Whether you're planning to retire, acquire another practice, or sell your practice to private equity, understanding how to accurately value a medical practice in New York is essential. It's one of the most financially consequential decisions a physician can make—and one of the most complex.
In New York, this decision comes with its own set of challenges: stricter regulations, mandatory transaction disclosures, and structural rules that don’t apply in other states. Add those to standard valuation considerations like earnings, payer mix, and provider dependency, and it’s easy to see why so many physicians miss out on the full value of what they’ve built.
This guide outlines how medical practices are valued, what factors drive that value in New York, and how to avoid costly mistakes, so you can approach this life-changing transaction with clarity and confidence.
What Makes a Medical Practice Valuable?
Medical practices aren’t valued like retail shops or manufacturing businesses. You’re not just selling equipment or a list of patients: you’re selling a service business with ongoing revenue, reliant on licensed providers and personal relationships. That means valuation is focused less on hard assets and more on sustainable earnings.
The most accurate and widely accepted method for valuing medical practices is the income approach. It’s based on adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) normalized to account for personal expenses, above- or below-market compensation, and other one-time items. This provides a clear picture of the true, transferable earnings potential of the business.
Multiples vary by specialty and performance, but practices with over $1 million in EBITDA tend to command stronger valuations, often 6x to 11x, because they present less risk and more scalability to buyers. Practices below that threshold may still transact at healthy valuations, but they’re often more sensitive to provider dependency and operational inefficiencies.
Other methods, like the market approach, asset approach, and rule-of-thumb multiples, can help round out the picture but are rarely accurate on their own. Market comps are limited and inconsistent. Asset values are often a fraction of the total business value. And rules of thumb (like valuing a practice at 0.5–1x annual revenue) ignore key drivers like profitability and payer mix. These shortcuts can be dangerous if used without deeper analysis.
Bottom line: Sustainable cash flow is king. The stronger and more predictable the earnings, the more attractive the practice is to buyers.
What Drives Value in Physician’s Practices in New York?
While national trends apply, several factors have an outsized impact on medical practice value in New York. Ignoring them can lead to inflated expectations—or missed opportunities.
- Reimbursement Landscape
In New York, payer mix matters. Commercial payers reimburse at significantly higher rates than Medicare. Practices with strong commercial coverage generally receive higher valuations than those dependent on government payers. Similarly, practices with favorable contracts, strong collection rates, and low write-offs tend to be viewed as more stable and scalable.
- Provider Risk
Is the practice tied to one physician, or does it have a team and systems that can operate without a single owner-doctor? Buyers will discount practices that depend heavily on one provider. Transition risk is real, and is always reflected in the valuation.
- Operational Efficiency
Buyers scrutinize overhead ratios, staff costs, and profitability benchmarks. Practices that outperform industry benchmarks are more appealing and justify higher prices.
- Location & Demographics
A full-service primary care practice with steady patient demand in a growing Westchester County suburb will attract far more buyer interest than a small rural clinic in upstate New York struggling with declining population and limited referral networks. Local demand, competitive density, and patient demographics all influence valuation.
- Specialty Considerations
Some specialties, including dermatology, cardiology, and ophthalmology—, tend to command higher multiples due to procedural revenue, ancillaries, and referral pipelines. But they can also come with added regulatory scrutiny or reimbursement risk. Buyers will factor in both.
- Regulatory Compliance
New York Public Health Law requires healthcare entities to submit written notice to the New York State Department of Health at least 30 days before closing any “material transaction”. A change of 10% or more ownership is considered material if it results in an entity increasing its $25 million or more in‑state gross revenues. While DOH does not formally approve the deal, failure to file timely can trigger civil penalties of $2,000 / day, which can escalate to $5,000 / day for serious violations.
Practices also must comply with New York’s corporate practice of medicine laws, which prohibit non-physicians from owning medical entities. Structuring around this typically requires a Management Services Organization (MSO), and even that can be fraught if not done correctly.
Valuations must account for these regulatory risks—both in timing and deal structure. A practice that’s well-positioned and compliant will transact faster and at better terms.
Dive Deeper: Buying Into a Medical Practice: Financial Planning Guide for Physicians
The Valuation Process: What to Expect (and Avoid)
A successful valuation starts months before a transaction. Preparation, documentation, and professional support can mean the difference between a deal that falls apart and one that builds long-term wealth.
Preparing to Sell a Medical Practice
Organize three to five years of clean financials, including tax returns and detailed P&Ls. Normalize earnings by separating business operations from personal expenses: travel, vehicles, family salaries, and other discretionary spending should be clearly adjusted. Compile key data like patient volumes, payer contracts, staff compensation, and equipment lists. For New York practices, include all relevant licensing and compliance documentation to avoid surprises later.
Professional Support
Medical practice valuations in New York come with unique complexities, from CPOM rules to Department of Health filing requirements. A generic, one-size-fits-all approach won’t cut it. You need a partner who understands how regulatory, financial, and operational details drive real deal value.
Common Mistakes:
- Relying on outdated revenue multiples or generic “rules of thumb”
- Ignoring provider risk or failing to build redundancy in leadership
- Misreporting earnings by failing to normalize owner comp
- Overlooking the DOH filing requirement and CPOM issues
Correcting these issues mid-deal is costly and delays closing. Fixing them in advance improves valuation and leverage.
How to Increase Your Practice’s Value Before You Sell
You don’t have to wait until a buyer shows interest to improve your valuation. The best outcomes happen when you start preparing several years in advance. During that time, you’ll want to take steps such as:
- Maximizing collections by reducing A/R aging and renegotiating payer contracts.
- Improving operational margins by benchmarking overhead and tightening processes.
- Reducing dependency on one physician through succession planning or additional hires.
- Ensuring regulatory compliance with current filings, contracts, and ownership structure.
- Timing your transaction around strong performance periods, not when profits dip or key staff leave.
These steps don’t just boost the selling price: they make your practice more attractive to strategic buyers, private equity platforms, and other acquirers who pay premiums for well-run, low-risk businesses.
Partner with Revonary: Experienced Accountants for Doctors
Valuing a medical practice in New York is as much an art as a science. It requires a deep understanding of the practice’s earnings potential, operational resilience, and regulatory compliance, all within the context of one of the most complex healthcare markets in the country.
At Revonary, we help physicians throughout New York navigate the valuation process with clarity and confidence. Whether you’re thinking about retirement, exploring a sale, or preparing for acquisition, our team of CPAs and healthcare advisors can help you maximize value and avoid costly missteps.
Reach out to Revonary today to schedule a consultation and take the first step toward a successful transaction.
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