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Data Ownership Questions Every PE-Backed Medical Practice Faces

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Data Ownership Questions Every PE-Backed Medical Practice Faces

Private equity continues to be more a part of the healthcare landscape. The data held by PE-backed medical practices is highly valuable due to its scope, sensitivity, and regulatory implications. Privacy issues and ownership disputes can complicate transactions if handled improperly. PE-backed entities often face difficult questions about who controls and owns the data, but the right legal guidance can solve many of these common issues. 

The medical transaction attorneys at Daniels, Porco & Lusardi, LLP know the challenges and benefits of private equity partnership in healthcare. Let us structure your deal to protect data privacy and ownership. 

Why Data Ownership Matters in PE-Backed Healthcare Deals

Data drives nearly every aspect of a modern healthcare platform:

  • Clinical quality reporting
  • Payer negotiations
  • Revenue cycle optimization
  • Marketing and patient acquisition
  • Benchmarking across locations
  • Operational efficiency and staffing models
  • Strategic growth and roll-up planning

The Core Question: Who Owns the Data?

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In a PE-backed healthcare structure, ownership is not always straightforward. Several entities may have a stake in the data:

  • The physician-owned professional corporation (PC or PLLC)
  • The management services organization (MSO)
  • The private equity sponsor
  • Third-party vendors, including electronic health record (EHR) providers
  • Affiliated practices within the platform

The challenge is that different types of data are treated differently under the law.

Clinical Data

Clinical data—patient medical records, diagnoses, treatment plans, and clinical notes—belongs to the physician-owned professional entity. Under New York’s Corporate Practice of Medicine (CPOM) doctrine, only licensed professionals may control clinical information.

Operational and Business Data

Scheduling, call center metrics, marketing analytics, staffing data, and financial performance metrics often fall under the MSO’s domain. However, these datasets frequently overlap with clinical workflows, creating gray areas.

De-Identified Data

De-identified or aggregated data can be used more freely, but only if it meets HIPAA’s strict de-identification standards. Many PE-backed groups rely on de-identified data for benchmarking and analytics across their platforms.

Key Data Ownership Questions Every PE-Backed Practice Must Address

1. Who Controls Access to the EHR?

Even if the MSO pays for the EHR system, the physician entity must retain control over clinical data. This raises questions such as:

  • Can the MSO access patient records for billing or analytics
  • Who controls user permissions
  • What happens if the relationship ends

2. Can the MSO Use Clinical Data for Analytics?

Many MSOs want to use clinical data to improve operations, negotiate payer contracts, or benchmark performance across practices. But HIPAA and CPOM limit how and when this data can be shared.

Solutions often include:

  • Business associate agreements (BAAs)
  • Data use agreements (DUAs)
  • Strict access controls
  • De-identification protocols

3. What Happens to the Data if the Relationship Ends?

Breakups between physicians and MSOs happen. When they do, disputes often arise over:

  • Who keeps the EHR system
  • Who retains copies of the data
  • How data is transferred
  • Whether the MSO can continue using de-identified data

Without clear exit provisions, unwinding a relationship can become costly and contentious.

4. How Are Third-Party Vendors Involved?

EHR companies, billing vendors, call centers, and analytics platforms may all have access to sensitive data. PE-backed practices must ensure:

  • Proper BAAs are in place
  • Data is stored securely
  • Vendors do not claim ownership rights
  • Data can be exported if the practice switches systems

Vendor contracts often contain hidden risks that only surface during diligence or post-closing integration.

5. How Is Data Shared Across a Multi-State Platform?

PE-backed platforms often operate in multiple states, each with its own privacy laws. Sharing data across state lines requires careful compliance planning, especially when CPOM rules differ from state to state.

Solve Issues Related to Data Ownership: Consult a New York Healthcare Transactions Attorney Today

Data ownership and protection is one of the most regulated areas of a PE-backed medical practice. Clear agreements and compliant business structures can help protect against violations, which could lead to regulatory exposure. The attorneys at Daniels, Porco & Lusardi, LLP are ready to help. Contact us today for a consultation.