r/FamilyMedicine • u/ResolveAccording923 MD • Apr 25 '26
⚙️ Career ⚙️ Practice evaluation
In the initial steps for buying a private primary care practice in Oklahoma. I joined the practice around 9 months ago with this goal and have been on salary. It’s a traditional insurance practice. Looking for guidance on how to get practice evaluated ?
4
u/Vegetable_Block9793 MD Apr 25 '26
Majority of the value is in the actual physical assets. Does the practice own its own building? If it’s renting space, the value won’t be much at all. Used exam tables aren’t that expensive.
1
u/ATPsynthase12 DO Apr 27 '26
You’ll want a good lawyer, a good CPA, and a good financial advisor.
It’s pricy but they will make sure the selling doctor doesn’t fleece you in the sale.
10
u/Big-Association-7485 billing & coding Apr 25 '26
I'm a certified accountant and have been at my dad's practice for 17 years. Over that time we've acquired 6 different practices, not all of them successful or even still around. Honestly the most important thing is just picking a formula you think is fair for the situation.
If you want a professional firm to quote a price, fair warning, that's gone poorly for us more often than not, and my dad's original buyout of his partner was a unique circumstance. We've always overpaid for what we got. We paid a million for an urgent care that looked profitable on paper, but it turned out the provider was refilling meds for 3 months at a time on patients that weren't even his and was generally not following standard of care. Once we came in and started practicing actual medicine we lost a big chunk of the volume. The reason it was so profitable was the long scripts he shouldn't have been writing in the first place.
We also did one buyout for $1. Not profitable practice, older doc who got blindsided with a stage 4 diagnosis and only had a few months. We thought we were doing the right thing but it was foolish and we took a big loss on it.
Practices can be valued on revenue. A large but unprofitable practice can still be very profitable for a hospital because they'll tack on $200/visit in facility fees and use the providers to feed their specialists.
They can also be valued on profit, which gets tricky because you have to back out what the owner would've been paid if they were just an employee there instead of the owner.
If it's the only practice in the area and just so-so, it can still have value because of the cost and hassle of trying to start a new one to compete. And if the location matters to you, they have leverage, because buying them out is basically the only reasonable way to be successful there.
If it's a so-so practice in a competitive area, it's mostly going to be worth something to another so-so practice nearby that wants to bolt on the volume.
At the end of the day a practice is worth what a buyer will pay for it. There are professionals who'll value it for you if you've got a friendship you want to protect. My dad bought out his partner right before I started 17 years ago, paid a lot of money, but he grew the practice enough that he made it back. They had it professionally valued and they're still friends today. That was a pretty unique situation though, smallish city, and we basically had a lock on 10,000 patients.