Quick answer: Selling a medical practice takes 12 to 24 months of planning. Start with an independent valuation, then choose the buyer that fits your goals: a hospital or health system, a private equity-backed group or MSO, a physician group, or an incoming physician. Plan compliance and the patient transition early, and run a confidential process with a medical practice broker.
Dr. Ellis owns a three-physician family medicine clinic and plans to retire in two years. A regional hospital has offered her a job, and a private equity-backed group wants to buy the practice outright. Her question is simple: “Should I sell my practice to either of them, and for how much?” She has two offers and no benchmark.
Whether you plan to retire or keep seeing patients, how you sell your business shapes your income for years after you close. The market has also changed around physicians like Dr. Ellis. According to the American Medical Association’s Physician Practice Benchmark Survey, 42.2% of physicians worked in wholly physician-owned private practices in 2024, down from 60.1% in 2012. More owners are selling, and more buyers are competing for the independent practices that remain.
The task of the medical practice broker is to take care of those activities that tend to distract the doctor from attending to the patients like financial planning, buying party selection, and negotiating with them. The skilled medical practice broker will also maintain the confidentiality of the sale till such time when you want to share this information with your employees and patients. If you are weighing firms, our guide on how to choose a healthcare M&A advisor covers what to ask.
At Website Closers, we work with physician-owners from the first valuation through closing. If a sale is a year or two away, a short confidential call is a reasonable place to start.
Sooner or later, every owner asks, “How much is my medical practice worth?” The answer depends less on gross revenue than on what a buyer can expect to earn after you are paid a market salary. A sound medical practice valuation shows that number, explains how you got it, and holds up when a buyer’s accountants test it.
Appraisals generally involve three methods being utilized, and then the results are weighted together. The income method is given the highest weight among the hospitals and PE buyers. It begins with collections and net revenues, then employs physician compensation normalization where the owner’s compensation is recalculated based on what the market would have paid a physician to do the work, sometimes measured in wRVUs. Subtract any one-time and personal expenses, and you have adjusted EBITDA. Medical practice valuations then employ multiples based on the adjusted EBITDA to come up with valuation, and the multiple changes according to size, specialty, payer mix, and buyer type. Fair market value must also be supported by a physician practice valuation for the hospital transaction, and that is covered later.
Revenue multiples, as a percentage of annual collections, are a fast reference tool. They do not take overhead into account, so use them as an estimate and not a price. The asset-based method sums up all the equipment, supplies, and accounts receivable in case the AR is included in the practice purchase. This will often be the bottom line number for a small practice with small margins.
Goodwill is where values split apart. If patients follow the physician and the physician plans to leave, much of that goodwill leaves too. Sellers who stay on through a transition or an employment agreement keep more of it in the price.
For a formal medical practice appraisal, start with an independent practice valuation. To get a ballpark first, try our free valuation calculator. Like any medical practice valuation calculator, it gives a starting estimate, not a defensible price.
Two practices with the same collections can sell for very different amounts. These factors explain most of the gap, and each one needs records a buyer can verify.
| Factor | Why buyers care | What to document |
| Payer mix and contracts | Commercial contracts usually pay more than Medicare and Medicaid, and some contracts don’t transfer | Collections by payer, commercial contracts, assignment terms |
| Provider productivity | Shows whether revenue will repeat after closing | wRVUs and collections per provider for three years |
| Physician dependence and succession | Goodwill tied to one doctor can walk out the door | Patient panels by provider, associate roles, transition plan |
| Specialty and ancillary services | Imaging, lab, infusion and in-office procedures add margin | Revenue by service line, equipment, related licenses |
| AR quality | Old or unworked receivables point to billing problems | AR aging report, denial rates, days in AR |
| Overhead ratio | Lower overhead leaves more earnings to value | Normalized P&L, expense breakdown |
| Staff stability | Turnover disrupts the practice after the sale | Staff roster, tenure, pay, key roles |
| EHR and compliance program | Weak controls create risk the buyer inherits | EHR system, HIPAA policies, coding audits |
| Lease and location | The buyer needs the right to stay in the space | Lease term, assignment clause, renewal options |
| Growth trends | Rising volume supports a stronger multiple | New patients, visit counts, three-year revenue trend |
Most offers come from four places: hospitals and health systems, private equity platforms and MSOs, physician groups, and individual physicians. Each one pays differently and expects different things from you after closing.
When selling your practice to a hospital, it generally involves trading ownership for employment within the health system organization. The hospital acquires the practice’s property, and you will enter into an employment contract that will detail your remuneration, productivity-based payments based on wRVUs, call responsibilities, and a non-compete clause. These agreements are dictated by federal regulations. The terms of sale and your remuneration must comply with fair market value and commercial reasonability principles so that hospitals do not pay for referrals or purchase of good will based on the number of patients in the future. Physicians who sell their medical practices to hospital systems relinquish control over their schedules, personnel, and the EHR.
Private equity is now a regular buyer of physician practices. The same AMA survey found that 6.5% of physicians worked in PE-owned practices in 2024, up from about 4.5% in 2022. Among those physicians, 38% said their practice had been acquired in the past five years.
Most of these deals run through an MSO. The PE-backed management company buys the nonclinical assets and handles billing, staffing, and contracting, while physicians keep clinical control. A larger practice can become a private equity platform, the base for future add-ons. Smaller practices usually join as add-ons and are priced lower.
Selling medical practice to private equity groups rarely means a full cash exit on day one. Owners who sell medical practice equity to a platform often keep rollover equity, a stake that pays out if the platform sells later. Earnouts tie part of the price to future results. Post-sale employment terms set your pay going forward, often below what you drew as owner, since that difference helped fund the purchase price. Our healthcare M&A advisory team can model each piece before you sign.
The associate buy-out process is the more conventional method used by both sole and small practices. Your fellow practicing physician would buy into the practice over time and gradually, gaining minority interest initially, which allows the new doctor to be familiarized with the patient base. Another alternative is the merger with a larger group of physicians. You are absorbed into this practice as either an employee or partner.
Financing tends to be the sticking point, since younger physicians often carry student debt. Bank loans, SBA-backed loans and partial seller financing are common in this kind of medical practice acquisition. Our practice acquisition financing page explains how those structures work.
Selling a medical practice comes down to doing things in the right order. For example, signing an LOI before the books are clean often costs money later in diligence.
Each stage of our sale process follows this sequence, with your broker managing timing and buyer communication along the way.
Healthcare buyers spend much of due diligence on compliance, because problems they inherit can cost more than the practice itself. These are the areas they review most closely.
HIPAA and records custodianship. Patient records generally cannot simply be sold as property. According to the AAFP, the buyer typically becomes the records custodian, and patients keep the right to request a transfer of their records. The purchase agreement should name the custodian and set retention and access terms.
Stark Law and the Anti-Kickback Statute. Stark Law restricts physicians from referring Medicare and Medicaid patients for certain services to entities they have a financial relationship with, unless an exception applies. The Anti-Kickback Statute makes it a crime to pay or receive anything of value in exchange for referrals of federal healthcare program business. Buyers check that the price and your future pay are fair market value and commercially reasonable, so neither can be read as payment for referrals.
Corporate practice of medicine. Many states limit who can own a medical practice or employ physicians. The rules vary by state, and they are the main reason PE deals are built around an MSO.
Credentialing and malpractice tail. A change in ownership can mean new credentialing and payer enrollment, which can take months. If your malpractice policy is claims-made, you will likely need tail coverage once it ends.
Our due diligence checklist lists the documents buyers usually request.
Word of a sale can unsettle staff and send patients looking for a new doctor before anything is signed. Keep the circle small: your advisors, and perhaps a trusted office manager once diligence begins. Buyers sign NDAs, site visits happen after hours, and documents move through a secure data room. Tell staff after the definitive agreement is signed, ideally with the buyer in the room to answer questions about jobs and pay. Patients hear next, by letter, with the name of the incoming physician or owner, who holds their records, and how to request copies.
Physician-owners come to us for a clear process and plain numbers. Here is what that looks like in practice:
If you also own a distribution or manufacturing business, see our page on selling a medical supply or device company.
A valuation is a sensible first step, even if a sale is two years off. It shows what buyers are likely to pay today, which issues could pull the price down, and which type of buyer fits your plans. The conversation stays confidential, and there is no obligation to sell. When you are ready, speak with a medical practice broker at Website Closers and get a clear view of where your practice stands.
The price rests on adjusted EBITDA, measured after paying a physician a market-rate salary, and the multiple a buyer applies to it. Specialty, payer mix, size, and how much revenue depends on you all move that multiple. Small solo practices with thin profits often sell close to the value of their assets and receivables, while larger groups with management in place draw stronger offers.
Appraisers typically blend three methods: the income approach based on normalized earnings, market comparisons such as revenue rules of thumb, and the asset approach. Hospital and private equity buyers lean mostly on normalized earnings. For hospital deals, the valuation must also support fair market value. An independent appraisal gives you a figure you can defend during negotiation.
Plan on 12 to 24 months from first preparation to closing. Getting financials, contracts, and compliance in order can take several months on its own. After the practice goes to market, finding a buyer, signing an LOI, and completing due diligence commonly takes six months to a year. Credentialing and payer enrollment for the buyer can add time near the end.
Taxes depend mostly on how you structure the deal. In an asset sale, the price is split among goodwill, equipment, and other assets, and each category can be taxed differently. Goodwill is often treated as a capital gain, while some of the gain on equipment may be taxed as ordinary income. Stock sales, personal goodwill, and state taxes add more variables, so work with a CPA before you sign an LOI.
Patient records generally cannot simply be sold as property. In most sales, the buyer becomes the custodian of the records and keeps them under HIPAA. Patients keep the right to request a copy or a transfer to another provider. State rules govern notice and retention, so the purchase agreement should spell out who holds the records and how patients can reach them.
Yes. Solo practices change hands regularly, most often to an associate, a nearby physician group, or a hospital. The challenge is that much of the goodwill rests with one physician. Staying on for a transition period, introducing the buyer to patients, and documenting referral sources and staff roles all help keep more of that value in the final price.
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