The buyer who pays the most for your practice is not always the one who shows up first. Here is how to find the right fit and maximize your outcome.
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The private practice landscape is contracting. As of 2024, only 42.2% of physicians work in private practices, down from 60.1% in 2012. For the first time on record, fewer than half of physicians work in practices with ten or fewer physicians. 527,700 physicians have moved from private practice to hospital or corporate employment in the past five years.
Only 35.4% of physicians currently have an ownership stake in their practice, down from 53.2%. That 18% decline represents an entire generation of independent providers leaving the sector. (Source: 2024 Physician Workforce Data)
The top three reasons physicians cite for selling: administrative burden, rising operational costs, and stagnant reimbursement rates. Brandon's take: these are solvable problems. The code to make private practice work as a business is crackable. That is exactly what Wellness Works is built to prove. Stop exiting too soon.
PE firms were involved in 73.7% of physician practice acquisitions between 2016 and 2020. Physician practice deals increased from 245 in 2019 to 535 in 2023. Healthcare deal values rose 17.7% year-over-year in 2024. Nearly 97.8% of practices that went through a PE exit were resold to another PE firm. The PE model is a freight train: acquire a platform practice, load smaller add-ons, and resell the combined entity at a higher multiple.
Health systems are absorbing practices through traditional employment models and joint venture partnerships. Insurance companies, retail health entities, and technology companies are entering the acquisition market. Franchise operators, especially in urgent care, are actively acquiring practices to bring under their brand. Understanding which buyer category fits your practice is step one of any exit strategy.
Practice-to-practice acquisitions remain common, driven by geographic expansion or specialty consolidation. Internal buyers, meaning existing partners, key employees, or family members, represent roughly 23% to 24% of acquisitions. If your team built the practice with you, they deserve a discount on the purchase price.
Engage healthcare investment banking advisors with active PE and health system relationships. Ask a business broker to pull a report of every acquisition in your market over the last 12 months. Create competition among buyers through a structured outreach process.
Private practices that defined a detailed ideal buyer profile, including buyer type and financial capability, completed sales 27% faster than those without a targeted buyer strategy. (Source: Medical Economics)
Lock in the multiplier before finalizing the EBITDA figure. Get the buyer to commit to a range first, then bring in independent audits to establish the EBITDA. Having a broker or advisor who knows the healthcare acquisition market increases your final sale price by an average of 23%.
Before entering any sale process, make sure your revenue cycle is clean and your financial reporting is airtight. Our medical billing services give you the documented performance history that supports a stronger multiplier at the negotiating table.
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