How should I structure LLCs for multi-location healthcare practices?

There is no single right structure, but there is a common pattern that works for most outpatient practices with two or more locations. At the top sits a parent holding entity, frequently an LLC that has elected S-corporation taxation (or, less often, a C-corp for groups planning to take outside investment). Underneath the parent are three layers. First, each clinical location is its own operating LLC. This contains malpractice exposure, employment claims, and contract disputes at the site level so a problem at Location B does not threaten Locations A or C. Second, any owned real estate sits in a separate real estate LLC that leases the building back to the operating entity. This keeps the building out of the operating risk pool, preserves the option to sell the practice without selling the real estate (often more valuable in a PE transaction), and creates clean rent expense for tax purposes. Third, shared back-office functions (billing, IT, HR, marketing, leadership comp) often live in a management services organization (MSO), which charges each operating LLC a management fee. The MSO structure is essential in states with strict corporate practice of medicine (CPOM) rules where non-physicians cannot own a clinical entity, since the MSO can have outside investors while the clinical PCs or PLLCs remain physician-owned. State law drives a large share of the design. California, New York, Texas, and New Jersey have strict CPOM regimes that require the clinical entity to be a professional corporation (PC) or professional LLC (PLLC) owned only by licensed providers, with the MSO providing everything non-clinical. Other states are more permissive. Before you finalize structure, also confirm: payer enrollment and credentialing (each new operating entity needs its own NPI Type 2, payer contracts, and CLIA if applicable), state licensure, sales-tax registration if you sell any taxable items, and whether your DSO/MSO arrangement triggers any state-specific friendly-PC or fee-splitting concerns. A clean structure makes diligence faster, partner buy-ins cleaner, and an eventual sale meaningfully more valuable. A tangled one costs six figures in legal fees to unwind during a transaction.