PE rollups in medical oncology: should you sell, partner, or stay independent?

May 6, 2026 · Pouyan Golshani, MD, Interventional Radiologist

Private equity has been acquiring oncology practices aggressively. Here’s how to evaluate an offer, model the alternative, and decide.

The call from the PE firm always sounds compelling: a big upfront check, relief from administrative burdens, and a “second bite of the apple” when the platform sells again. For a busy oncologist, it’s a tempting vision. But before you get dazzled by the enterprise value multiple, you have to do the hard work of modeling the alternative. What does staying independent, or joining a non-PE-backed group, actually look like when you optimize every financial lever available to you as a physician? The answer is often far more lucrative than you think. Understanding these strategies is the only way to truly evaluate an offer on the table. For a broader look at the clinical and operational side, you can find more in our hub of oncology free tools and resources.

Staying Independent? Maximize Your §199A QBI Deduction First

For oncologists in private practice, the qualified business income (QBI) deduction under Section 199A of the tax code is one of the most significant benefits of independence. It allows you to deduct up to 20% of your practice’s net income directly from your taxable income. However, there’s a critical catch: as a “specified service trade or business” (SSTB), which includes the practice of medicine, this deduction begins to phase out and then disappears entirely once your taxable income exceeds certain thresholds.

For 2026, those thresholds are projected to be around $394,000 for single filers and $787,000 for those married filing jointly. Many successful oncologists will find themselves above this limit. The key is strategic AGI management to stay under the wire. This isn’t about earning less; it’s about deferring more income into tax-advantaged accounts.

Here’s the sequence:

Max out pre-tax retirement accounts. This is your first and most powerful tool. If your practice offers a 401(k), contribute the maximum employee deferral ($24,000 in 2026). Then, add the maximum employer profit-sharing contribution, bringing the total up to the §415 limit of $69,000.
Utilize a Cash Balance Plan. This is a defined-benefit pension plan that can supercharge your tax deferral. Depending on your age and income, you can often contribute an additional $100,000, $200,000, or even more per year, all of it a direct reduction to your AGI.
Stack your Health Savings Account (HSA). Contribute the family maximum ($8,750 in 2026). It’s another above-the-line deduction.

Let’s model it. A physician with $850,000 in taxable income is completely phased out of the QBI deduction. But by contributing $69,000 to a 401(k) and $150,000 to a cash balance plan, their taxable income drops to $631,000. They are now back under the MFJ threshold, potentially restoring a QBI deduction worth tens of thousands of dollars. Before you sell the practice that generates this income, make sure you’re not leaving six figures of tax savings on the table every year.

Unlock Lost Deductions with 1099 Side Income

The Tax Cuts and Jobs Act of 2017 (TCJA) was a blow to W-2 employee physicians. It eliminated the ability to deduct unreimbursed business expenses—think CME, board recertification fees, state licenses, DEA registration, scrubs, and home office computers. For many hospital-employed oncologists, this meant thousands of dollars in professional costs could no longer be written off.

The strategic fix is to generate a small amount of 1099, or independent contractor, income. This creates a Schedule C (Profit or Loss from Business) on your tax return, which acts as a vehicle for these deductions. Even a few thousand dollars from a medical directorship, a consulting gig, expert witness work, or a telemedicine side hustle is enough to unlock this benefit.

Here’s how it works: All those professional expenses that were non-deductible as a W-2 employee become legitimate business expenses on your Schedule C. They are deducted against your 1099 income, reducing your taxable self-employment income. The trap to avoid is thinking the deductions can only be up to the amount of 1099 income. While you can’t use a Schedule C loss to offset your W-2 wages indefinitely (the IRS hobby loss rules are a real concern), you can absolutely use, say, $8,000 in legitimate professional expenses to wipe out $5,000 of 1099 income, resulting in a $3,000 business loss for the year.

Even better, this side business makes you eligible for a Solo 401(k). This allows you to contribute both as the “employee” (up to $24,000 in 2026) and the “employer” (up to 20% of net self-employment income), up to the combined $69,000 annual limit. This is a powerful way to create additional tax-deferred savings space on top of your primary W-2 job’s retirement plan.

The HSA Triple-Stack: Your Best Long-Term Shelter

Most of us think of a Health Savings Account (HSA) as a way to pay for current medical expenses with pre-tax dollars. That’s true, but it’s the least powerful way to use it. The real power of the HSA comes from leveraging its unique triple tax advantage:

Contributions are tax-deductible (pre-tax).
The money grows tax-free inside the account when invested.
Withdrawals are tax-free for qualified medical expenses.

This makes it superior to a 401(k), where withdrawals are taxed, and a Roth IRA, where contributions are made with post-tax dollars. The optimal strategy, which I call the “HSA Triple-Stack,” is to treat it purely as a retirement vehicle.

Here’s the sequence:

Contribute the maximum every year. For 2026, the family limit is $8,750. Make this a non-negotiable part of your savings plan.
Pay for current medical expenses out-of-pocket. Do not touch the HSA funds. Instead, pay for co-pays, prescriptions, and dental visits with a credit card or cash.
Scan and save every single medical receipt. Create a digital folder (e.g., in Dropbox or Google Drive) labeled “HSA Receipts.” Save every EOB, pharmacy receipt, and invoice for yourself, your spouse, and your dependents.
Invest the entire HSA balance. Choose a low-cost, broad-market index fund within your HSA provider’s platform and let it compound, tax-free, for decades.

The planning trap here is reimbursement timing. The IRS has no time limit on when you can reimburse yourself from your HSA for a past qualified medical expense. This means you can let your HSA grow for 30 years. When you’re 65, you can pull out, say, $100,000 completely tax-free by submitting the receipts you’ve been accumulating since you were 35. It becomes a tax-free emergency fund or a source of income in retirement, all because you uncoupled the spending from the saving.

W-2 Deduction Rescue: A Deeper Dive

We touched on using a 1099 side gig to deduct professional expenses, but it’s worth emphasizing how powerful this “rescue” operation is. Before the TCJA, W-2 employees could take a miscellaneous itemized deduction for unreimbursed professional expenses that exceeded 2% of their adjusted gross income (AGI). That’s gone. Now, if your hospital doesn’t reimburse you for your state medical license renewal, it comes straight out of your post-tax pocket.

Let’s walk through a concrete example. Dr. Chen is a hospital-employed oncologist. Her employer provides a small CME stipend but doesn’t cover everything. Her annual unreimbursed professional expenses are:

State Medical License: $800
DEA Registration: $888
Board Recertification (MOC): $1,500
Professional Society Dues (ASCO): $650
Medical Journal Subscriptions: $500
New laptop for work/presentations: $2,000
Total: $6,338

As a pure W-2 employee, she cannot deduct any of this. It costs her the full $6,338 out of pocket. Now, let’s say she takes on a consulting project for a biotech firm that pays her $10,000 on a 1099-NEC. She now has a sole proprietorship. All $6,338 of those expenses are now ordinary and necessary business expenses for her consulting business. They are fully deductible on her Schedule C.

Her net business income is now $10,000 – $6,338 = $3,662. She’ll pay self-employment tax on that smaller amount, but she has effectively paid for her professional expenses with pre-tax dollars. If she’s in a 35% marginal federal tax bracket and a 5% state bracket, deducting $6,338 saves her over $2,500 in taxes. This single strategy can be the difference between a PE offer looking good and looking mediocre. You can use the physician finance hub to model how different side income scenarios could impact your overall tax picture by unlocking these deductions.

A High-Risk Play: Oil & Gas Intangible Drilling Costs (IDCs)

For physicians with a high-risk tolerance and a need for large, immediate deductions, direct investment in oil and gas partnerships can be a powerful, albeit complex, tool. The primary tax benefit comes from Intangible Drilling Costs (IDCs). These are the non-salvageable costs of drilling a well—labor, fuel, site preparation, etc.—and under the tax code, they can be fully deducted in the year they are incurred.

Typically, 65% to 80% of your investment in a drilling partnership will be classified as IDCs. If you invest $100,000, you could get a $65,000 to $80,000 tax deduction in year one. This is a direct reduction of your active, ordinary income, which is incredibly valuable for a high-earning oncologist. The remaining 20-35% of the investment, the Tangible Drilling Costs (TDCs) for physical equipment, is depreciated over seven years.

However, this strategy is riddled with traps. The biggest one is the Alternative Minimum Tax (AMT). IDCs are a “tax preference item,” meaning they are added back when calculating your income for AMT purposes. If the deduction is large enough, it can easily trigger the AMT, which claws back a significant portion of the tax savings you were trying to achieve. You absolutely must model the AMT impact with a qualified CPA before even considering this.

Furthermore, this is a high-risk investment. The well could be a dud, and your entire investment could be lost. These are illiquid, private placements often with high fees and carried interest for the general partner. This is not for the faint of heart and should only be considered for a small portion of a well-diversified portfolio after all other tax-advantaged accounts have been maxed out.

Evaluating a private equity offer requires a clear-eyed assessment of your baseline. By implementing advanced tax and savings strategies like these, you can significantly increase the annual take-home value of staying independent. This higher, optimized baseline becomes the true benchmark against which any buyout offer should be measured. If you’re facing a complex offer sheet and need an objective breakdown, you can request a diligence memo on a PE offer. For a more direct conversation about your options and how to model them, you can talk to GigHz about a PE offer.