A Florida MSO deal can cost your practice its clinic-license exemption

Physician practice management deals fell from a 2021 peak of 851 to 105 in the first half of 2026, PitchBook data reported by STAT on Aug. 17 show, putting the segment on pace for roughly half of last year’s volume. Reed Smith partner Paul Pitts told STAT it has “certainly been a big decrease.” PitchBook’s Q2 2026 report put health care services private equity deal count down 18.5% year over year, with practice management lagging, and points to expanding state oversight of health care transactions as one of the forces reshaping investor strategy.

Florida did not add to that oversight. Hawaii, Indiana, New York, Pennsylvania, Rhode Island, Vermont and Virginia opened 2026 with proposals to tighten scrutiny of health care transactions, strengthen corporate practice of medicine prohibitions and constrain professional corporation-management services organization structures, according to a Jan. 29 alert from Nixon Peabody. Florida was not among them. Session roundups from Akerman and the National Law Review list no comparable measure among the health care bills Florida passed this year. The Private Equity Stakeholder Project’s tracker counts 79 such bills across 25 states.

The state agency that will look at a Florida practice’s transaction is the Agency for Health Care Administration, and what it reviews is a licensure file the practice itself has to open.

What Florida does not regulate

Florida has no corporate practice of medicine doctrine for physicians. Morgan Lewis puts it plainly in its guide to private equity acquisitions of physician practices: Florida does not have a CPOM doctrine, but under certain circumstances a non-physician-owned clinic requires licensure.

Bills to create one have failed. HB 1193 and SB 1222 in 2023 would have made non-physician employment of a physician, and interference with a physician’s clinical judgment, patient records, billing or hours of practice, grounds for license denial or discipline. Both died in committee on May 5, 2023.

That leaves three bodies of Florida law doing the work an MSO agreement in Vermont or New York would run into: clinic licensure, the fee-splitting prohibition and restrictive covenant statutes.

The exemption certificate does not survive the deal

Most physician-owned groups in Florida operate without a health care clinic license because they hold a certificate of exemption. Section 400.9905(4)(f) exempts a sole proprietorship, group practice, partnership or corporation that provides services by physicians covered by §627.419, is directly supervised by one or more of those physicians, and is wholly owned by one or more of those physicians or by a physician and that physician’s spouse, parent, child or sibling.

Rule 59A-33.006 of the Florida Administrative Code makes those certificates “not transferable, directly or indirectly.” They are valid only for the entity, the qualifying owners and the specific exemption claimed. The rule also states that exempt status expires when a change occurs that negates the entity’s qualification for the exemption. AHCA’s own exemption page instructs an entity reporting a transfer of ownership to apply for a new initial certificate and submit the transfer documents.

For an administrator, the fork is concrete. If the transaction leaves the professional association wholly owned by physicians and the MSO takes only a management role, the exemption can survive on a new certificate. If ownership moves outside the physician-and-immediate-family circle described in the statute, the exemption is gone and the entity needs a license. Rule 59A-33.006 gives AHCA 60 days from receipt of a completed application to grant or deny an exemption. Certificates expire two years from issuance and renew biennially, with renewal applications due 60 to 120 days before expiration, and name or address changes filed 21 to 120 days ahead.

Exempt entities carry an ongoing obligation that survives all of this: publishing and maintaining a schedule of charges for medical services billed to uninsured patients paying by cash, check, credit card or debit card, under §400.9935(6).

A change of ownership starts a 60-day agency clock

Section 408.803(5) defines change of ownership as either a sale or transfer of the licensee’s ownership evidenced by a change in federal employer identification number or taxpayer identification number, or an event in which 51% or more of the ownership, shares, membership or controlling interest is transferred or assigned. A change solely in the management company or the board of directors is not a change of ownership.

AHCA’s change of ownership guidance for health care clinics requires the application, fees and all other required forms at least 60 days before the change of ownership date. The filing set is the Health Care Clinic Licensing Application, the Health Care Licensing Application Addendum and a Proof of Financial Ability to Operate form. Other reportable changes are due within 21 calendar days of their effective date under §408.810(3), and a licensee discontinuing operation must tell the agency at least 30 days out.

Practices should also note a detail on AHCA’s licensing requirements page: applicants and controlling interests who are nonimmigrant aliens must post a surety bond of at least $500,000 under §408.8065(2). In a deal with foreign capital in the ownership chain, that lands on the license application, not the purchase agreement.

The 60-day requirement sits ahead of a closing date the practice does not control. Administrators who learn the structure late are the ones who end up asking a buyer to move a closing.

Someone has to sign as medical director

Section 400.9935(1) requires every licensed clinic to appoint a medical director or clinic director who agrees in writing to accept legal responsibility for a defined list of duties: posting identifying signage visible to patients, ensuring every practitioner holds a current, active and unencumbered Florida license, ensuring appropriate certification for the level of care provided, serving as the clinic records owner under §456.057, and reviewing any patient referral contracts or agreements the clinic executes.

That last duty is worth reading twice during a transaction, because the referral contracts a newly licensed clinic inherits become a named responsibility of the physician who signs.

Operating an unlicensed clinic that requires licensure is a third-degree felony under §400.9935(4)(a) where the person acts knowingly, with each day of violation a separate offense and a second or subsequent conviction rising to a second-degree felony.

What Bakarania actually held about management fees

Section 458.331(1)(i) makes it grounds for discipline for a physician to pay or receive any commission, bonus, kickback or rebate, or engage in “any split-fee arrangement in any form whatsoever,” directly or indirectly, for patients referred to providers of health care goods and services.

The Florida Board of Medicine applied that provision to a practice management agreement in In re Petition for Declaratory Statement of Magan L. Bakarania, M.D., 20 FALR 395, affirmed as Phymatrix Mgmt. Co. v. Bakarania, 737 So. 2d 588 (Fla. 1st DCA 1999). The Fourth District Court of Appeal later summarized the holding: the agreement was a split-fee arrangement because the group paid a specified percentage of net income without regard to the cost of the services the company supplied, and without regard to whether the income came from services the practice performed or supervised. A reasonable flat fee for management services including practice enhancement is allowable, the Board held, while payment of a percentage of the revenue those services generate “is not permissible.”

The Board distinguished the Second District’s line of cases, including Practice Management Associates v. Gulley, 618 So. 2d 259 (Fla. 2d DCA 1993), which had not treated percentage-based agreements as fee splits. The Florida Bar Journal has traced the Board’s declaratory statements on the question across more than a decade.

The practical test an administrator can apply to a draft management services agreement is whether each fee component ties to the cost of identified services rather than to revenue the arrangement generates. Section 456.054 sits alongside it, making it unlawful for any health care provider to offer, pay, solicit or receive a kickback for referring or soliciting patients, with violations treated as patient brokering and punishable under §817.505. A Florida health care attorney should review the structure before anyone signs.

The CHOICE Act covers your administrators, not your physicians

Florida’s CHOICE Act, codified at §§542.41–542.45 and effective July 1, 2025, makes covered noncompetes presumptively enforceable for up to four years and requires courts to issue preliminary injunctions. Jackson Lewis notes that the act expressly excludes health care practitioners as defined in §456.001, and applies to employees and independent contractors earning more than twice the annual mean wage in the relevant Florida county.

Physician restrictive covenants therefore remain under §542.335, where agreements longer than two years are presumed unreasonable. Section 542.336 voids a physician covenant entirely where a single entity employs or contracts with every physician practicing a given specialty in a county, and keeps it void for three years after a second entity enters that market. Holland & Knight reported that the U.S. District Court for the Northern District of Florida upheld the statute in 21st Century Oncology v. Moody in 2019, in a case brought by an employer of all nine radiation oncologists in Lee County.

Practice managers, billing leads and revenue cycle directors are a different matter. An acquiring MSO can use the CHOICE Act’s four-year track against nonclinical staff whose compensation clears the county threshold, and those are the people an administrator has to replace.

Consolidation has continued through the deal slowdown. The Physicians Advocacy Institute and Avalere Health reported in May that 82% of U.S. physicians were employed by hospitals or corporate entities as of Jan. 1, that corporate ownership of practices at 33.2% now exceeds hospital ownership at 30.6%, and that non-physician-owned practices grew 140.2% in the South between 2018 and 2026, the fastest of any region. PAI CEO Kelly Kenney said in a statement accompanying the report that corporate profits “must never take precedence over patients.”

Until Florida enacts a transaction review law, the review of a Florida practice’s MSO deal is the one the practice runs itself, on AHCA’s calendar, with the forms in its own file. Physicians Practice has previously covered what MSO structures involve and how administrators should evaluate them.