DPC Partnership Agreements (Buy-In, Profit Splits, Decisions and Exits for Co-Owners)

What Goes in a DPC Partnership Agreement?

A DPC partnership agreement (an operating agreement if your practice is an LLC or PLLC, a shareholder agreement if it is a professional corporation) is the written deal between physicians who co-own a direct primary care practice. It should settle six things before anyone signs, namely how a partner buys in, how profit is paid out, who decides what, how a partner leaves, what happens on a death or disability, and what each partner may do afterward. If the agreement is silent, state law decides for you, so have a health care attorney in your state draft it and a CPA review it. This guide is a planning map for those conversations, not legal or tax advice.

Co-ownership is the less common path in DPC. The AAFP's 2026 DPC data brief, from a survey that asked about 2025, found that 89% of DPC respondents had an ownership stake in their practice, with 74% sole owners and 15% partial owners or shareholders. The same brief found that 69% of DPC practices ran a single physician panel.

If you are still choosing between hiring a second physician as an employee or as a partner, start with when to hire a second DPC physician. This post picks up once you both want to own the practice together.

The agreement at a glance

Which Entity Lets Two Physicians Co-Own a DPC?

Your entity decides what kind of agreement you are writing. Two physicians in a general partnership sign a partnership agreement, members of an LLC or PLLC sign an operating agreement, and shareholders of a professional corporation sign a shareholder agreement, alongside the bylaws and sometimes an employment agreement for each physician. The topics are the same in all three.

States limit who may own a medical practice, so in a professional entity the second owner generally has to be a licensed professional, and states differ on which professions may co-own the same entity. Our guide to PLLC versus LLC for a DPC walks through those ownership rules in the larger states and how each entity is taxed. If you are thinking about a nurse practitioner as a co-owner rather than an employee, read whether a nurse practitioner can own a practice and ask a health care attorney first.

The reason to write it all down is practical. The IRS's Publication 541 says a partnership agreement can be oral or written, that changes must be agreed by all partners or made the way the agreement itself provides, and that if the agreement is silent on any matter, the provisions of local law are treated as part of the agreement.

How Much Should a DPC Partner Buy-In Cost?

There is no standard buy-in price for a DPC partnership, and we found no primary source that surveys what DPC partners pay. What you can do is agree on what is being bought and a method for valuing it, then apply that method honestly.

What a new partner is actually buying

A membership practice holds different assets from an insurance practice, since its revenue comes from member fees rather than claims. The value can sit in these places:

• Hard assets, such as exam room equipment, point-of-care testing, furniture and computers.
• Working capital, meaning cash in the operating account and any reserve.
• Obligations, such as the office lease, equipment loans and any startup loan still being repaid.
• The membership base and goodwill, meaning the active members, any employer contracts and the practice's name and reputation.
• Any dispensing inventory, if the practice dispenses medications in-house.

The membership base is where partners can disagree, because the founder built it, sometimes through years of thin pay. Talking about it openly before anyone names a number keeps the conversation from turning personal.

Ways to set the price

Whichever method you choose, write the same one into the exit terms.

How the buy-in gets paid

A buy-in does not have to be one large check. Payment options include a lump sum, deductions from the partner's pay or draws over a few years, a promissory note to the practice or the founder, or a bank loan in the new partner's name. Our DPC startup financing guide covers practice loans. The agreement should say when ownership transfers (at signing, or only as payments are made), what happens to a partly paid buy-in if the partner leaves early, and whether the new partner shares in profit before the buy-in is complete.

How Do DPC Partners Split Profits?

Model the profit split with real numbers before you sign. A useful structure separates a regular payment each partner receives for working in the practice from a split of whatever profit is left after expenses and that regular pay.

For tax purposes, a payment to a partner that is set without regard to the partnership's income is a guaranteed payment, as Publication 541 explains, while the share of profit is the partner's distributive share. An S corporation works differently, so let your CPA set this up.

Whatever you choose, define the inputs clearly. Decide how members are attributed to a partner (by the physician the member picked, or by the panel in your EHR), how employer contracts are credited, and how the practice treats a partner who works fewer days by agreement.

The Stark rule if you bill Medicare for lab work or other designated health services

A pure DPC practice whose physicians have opted out of Medicare does not bill Medicare, and the federal self-referral law is about Medicare-payable designated health services, so it matters most for a hybrid practice that still bills Medicare for lab tests or similar services. Opting out doesn't by itself take a physician outside the law, which, unless an exception applies, bars referring Medicare patients for designated health services to an entity, such as a lab, that the physician has a financial relationship with. The group practice rules at 42 CFR 411.352 allow a physician in the group to be paid a share of overall profits only if it is not directly related to the volume or value of the physician's referrals, and the rule lists methods treated as meeting that test, such as dividing profits per capita. Our anti-kickback and Stark basics guide explains the wider rules, and an attorney should check any split that touches Medicare revenue.

Who Decides What in a Multi-Physician DPC?

Two equal owners can deadlock on anything, so the agreement should sort decisions into tiers before the first real disagreement arrives.

Day-to-day decisions can belong to whichever partner is on that day, or to a managing partner the agreement names. That covers scheduling, supply orders and staff coverage. Give a managing partner a written list of what the role covers.

Major decisions are the ones that change the practice, and they belong on a list that needs both partners, or a stated majority if there are more than two. Candidates to consider:

• Changing membership prices or what the membership covers (see how to raise DPC membership prices).
• Signing or ending an employer contract, a lease or a loan above an agreed amount.
• Hiring or letting go of a clinician, and setting clinician pay.
• Opening a second location or adding services such as dispensing or imaging.
• Admitting a new partner, or selling the practice.
• Changing the profit split or the agreement itself.

Clinical judgment stays with each physician, though the agreement can set shared standards such as message response times.

When you cannot agree

A deadlock clause turns a stuck decision into a process. Options include a cooling-off period, then mediation, then binding arbitration, or a buy-sell trigger where one partner names a price and the other chooses whether to buy or sell at it. The last option is fair on paper and harsh in practice if one partner has more savings than the other, so discuss it carefully with your attorney. Time off, call coverage and clinic days per partner belong in writing too.

What Happens When a DPC Partner Wants Out?

Every partnership ends, so plan the exit while everyone is on good terms. A sale of the whole practice is covered in buying or selling a DPC practice; here one partner leaves and the practice continues.

The agreement should cover these points:

1. Triggers. Voluntary withdrawal, retirement, loss of a license or of the ability to practice, a serious breach and expulsion by the other partners, each with its own rules.
2. Notice. How far ahead a partner must tell the others, which should be long enough to cover the schedule and tell members.
3. Price. The same valuation method used for the buy-in, with any discount for leaving early or for cause stated up front.
4. Payment terms. A lump sum or payments over time, with interest, security and what happens if the practice cannot pay.
5. Members. How members are told, that each member chooses which physician to follow, and how their records move.
6. Practical loose ends. Removing the partner from bank accounts, the lease, loan guarantees, payer contracts if any, and malpractice coverage. Ask your broker about tail coverage, which our guide to insurance for a new DPC practice explains.

Tax treatment of the buyout depends on how the payments are structured. Publication 541 explains that payments to a retiring partner, or to the successor of a deceased partner, may have to be split between payment for the partner's interest in partnership property and other payments, which are taxed differently. Ask your CPA to review the payment terms before the agreement is final.

What If a DPC Partner Dies or Becomes Disabled?

Without a plan, a deceased partner's ownership passes to their estate, and in states that limit practice ownership to licensed professionals, a spouse or heir who is not licensed may not be allowed to own it. The remaining partner may have to buy the share quickly with no plan for the money.

A buy-sell agreement solves this. It names the trigger (death, permanent disability, or both), sets the price or the formula, and says where the money comes from. Two structures to compare:

• Cross-purchase. Each partner owns insurance on the other and buys the departing partner's share personally.
• Entity purchase (redemption). The practice owns the insurance and buys back the share itself.

The choice matters more since 2024. In Connelly v. United States, decided June 6, 2024, the Supreme Court held that a corporation's obligation to redeem a deceased owner's shares does not necessarily offset the life insurance proceeds it receives to fund that redemption, so the insurance raised the company's value for estate tax purposes.

In that case, the estate owed an additional $889,914 in federal tax after the IRS counted the insurance in the company's value.

That case involved a building supply corporation, not a medical practice, so ask your attorney and CPA how it bears on your entity and whether a cross-purchase, an entity purchase or another structure fits. For deaths in 2027, the federal estate tax basic exclusion amount is $15,480,000, so ask your CPA how much the estate tax effect in Connelly matters for your estates.

If the practice owns life insurance on a partner, federal tax law adds paperwork. Under 26 U.S.C. 101(j), the insured must be told in writing before the policy is issued that the employer intends to insure their life and for how much, must consent in writing, and must be told the employer will be a beneficiary, or the tax-free part of the death benefit can be limited to the premiums paid. Notice and consent alone aren't enough: the payout must also fit one of the statute's exceptions, such as an amount used to buy the insured's equity interest from their family, beneficiary or estate. Employers that hold these policies report them on IRS Form 8925.

Disability can be partial or temporary, so define it carefully. Set a waiting period before a buyout is triggered, and decide how the disabled partner is paid in the meantime. Disability buyout insurance exists for this purpose, and a broker can quote it alongside the partners' own disability coverage. If you see Medicare patients under private contracts, check the Medicare opt-out status of whoever takes over the departing partner's members.

Are Noncompetes Between DPC Partners Enforceable?

There is no federal rule. The FTC's nationwide Noncompete Rule is not in effect and is not enforceable, according to the FTC's own page. A federal court stopped it in August 2024, the FTC took steps to dismiss its appeal in September 2025, and a February 12, 2026 Federal Register notice removed the rule. That leaves covenants between physicians mainly to state law, which differs from state to state, though the FTC says it can still investigate noncompetes that are unjustified, overbroad or otherwise unfair under Section 5 of the FTC Act.

Texas shows how specific a state can get. Its S.B. 1318, effective September 1, 2025 for covenants entered into or renewed on or after that date, says a physician noncompete must offer a buyout no greater than the physician's total annual salary and wages at termination, must expire within one year, must be limited to a five-mile radius of where the physician primarily practiced, and must be stated clearly and conspicuously in writing. It also makes a physician covenant void if the physician is involuntarily discharged without good cause. The section's other requirements still apply too, including access to the physician's patient list and patients' medical records, and continuing care for a patient during an acute illness. The statute speaks of a physician's "contract or employment", so ask a Texas attorney how it applies to a co-owner.

For other states, start with the physician non-compete laws by state table in our guide to leaving employed medicine, and confirm with a local attorney. Many of those laws exempt physicians who own part of the practice, so ask how yours treats a co-owner. Whatever your state allows, softer tools may fit a DPC partnership better than a broad noncompete. Examples include a clear notice period, a promise not to solicit staff and a joint letter telling members they may choose either physician.

A Checklist Before You Sign

Bring this list to the first meeting with your attorney and CPA:

1. Confirm the entity allows the new owner under your state's rules, and update it if needed.
2. Agree in writing on what the buy-in buys, the valuation method and how it is paid.
3. Model the profit split with a year of real numbers, including a slow month. Our break-even panel size guide helps with the revenue and overhead math.
4. List the major decisions that need both partners, and choose a deadlock process.
5. Write the exit terms with the same valuation method as the buy-in.
6. Set up the buy-sell agreement and its funding, with 101(j) notice and consent if the practice owns the insurance.
7. Have a local attorney review any noncompete or nonsolicitation clause.
8. Plan how members are told and how records move if a partner leaves.
9. Schedule a yearly review of the agreement, the valuation and the base pay.

Keeping a Shared Practice Running Day to Day

A good agreement covers the big moments. Much of the daily life of a partnership, though, is the ordinary work between them, such as who answered the member's message, who is following up on the lab result, and whose panel a new family joined. That work is spread across the EHR, the billing system and the phone, so each partner can assume the other has it.

Tabflows is a dedicated tech team that connects the tools your practice already uses, so follow-ups, tasks and patient context sit in one shared place both partners can see. It does not replace your EHR or billing system. For the numbers worth watching together each month, see our guide to DPC metrics to track in 2027.