How to Buy a Medical Practice in 2026

I've advised on dozens of medical practice acquisitions over the past decade, and I'll tell you this: buying a medical practice is one of the more complex small business transactions you can do. Between credentialing timelines, payer contract assignments, and the near-certainty that the selling physician is the practice's most valuable asset, there are landmines everywhere.

But when you get it right, medical practices are extraordinary businesses. Recurring patient relationships, third-party-payer revenue that's largely recession-proof, and significant barriers to entry. Here's how to buy one without blowing up the deal or overpaying.

What Medical Practices Actually Trade For

Before you start looking at listings, you need to understand the valuation landscape. Medical practices trade very differently depending on specialty, size, and buyer type.

Small physician-owned practices (under $3M revenue) typically sell for 3-6x SDE or 0.5-1.2x revenue. Primary care sits at the lower end — 3-4x SDE — because margins are thinner and reimbursement rates are under constant pressure. Specialty practices (dermatology, orthopedics, gastroenterology) command 5-8x EBITDA because they have higher margins, more ancillary revenue, and stronger moats.

If you're a PE-backed platform making add-on acquisitions, you're paying 4-7x EBITDA for bolt-ons. If you're an individual physician buying your first practice, you're looking at SDE multiples and thinking about debt service coverage. Either way, start with a proper valuation before you write a letter of intent.

Where to Find Practices for Sale

The best medical practice deals rarely hit public listing sites. That said, here's where to look:

• Healthcare-specific brokers— firms like TUSK Practice Sales, Health Care Appraisers, and PBG (Professional Business Group) specialize in physician practice M&A. They'll have off-market inventory.
• BizBuySell and DealStream — the generalist marketplaces have medical practice listings, but quality varies wildly. Filter for practices with financials attached.
• Specialty medical associations — organizations like the AMA, AAFP, and specialty-specific societies maintain practice transition resources and classified boards.
• Direct outreach — the most underrated strategy. Send letters to physicians over 55 in your target geography. A shocking number of them have no succession plan and will entertain a conversation.

Due Diligence That Actually Matters

Generic due diligence checklists miss the medical-specific items that make or break these deals. Here's what I focus on:

Payer contract assignment.This is the single biggest risk in any medical practice acquisition. Medicare, Medicaid, and commercial payer contracts are typically non-assignable — they're tied to the provider's NPI and tax ID. You need to verify that every major payer will credential you and execute new contracts before closing. I've seen deals fall apart 60 days post-LOI because a payer refused to contract with the buyer. Start the credentialing process the day you sign the LOI — it takes 90-180 days.

Revenue concentration by payer.Pull the aging report and calculate what percentage of revenue comes from each payer. If Medicare represents 60%+ of revenue, you're exposed to CMS rate changes. If one commercial insurer is 40%+, you're one contract renegotiation away from a margin squeeze. Healthy diversification means no single payer above 25-30%.

Provider productivity and billing patterns.Request a provider productivity report showing RVUs per provider, collections per visit, and CPT code mix. If the selling physician generates 70%+ of production, you have a massive key-person risk. Look at how the E&M coding distributes — a practice that bills 99215 on 80% of visits might be over-coding, which creates audit exposure.

Compliance history.Request the practice's HIPAA risk assessment, any OIG audit results, and malpractice claims history for the past five years. An unresolved compliance issue can become your liability post-close.

EHR and technology.What system are they on? If it's a legacy EHR with no interoperability, budget $50K-$150K for a migration. If they're on a modern system (athenahealth, eClinicalWorks, Epic), verify that the license transfers or what the new contract terms look like.

Deal Structure for Medical Practices

Most physician practice acquisitions are asset purchases, not stock purchases. You're buying the patient charts, equipment, trade name, non-compete, and goodwill — not the legal entity. This protects you from unknown liabilities (malpractice tail, tax issues, compliance exposure).

A typical deal structure for a $1.5M medical practice acquisition looks like:

• 60-70% at closing (cash from SBA loan or conventional financing)
• 15-25% seller note over 3-5 years (subordinated to the bank debt)
• 10-15% holdback or earn-out tied to patient retention at 12 months

The seller note is your leverage. It keeps the selling physician financially motivated during the transition period. If patients leave because the seller badmouths you or refuses to cooperate, the note balance adjusts. Every deal I structure includes this mechanism.

Financing the Acquisition

SBA 7(a) loans are the workhorse for physician practice acquisitions under $5M. The SBA will finance up to 90% of the purchase price at variable rates (currently Prime + 2.75% for loans over $350K), with 10-year terms. You'll need 10% equity injection, which can include a seller note on standby.

Key SBA requirements for medical practices: the practice must have been profitable for 2+ years, you must have relevant clinical experience (or hire someone who does), and the lease must have at least as many years remaining as the loan term. Lenders want to see a debt service coverage ratio of 1.25x or better.

For larger deals ($5M+), conventional bank financing or PE capital replaces SBA. Healthcare-focused lenders like Live Oak Bank, Provide (now part of Fifth Third), and Bank of America Practice Solutions understand medical practice cash flows and can move quickly.

The Transition Plan

Patient retention is everything. If you lose 30% of patients in the first year, you've effectively destroyed a third of the value you just paid for. The transition plan needs to be negotiated as part of the purchase agreement, not an afterthought.

Physician overlap period.Insist on a 6-12 month transition where the selling physician continues to see patients on a reduced schedule. This gives patients time to meet you, builds trust, and provides a warm handoff. Pay the seller a per-diem or percentage of collections during this period — it's worth every dollar.

Staff retention. The front desk staff and medical assistants ARE the continuity. Patients see the same faces, the billing keeps flowing, and institutional knowledge stays. Offer retention bonuses (typically $2K-$5K per key employee) contingent on staying 12 months post-close.

Patient communication. Send a joint letter from both physicians to every active patient within one week of closing. The selling physician endorses you, you introduce yourself, and you emphasize that nothing changes except the name on the door. Follow up with a phone call to the top 50 patients by revenue.

Mistakes That Kill Medical Practice Deals

Not starting credentialing early enough.If you're not paneled with the practice's major payers by closing day, you can't bill. That means zero revenue on day one. I've watched buyers hemorrhage $50K/month post-close because credentialing took longer than expected. Start the paperwork the week you sign the LOI.

Ignoring the corporate practice of medicine doctrine.In states like California, Texas, New York, and Illinois, non-physicians cannot directly own a medical practice. If you're a non-physician buyer (PE firm, search fund), you need a management services organization (MSO) structure with a friendly physician as the nominal practice owner. Get healthcare M&A counsel involved from day one.

Overpaying for goodwill in a solo practice.When one physician generates 90%+ of revenue, you're not buying a business — you're buying a job. The goodwill evaporates the day that physician walks out. Discount your offer by 20-30% for extreme owner dependency, or structure 30%+ of the price as an earn-out tied to post-close revenue retention.

Skipping the coding audit. Hire a compliance consultant to audit 6 months of billing records. If the practice has been upcoding or billing for services not documented, you inherit the False Claims Act liability. This $10K-$15K audit can save you millions in qui tam exposure.

The Bottom Line

Medical practice acquisitions reward thorough, patient buyers. The regulatory complexity and credentialing timelines scare away unsophisticated acquirers, which means less competition and better deals for those who understand the process. Get your financing pre-approved, start credentialing immediately, structure the deal to protect against patient attrition, and invest in a real transition plan. The practices I've seen succeed post-acquisition are always the ones where the buyer treated the transition as seriously as the transaction itself.