Florida is one of the more permissive states in the country when it comes to the corporate practice of medicine — the doctrine that limits non-physician ownership of medical practices. For that reason, the state has been at the center of a wave of physician-practice consolidation that shows no sign of slowing. Global healthcare private equity deal value hit an estimated $191 billion in 2025, and Florida specialties in dermatology, ophthalmology, orthopedics, dental, and pain management have been among the most active acquisition targets. The financial statement audit of a Florida physician practice, once a comparatively straightforward closely-held-business engagement, now sits at the intersection of a half-dozen technical complications that did not exist a decade ago.
The MSO/PC structure is now standard — and it changes the audit
The typical Florida investor-backed medical practice today operates as two entities working in tandem: a physician-owned Professional Corporation (PC) or Professional Association (PA) that holds the clinical assets and the licensure, and a separate Management Services Organization (MSO) owned by the investors that provides billing, HR, IT, credentialing, marketing, and facilities. The two are connected by a Management Services Agreement (MSA), under which the PC pays the MSO a management fee for the bundle of services rendered.
From the auditor’s perspective, this creates one of the most heavily related-party engagements in Florida practice. Nearly every material line on the PC’s income statement flows through the MSA, and the audit has to test whether the fee is fair market value, whether it is structured in a way that avoids fee-splitting exposure under F.S. § 456.054, and whether the resulting financial statements disclose the related-party dependency with the specificity that GAAP and audit reporting standards require.
What actually gets tested that used to be simpler
Three areas absorb most of the additional audit hours:
Fee-splitting compliance. Florida Statute § 456.054 prohibits health-care providers from paying, receiving, or splitting fees for referrals or in a manner that constitutes an illegal remuneration. The long-standing PhyMatrix line of Florida case law has interpreted this to disfavor percentage-of-revenue management fees that scale directly with patient volume or gross collections. Auditors reviewing an MSA are now routinely checking that the fee structure is fixed, cost-plus, or tiered — not raw percentage — and that the fair-market-value support is documented and current.
Payer concentration and revenue recognition. Medicare, Medicaid, and commercial-payer concentration disclosures have sharpened as value-based-care contracts, capitation arrangements, and quality-adjusted revenue models have become common. Where a Florida practice’s revenue turns on quality-metric attainment or on shared-savings settlements, the recognition timing under ASC 606 requires more thought than a fee-for-service model ever did.
Related-party disclosure specificity. Under ASC 850, related- party transactions and balances must be disclosed in a way that lets a reader understand the economic dependency. In an MSO/PC structure, the disclosure often runs multiple paragraphs and cross-references the MSA terms, the fee calculation methodology, and the physician-shareholder rollover-equity arrangements that are typical of PE-backed platforms.
“The financial statement audit of a Florida physician practice is no longer a closely-held business audit with a healthcare flavor. It is a related-party engagement built around the MSA — and the MSA determines what the audit has to test.”
Why 2026 is a heavier year than most
Several states — California, Oregon, Massachusetts, and New Mexico most notably — have tightened their oversight of MSO structures in 2025 and early 2026, expanding notice requirements and constraining what MSOs can control. Florida has so far not moved in that direction, which continues to make it a favored jurisdiction for physician-practice roll-ups. That also means the diligence and audit burden on Florida practices has shifted upward as investors bring their national compliance standards to bear on local engagements. For Florida physician-owners weighing a sale, a recapitalization, or a first audit in advance of a transaction, that shift is now a planning variable rather than a footnote.
