How to Buy an Internal Medicine Practice in 2026

Independent internal medicine is one of the last corners of American healthcare where a physician can still own their practice outright. Hospital systems have acquired the majority of primary care over the last fifteen years — depending on the market, 55-75% of internists are now employed rather than independent — and that consolidation is exactly why the remaining independent practices are worth buying. The sellers have real patient panels, real referral relationships, and often real revenue discipline that employed doctors don't.

I've advised on internal medicine acquisitions ranging from solo practices in rural Ohio to eight-physician groups in suburban Dallas. The mechanics are similar at both ends of the spectrum, but the valuation math and the financing picture are nothing like what you'd run on a dental or veterinary deal.

The Buyer Pools Are Not What You Think

There are really four buyers for an independent internal medicine practice, and each values it differently.

Another independent physician — usually a younger internist coming off an employed contract who wants autonomy. This buyer values the practice on SDE because they're underwriting it as an owner-operator job. Multiples typically run 1.5-2.5x SDE, sometimes lower if the seller is the only provider and heavily owner-dependent.

A physician group consolidator — groups like Privia, Agilon, VillageMD, and Oak Street Health that are rolling up primary care, often with a value-based care or Medicare Advantage thesis. These buyers pay 4-7x EBITDA, sometimes higher if the practice has a meaningful Medicare Advantage panel, because they monetize the patient list through risk contracts you can't access on your own.

A hospital system — hospitals typically don't pay much for the practice itself. They pay for the referral stream. Deals are often structured as asset purchase plus a multi-year employment agreement with a salary in the $260K-$340K range for internal medicine, plus WRVU bonuses. The transaction value looks like 0.5-1.5x revenue on the paper, but the real value is in the employment contract.

Private equity primary care platforms — still relatively active in attractive metros, paying 5-8x EBITDA for practices with strong Medicare Advantage exposure.

If you're an individual physician buyer, you're competing against all of these. The seller's expectations are usually anchored to whichever offer they received first — know what the other bids look like before you negotiate.

The Panel Transfer Problem

The single biggest risk in buying a primary care practice is panel attrition. Unlike dermatology or orthopedics, where patients come in for a specific procedure and then leave, internal medicine is built on long-term relationships. Patients have been seeing Dr. Seller for fifteen years. When Dr. Seller retires, a predictable percentage of them leave.

The industry benchmarks I use: expect 10-15% panel attrition in year one when the new physician has been introduced by the seller during a 60-90 day transition, up to 25-35% attrition when the seller disappears abruptly or the new physician is poorly matched to the patient demographic. Seniors with multiple chronic conditions are the stickiest; healthy 35-year-olds with annual physicals are the most likely to leave.

Price the attrition into your offer. If the practice generates $1.2M in collections and you believe you'll lose 15%, underwrite against $1.02M. Don't let the seller price the practice on trailing twelve months and then absorb the loss yourself.

The transition period itself is leverage. A six-month transition with the selling physician co-seeing patients, personally introducing you, and sending a formal letter to the entire active panel is worth substantial value. Make it a closing condition, not a handshake agreement. I've seen sellers promise a transition and then move to Florida in week six.

Payer Credentialing: The 120-Day Problem

You cannot bill Medicare, Blue Cross, United, Aetna, or Cigna under your NPI until those payers have individually credentialed you at the new practice. The process takes 60-120 days for Medicare, 90-180 days for commercial payers. During that window, claims submitted under your name will be denied.

This creates a real cash flow problem on day one of ownership. There are three ways to handle it, and every buyer needs to pick one before closing.

Option 1: Locum arrangement with the seller. The selling physician continues as a locum tenens for 90-120 days. Claims are billed under their NPI and reassigned to your new TIN. This is legal for up to 60 days of absence under Medicare's reciprocal billing rules, longer under locum tenens rules (up to 60 continuous days per physician). Your counsel needs to confirm the structure — Medicare is strict about it.

Option 2: Keep the seller's entity alive. Structure as a stock purchase or membership interest acquisition rather than asset purchase. The practice entity and its provider agreements survive. This is the cleanest solution but creates successor liability exposure — you inherit any prior malpractice, billing, or HIPAA liabilities. Tail insurance and robust reps are essential.

Option 3: Pre-closing credentialing. Start credentialing 120-150 days before closing, using the seller's TIN as your billing address with their consent. Requires seller cooperation and a willing set of payers. Doable but tedious.

Whatever you choose, pad your working capital by at least 90 days of operating expenses. A solo internal medicine practice burns $60K-$90K per month. You need $200K-$300K of accessible cash at closing to survive the credentialing gap without skipping payroll.

How to Value the Practice

Start with trailing twelve months collections (not charges — collections). For a solo internal medicine practice collecting $1.0M-$1.8M, the practice is almost certainly valued on SDE, because the buyer pool is another physician and the lender (almost always SBA) underwrites to SDE coverage.

Build SDE this way: net income plus owner W-2 compensation plus owner benefits plus discretionary spend plus interest and depreciation, minus a fair-market replacement salary adjustment if the owner worked less than 4 days a week. A practice where the owner worked 3 days and collected $1.1M is not the same as one where the owner worked 5 days — the first has operational leverage a new full-time buyer can capture.

Typical solo internal medicine SDE margins run 22-32% of collections. A $1.2M practice should show $260K-$380K in SDE. Below 20% margin is either a staffing problem, a payer mix problem, or sloppy expense management — usually all three. Above 35% is often the owner underpaying themselves or running personal expenses through the practice; scrutinize it.

Apply 1.5-2.5x to SDE. The drivers of where you land in that range: panel stickiness (how long has the average patient been active), payer mix (Medicare and commercial good, Medicaid bad for solo economics), provider continuity (multiple providers reduces owner dependency), EHR quality (Athena, eClinicalWorks, and Epic are fine; a homegrown or abandoned system is a $50K-$100K replacement project), and building ownership (practice real estate is valued separately but strengthens the deal).

Hospital Employment as an Alternative

Before you commit to buying, run the math on a hospital employment offer as a comparison. A typical internal medicine employment package in 2026 looks like: $260K-$320K base salary, $20K-$50K signing bonus, WRVU production bonus above a threshold (usually 4,800-5,200 WRVUs), $10K-$20K CME allowance, full benefits, and paid malpractice with tail coverage. No call for most outpatient positions.

Compare to ownership: let's say you buy the $1.2M practice for $550K (1.7x SDE of $325K), finance $495K at SBA 7(a) terms (prime + 2.75%, 10-year am), and generate $325K in SDE. Debt service eats about $75K annually, leaving $250K of take-home. That's less than employment in year one, and you're carrying the operating risk.

Ownership wins over a 5-10 year horizon for three reasons: practice value appreciation (if you can add a provider or shift payer mix), real estate appreciation if you buy the building, and optionality to sell to a consolidator at 5-7x EBITDA in year 7-10 as primary care PE activity continues. Employment wins if you want predictable income and no operational headaches. Both are legitimate choices. Don't assume ownership is automatically better.

Due Diligence Checklist

• Collections reports by payer, last 36 months. Pull directly from the PM system, not the accountant's summary. Look for payer concentration and Medicaid percentage.
• Active patient count by visit recency. Industry standard: patient seen in prior 18 months. A panel of 1,800-2,500 active patients is healthy for a solo internist.
• Provider productivity by WRVU. Benchmark against MGMA medians. A productive internist runs 5,000-6,500 WRVUs annually.
• Payer contracts and fee schedules. Some contracts don't assign. Blue Cross in particular sometimes requires re-negotiation at the new TIN, and the new rates may be lower than the seller's grandfathered rates.
• Billing compliance audit. Pull 50 random encounters and verify coding matches documentation. E/M coding errors are the most common source of repayment liability.
• Malpractice claim history and tail coverage. Seller should purchase tail or you need occurrence-based policy. Non-negotiable.
• Lease term and assignment. Match to loan amortization — SBA wants 10 years of lease for a 10-year note.
• Staff retention. The practice nurse or MA with 10 years of tenure is often more important to patient retention than the physician. Budget retention bonuses.

Financing the Deal

Primary care practices are reliably financeable through SBA 7(a) loans up to $5M. Live Oak Bank, Bank of America Practice Solutions, and Huntington are the most active lenders for physician practice acquisitions. Typical structure: 10% buyer equity, 5-10% seller note on standby, 80-85% SBA 7(a) at prime + 2.75% on a 10-year amortization.

SBA underwriting requires 1.2x DSCR on the historical cash flow, post-adjustment. For a $550K loan at current rates, annual debt service runs about $75K, so you need $94K of post-buyer-salary SDE to clear the coverage test. Every practice I described above clears it easily — primary care is one of the easiest healthcare deals to finance.

Before you make an offer, run the practice through our valuation calculator to see where the purchase price falls relative to comparable internal medicine transactions. Anchoring the negotiation in market data — not the seller's desired retirement number — is how you avoid overpaying for the wrong panel.