A physician-owned practice lacks separation between ownership and governance. What governance risk arises?

• A. Conflicts of interest
• B. Market risk
• C. Operational inefficiency
• D. Regulatory compliance risk

Answer: (A)

When ownership and governance aren’t separated, those who control the business may have incentives that conflict with what’s best for the practice and its patients. That creates a conflicts of interest: decisions could be influenced by personal financial gain rather than objective, patient-centered governance. In a physician-owned setting, this can show up in how compensation is set, which partnerships are pursued, or how revenue-generating arrangements are approved, all of which raise questions about whether actions serve the organization or the owners.

This is the governance risk most directly tied to lack of separation, because it centers on competing duties and biased decision-making within the leadership structure. Market risk looks to external conditions, regulatory compliance risk concerns laws and rules, and operational inefficiency stems from process flaws; while they can be related, they’re not the primary governance risk produced by owning and governing at the same time.