What Is My Medical Practice Worth?

Medical practice M&A has accelerated as PE firms and hospital systems consolidate healthcare delivery. Valuations vary dramatically by specialty, size, and payer mix.

Typical Valuation Ranges

Solo and small practices (1–2 providers): 2x to 3.5x SDE

Multi-provider groups ($1M+ EBITDA): 5x to 8x+ EBITDA depending on specialty

Highest-value specialties: Dermatology, orthopedics, gastroenterology, ophthalmology, urology, and pain management command premium multiples due to strong ancillary revenue and PE interest.

Factors that push toward the higher end:

• Multiple providers generating revenue independently
• Strong ancillary revenue (in-office procedures, imaging, lab)
• Favorable payer mix (commercial insurance heavy)
• Revenue above $2M with growth trajectory
• Desirable demographics and location
• Modern facility and equipment

Factors that push toward the lower end:

• Solo provider generating all revenue
• Primary care without ancillary services
• Medicaid-heavy payer mix
• Declining patient volume
• Aging facility and equipment
• Short remaining lease

What Drives Medical Practice Valuations

Provider leverage is the key factor. Practices where associates or employed physicians generate significant revenue are worth dramatically more than solo practices where everything depends on one doctor.

Ancillary revenue (procedures, imaging, lab, optical) operates at much higher margins than evaluation and management visits. Practices with strong ancillaries are more profitable and more attractive to buyers.

Payer mix matters enormously. Commercial insurance reimburses 2–4x Medicaid rates. A practice with 60%+ commercial payer mix has different economics than one at 60% Medicaid.

How to Increase Your Practice's Value

1. Hire associates. Every dollar generated by a non-owner provider is more valuable than owner production for valuation purposes.
2. Build ancillary revenue. Add in-office procedures, point-of-care testing, or imaging services appropriate to your specialty.
3. Improve payer mix. Actively credential with high-reimbursement commercial plans. Increase marketing to commercially insured populations.
4. Reduce owner dependence. Build a clinical and administrative team that operates without you.
5. Lock in your lease. 7–10 years remaining for PE buyers.
6. Document clinical protocols. Standardized workflows make the practice scalable and transferable.

Browse the valuation multiples guide for industry data, or schedule a free call for a confidential valuation.