OB/GYN Ownership: Buy In, Partnership, and What the Practice Is Worth

A buy in purchases distributions, a vote, and a share of the practice's history. The distributions are the visible layer: a share of collections after overhead, which in this specialty means after the malpractice premium, one of the largest overhead lines the practice carries. The vote is the second layer: a say in hiring, in the call rota, in payer contracts, and in whether the group ever sells itself to a system. The third layer is the one the brochure omits. The new partner takes a share of the obligations of the practice, and the defining obligation is the malpractice past of the group: the claims already filed, the claims not yet filed on care delivered years before the new partner arrived, and the tail exposure that wakes up when coverage changes or a partner departs. A delivery performed three years before you arrived can become a claim ten years after you buy in, and where that claim lands is decided by documents signed long before you read them.

Price the history before the shares, in a set order. Ask how the coverage of the group is shaped across every era: which years sat under occurrence policies, which under claims made policies, what retroactive date the current policy carries, and whether the tail of every departing partner was bought, waived, or left open. Ask who bears a claim from care delivered before your arrival, and get the answer from the partnership agreement and its indemnity language rather than from reassurance. Then price what you find. Tail coverage commonly runs 150 to 200 percent of the mature annual premium, so on a Florida premium of $243,988 the tail on one block of years runs $243,988 times 1.5, which is $365,982, to $243,988 times 2, which is $487,976. Even a fractional share of an open exposure at that scale changes what the buy in should cost. The full costing is in the buy in with malpractice history question. Groups that carry their history cleanly will show you the file.

The track is the buy in collected in installments of work, so read its terms closely. A new attending joins as an associate for a track period, a set number of years named in the offer, working at a salary or at a share of production below the partner line. At the partnership date, the associate buys in, in cash, in installments, or in a final stretch of reduced distributions, and becomes a partner. The three payment shapes are worth different amounts even at the same headline number, because money paid across three associate years at a reduced rate is a larger price than the same figure paid at the partnership date. Build the track years at the associate terms, build the same years at the employed terms available elsewhere, and the gap between the two builds is the real price of the share.

Four terms decide whether a track is a path or a toll. The partnership date, stated as a date or as objective conditions. The buy in price or the formula that will set it, stated now, because a formula chosen later is chosen by the people selling. The treatment if the track ends without partnership, including any covenant that still binds and who pays the tail on the associate years. And the distribution formula, run against the schedule you expect to work, call included: a partner who takes heavy call inside an equal share formula subsidizes the partners who do not. Get all four terms in writing before the track starts. The decision is worked in the partnership track question, and the contract terms are read on the contracts page.

Scale buys coverage stability, and smallness buys control, and the premium prices the trade. Put the premium on the table first. For $1M/$3M policies, the AMA Policy Research Perspectives exhibit, using Medical Liability Monitor data through 2025, reports OB/GYN premiums of $243,988 in Florida in Miami Dade, $207,907 in Illinois in Cook, Madison, and St. Clair counties, $176,358 in New York in Nassau and Suffolk counties, and $49,804 in California in Los Angeles and Orange counties. A large group spreads a premium at that scale across a deep roster, negotiates coverage as a buyer with volume, absorbs the departure of one partner and the tail question that follows it, and carries staff whose whole job is the coverage file. The individual partner in that group owns a thinner slice, votes as one of many, and practices inside decisions made at a distance.

A small practice inverts every term. The premium per partner is the same market premium divided by very few names, the tail on a departure can be a group event rather than a line item, and one claim history belongs to everyone whose name is on the door. Against that exposure, the small practice partner holds real ownership: a large vote, distributions set by people in the room, a call rota the partners design, and an equity share whose value the partners can move. They are two prices for the same clinical life, and the comparison has to be run whole, in the state where the practice sits, with the premium, the tail treatment, the call burden, and the exit formula all carrying numbers. Run it at five years and at ten, because the large group often wins the early cash years while the ownership case compounds. The comparison is worked in the large group against small practice question. One structural note: the practice entity is chosen under state professional practice law first, since many states route physicians through a professional corporation or a professional limited liability company, and some bar an ordinary limited liability company from rendering medical services at all.

Value the practice in three layers, and never let the first two be priced without the third. The first layer is hard assets: equipment, furnishings, owned real estate where it exists, and accounts receivable at the share that history says will collect. This layer can be appraised and argued about with evidence, which is why negotiations live here so comfortably. The second layer is goodwill: the payer contracts, the referral pattern, the hospital call position, the employed clinicians and staff, and the name the community calls first. Goodwill is real value and it is also the layer that walks out the door fastest, because referral patterns follow physicians and contracts get renegotiated. Price goodwill against the years it has actually produced distributions, not against the story of the practice at its best.

The third layer is the liability shadow, priced like an asset in reverse. Start with the coverage map from the first section: the eras, the policy forms, the retroactive date, and the open tails. Then price the exposure with the arithmetic the market gives you. A mature premium of $243,988 in Florida carries a tail band of $365,982 to $487,976 for one physician block of years, and the same computation in California on $49,804 runs $49,804 times 1.5, which is $74,706, to $49,804 times 2, which is $99,608. Geography alone moves the shadow by hundreds of thousands of dollars. A state patient compensation fund changes the shape where one exists: in Indiana, total recovery is capped at $1,800,000 for an act of malpractice occurring after June 30, 2019, a provider is liable for no more than $500,000, and the Fund pays above the provider layer up to the cap, under Indiana Code section 34-18-14-3. Louisiana, Kansas, Nebraska, Wisconsin, and Pennsylvania run funds or excess programs of their own. The honest valuation states all three layers on one page: hard assets at appraisal, goodwill at a multiple the distribution history defends, and the shadow at the cost of closing it. The retirement plan the partners fund is built on the retirement page.

The exit formula, read on the way in, is the price the share fetches on the way out. Partnership shares are not sold on a market. They are usually repurchased by the group under the buy sell agreement, at a formula price, on a payment schedule, when a partner retires, leaves, drops obstetrics, becomes disabled, or dies. Read that formula as a buyer, because it is the only buyer the share is guaranteed to have. Learn how it treats the three layers above: whether goodwill enters the exit price at all, how receivables are settled, how capital accounts close, and over how many years the group may pay. Learn the notice period, the covenant that binds a departing partner, and whether dropping obstetrics while staying in gynecology triggers a partial redemption, a repriced share, or no event at all, because the phase change is the exit most partners here take first.

The tail stands at the exit the way it stands at the entrance. A partner leaving a claims made structure leaves a coverage question priced at 150 to 200 percent of the mature premium unless the agreement, the policy, or a retirement waiver assigns it elsewhere, and the assignment belongs in the exit papers in writing. Where the whole group sells, the same agreement governs the vote, the division of the price, and the terms of the job that follows, and a sale price should be priced against the distribution stream it ends before it is celebrated. The personal side is worked in the exit or sell a share question, and the estate treatment of the same share is on the estate planning page. Ownership done well is a position entered with its exit already priced.

American Medical Association, Policy Research Perspectives, Medical Liability Monitor data through 2025 (OB/GYN premiums for $1M/$3M policies, including $243,988 in Florida and $49,804 in California, accessed October 2026)

Physician Side Gigs, malpractice tail insurance coverage guide (tail coverage commonly costs 150 to 200 percent of the mature annual premium, and in many states the malpractice clock for a child does not start running until the patient turns 18, accessed October 2026)

Indiana Code section 34-18-14-3 (Indiana Patient Compensation Fund caps, accessed October 2026)

NORCAL Group, state patient compensation funds overview (states running funds, accessed October 2026)

Ryan Inman is a retired financial planner who worked with about 500 physician families. He created the Financial Residency podcast (about 3 million downloads) and is no longer affiliated with it. Financial Fellowship is his sole focus. This guide is educational. Last updated October 2026.