EyeCare Partners completed a distressed refinancing in April 2024.
What this means for you depends on what you hold. Your employment agreement generally survives a restructuring because the practices keep operating and the lenders need physicians. Your rollover generally does not survive; in a typical Chapter 11, lenders take the equity and existing holders are wiped out. Even short of bankruptcy, a platform with heavy debt has little left for common equity after lenders and the fund's preferred return, and in orthopedics, for example, physician common equity can receive nothing in a moderate downside. Watch for the warning signs in the statements your information rights entitle you to: a refinancing that pushes maturities out at a higher rate, payment-in-kind interest, a dividend recap that paid the sponsor, or a management fee that keeps rising.
If you see them, act early. Make sure your household plan does not depend on the rollover. Confirm your tail coverage and who pays for it if the practice entity changes hands. And get the physicians at your platform talking to one another, because a group has options in a restructuring that individuals do not.
Can we buy the practice back?
Rarely, but it is not impossible, and the situations where it works share a pattern. A platform controlled by its lenders after a default is a seller of practices, not a buyer, because lenders want to recover money rather than run clinics. A platform trimming markets to fix its balance sheet may sell a practice that no longer fits. In both cases the physicians who work in the practice are the natural buyer, since nobody else can keep the patients.
What it requires is capital, which usually means a bank loan secured by the practice's receivables or a group of physicians contributing their own funds; a way through the management agreement, which the seller controls and can release; and relief from your non-compete, which the seller can also waive as part of the sale. It also requires an honest look at whether you want to run a business again. Approach it through counsel and as a group. An individual physician asking to buy back a practice is a nuisance. A dozen physicians with financing are a bid.
When do you not need help?
Regret is a feeling, and it does not always point to a problem that needs solving. If your employment term has ended and you have negotiated terms you can live with, if your rollover is a small share of your net worth that you have already written down to zero in your own plan, if you have read your documents and know your dates, and if you live in a state with no income tax so the second bite is a federal question only, there is not much a planner or an attorney can add. Keep your documents in one place, glance at the platform's financials once a year, and revisit this if a sale or a refinancing is announced. Many physicians in this position are doing fine and simply wish they had asked more questions in 2021. That is a reasonable thing to wish, and it is also over.
What to do next
Read your three documents this month
Employment agreement, equity agreement, purchase agreement. Write down the term end date, the clawback schedule, both non-competes, the good and bad leaver definitions, and your information rights. If you cannot find them, request them.
Request the financials you are entitled to
Look at the debt maturities, the management fee trend, and whether a tax distribution clause exists. Then read the second bite page to calibrate your expectations for timing.
Rebuild your plan with the rollover at zero
If it works, everything above zero is upside. If it does not, you have found the problem while there is time to address it through savings, Roth conversions, and diversification. The W-2 planning page is the place to start.
Decide whether the estate planning window is open
If your rollover could be worth several million dollars at the second bite and your estate is near the federal or state exemption, gifting units to a trust before a sale is announced is the highest-value move on this page. If none of that applies, or if you simply want a second opinion on where you stand, get in touch. We will tell you if there is nothing to do.
Questions people ask
Can I leave before my employment term ends?
You can, but read the clawback first. Standard agreements require you to repay part of the lump sum, often on a declining schedule, if you leave before the three-year minimum term or drop below a required schedule. Your rollover will usually be treated under the bad leaver rules, which can mean repurchase at cost or at a discount. And the non-compete starts on the day you leave. Some physicians find the cost acceptable; many find it is cheaper to serve out the term and negotiate at renewal.
What is a good leaver and a bad leaver?
These terms in your equity agreement decide what your rollover is worth if you leave. A good leaver, usually someone who retires after the term, dies, or becomes disabled, keeps the shares or is bought out at fair value. A bad leaver, usually someone who quits early, is terminated for cause, or violates the non-compete, may be bought out at the lower of cost or fair value, or forfeit unvested shares. The definitions vary by platform and are worth having an attorney confirm.
What happens to my rollover if the platform goes bankrupt?
In a typical Chapter 11 restructuring, lenders take ownership and existing equity is wiped out. That is what happened at Envision in 2023, where debt was cut about 70 percent and lenders became the owners. Your employment agreement usually survives, since the practice keeps operating, but the rollover does not. There is no dataset showing how often physician rollover has paid out, and you should plan as if yours could be worth zero.
Half of PE-owned practices are resold within three years. What does that mean for me?
It described the 2016 to 2020 cohort, where 51.6 percent of acquired dermatology, ophthalmology, and GI practices changed hands within three years, almost always to another private equity firm. Since then, recapitalizations fell to 13 in 2024 and holds have stretched to 8 to 10 years. If you sold in 2021 or later, you are more likely to be waiting than to be cashed out soon. A resale may also ask you to re-roll your equity into the next owner rather than paying cash.
Can we buy the practice back?
Rarely, but it has happened. The most common opening is a platform controlled by its lenders after a default, where the lenders would rather sell a practice than run it. It requires capital, a willing seller, and a way around the management agreement and your non-compete. If your platform is distressed, it is worth asking, ideally through counsel and as a group of physicians rather than alone.
Did I sign a non-disparagement clause, and does it still apply?
Probably, in the employment agreement or the equity documents. It generally still applies, with one exception: in California, since January 1, 2026, non-disparagement clauses in a management contract for a physician or dental practice are void under SB 351. Clauses in your personal employment or equity agreements are a separate question. Before you speak publicly or to colleagues considering a sale, have an attorney check which document the clause is in.
Is my second-bite payout long-term capital gain?
Mostly, if you have held the rollover more than a year, which you have. Plan on 20 percent federal plus the 3.8 percent net investment income tax, because as a W-2 employee you no longer materially participate in the entity being sold. If the holding company is a partnership, part of the gain may be ordinary income under Section 751 for your share of receivables and depreciation. Your basis is what it was in the practice, often near zero, so nearly the whole payout is gain.
Why did I get a K-1 with income I never received?
Because the holding company is taxed as a partnership and allocates its taxable income to owners whether or not it distributes cash. This is called phantom income. Some agreements require tax distributions to cover it; many do not, or make them discretionary. Check your operating agreement for a tax distribution clause, and if there is none, raise it with other physician holders as a group.
When do I not need any help with this?
If your employment term has ended, your rollover is a small share of your net worth, you are content with your pay and schedule, and you live in a state with no income tax, there is not much to optimize. Keep your documents in a folder, note the platform's debt maturities, and revisit if a sale is announced. Regret about a decision is not the same as a problem that needs fixing.