How to Value a General Dermatology Practice in 2026

General dermatology is one of the most sought-after specialties in healthcare M&A right now, and the reason is straightforward: patient demand far outstrips provider supply. The average wait time for a new derm appointment in the US is 35 days. In many markets, it's 60-90 days. That supply-demand imbalance creates pricing power, capacity constraints that function as barriers to entry, and a buyer pool that's deep and motivated.

But valuing a general dermatology practice (medical derm, skin cancer screening, acne, rashes — as distinct from cosmetic dermatology) requires understanding some dynamics that are unique to the specialty. I've worked on derm transactions from solo practices to 15-provider groups, and the valuation drivers are remarkably consistent.

The Multiple Range: 4-8x EBITDA

General dermatology practices trade at 4-8x EBITDA. The wide range reflects the enormous variation in how derm practices are structured and, critically, how much of the revenue is physician-dependent versus leveraged through mid-levels.

At the low end (4-5x), you find solo dermatologists generating $800K-$1.5M in collections, running lean operations with no mid-level providers, and where the physician personally sees every patient. The practice is essentially buying a job for another dermatologist, and the buyer prices in the risk that 20-30% of patients will leave when the selling doctor exits.

At the high end (7-8x), you find multi-provider groups with 2+ dermatologists and 3+ PAs or NPs, established referral networks, strong ancillary revenue (pathology, phototherapy), and EBITDA above $1M. These practices attract private equity-backed platforms like US Dermatology Partners, Forefront Dermatology, or regional roll-ups that are paying aggressively for quality practices.

Cosmetic dermatology practices command higher multiples (6-10x+), but that's a different article. General medical derm is valued on different economics: insurance reimbursement rather than out-of-pocket pricing, volume rather than ticket size, and referral relationships rather than patient marketing.

Visit Volume and Provider Productivity

Dermatology is a volume specialty. A productive dermatologist sees 40-55 patients per day, compared to 20-25 for most other medical specialties. That throughput is what makes derm economically attractive: high volume, moderate per-visit reimbursement ($120-$200 for a Level 3-4 E&M), and efficient use of provider time.

Buyers analyze your visits per provider per day as a key productivity metric. A dermatologist seeing 45 patients daily is operating at capacity. One seeing 28 patients daily either has a scheduling problem, a demand problem, or is spending too much time per patient. Buyers will want to understand why.

Total practice visit volume also signals capacity utilization. A practice seeing 150 patients per day across three providers has limited organic growth potential without adding space or providers. A practice seeing 80 patients per day in a facility built for 150 has upside that buyers value, sometimes more than current earnings.

New patient volume as a percentage of total visits matters too. General derm practices typically run 20-30% new patients. Below 15% suggests declining referral relationships or market penetration. Above 30% with strong retention indicates healthy demand, and that's exactly what platform buyers want to see.

Mid-Level Leverage: The Real Value Multiplier

The single biggest factor separating a 4x practice from an 8x practice is mid-level leverage— the ratio of physician assistants and nurse practitioners to dermatologists, and how effectively those mid-levels are utilized.

A dermatologist earning $500K who personally sees every patient generates $500K in production. That same dermatologist supervising two PAs who each see 35-40 patients per day generates $500K in personal production plus $700K-$900K in mid-level production. The PA compensation is $130K-$180K each. The incremental margin on mid-level production is enormous.

Buyers, especially PE platforms, are explicitly buying mid-level leverage. Their playbook is straightforward: acquire the practice, add PAs and NPs to handle routine medical derm (acne, eczema, rashes, follow-ups), redirect the dermatologist's time to higher-value procedures (biopsies, Mohs referrals, complex cases), and watch margins expand. A practice that has already built this model is worth more because the work is done.

The ratio buyers target is 2-3 mid-levels per dermatologist. If your practice has one dermatologist and zero mid-levels, the buyer sees the current earnings but also the cost and time (6-12 months) to recruit and ramp PAs. That gap reduces what they'll pay today.

Biopsy and Mohs Referral Patterns

General dermatology practices generate significant pathology revenue through skin biopsies. The average general derm practice performs 15-25 biopsies per provider per day. At $100-$250 per biopsy (technical component + professional component), pathology can represent 15-25% of total practice revenue.

Buyers look carefully at whether you perform pathology in-house or send it out. In-house dermatopathology (where the dermatologist or an employed pathologist reads the slides) generates substantially higher margins than sending biopsies to a reference lab. If you're already capturing pathology in-house, that's a significant value driver. If you're not, the buyer sees it as immediate post-acquisition margin improvement.

Mohs referral patterns are the other piece of the pathology puzzle. General derm practices that identify skin cancers refer those patients for Mohs micrographic surgery, either internally (if you have a Mohs surgeon) or externally. A practice referring 300+ Mohs cases per year externally represents a significant revenue capture opportunity that platform buyers will factor into their model. Some PE-backed groups acquire general derm practices specifically to redirect Mohs referrals to their existing Mohs surgeons.

What Kills General Derm Practice Value

Single-physician dependency. Owner dependency is amplified in dermatology because the physician-patient relationship is particularly strong in skin care. Patients with chronic conditions (psoriasis, eczema, skin cancer monitoring) often follow their dermatologist, not the practice. A solo practice without mid-levels faces 25-35% patient attrition risk upon sale, and buyers price that in aggressively.

Unfavorable payer mix. General derm is insurance-driven, and reimbursement rates vary dramatically by payer. A practice with 40%+ Medicare and significant Medicaid exposure faces reimbursement risk and lower per-visit economics than one with a strong commercial payer mix. Buyers run your payer mix against their reimbursement models, and a heavy government-payer book gets a lower multiple.

No ancillary revenue.Practices that do nothing but office visits and send all biopsies to an outside lab have thinner margins than those with in-house pathology, phototherapy (for psoriasis and eczema), or allergy patch testing. The absence of ancillary services isn't just a missed revenue opportunity — it signals to buyers that the practice hasn't been optimized, which can be good (upside) or bad (why hasn't anyone done this in 20 years?).

Declining referral relationships. General derm depends on primary care referrals. If your top referring PCPs are retiring, joining health systems that refer internally, or switching to telederm solutions, your new patient pipeline is at risk. Buyers analyze referral source concentration and trends, and deteriorating referral patterns are a red flag.

Preparing a Derm Practice for Sale

If you're 18-24 months from selling, the highest-impact move is hiring one or two PAs. Mid-level leverage transforms your economics and attractiveness to the buyers paying top multiples. It takes 6-9 months to recruit, credential, and ramp a PA to full productivity, so start now. Second, bring pathology in-house if you haven't already — the capital investment is modest ($50K-$100K), and the margin improvement is immediate. Third, clean up your referral tracking so you can show buyers 20+ referring practices with no single source exceeding 10% of new patients.

The Bottom Line

General dermatology practices trade at 4-8x EBITDA, with mid-level leverage being the single biggest determinant of where you fall in that range. The supply-demand dynamics in dermatology are as favorable as any medical specialty, and PE platforms are actively acquiring. But the practices commanding 7-8x are the ones that have already built the mid-level model, captured pathology in-house, and diversified beyond a single physician. If you're still a solo dermatologist seeing every patient yourself, you're leaving both current income and exit value on the table.