Healthcare Valuation Template

Start with the Practice Inputs sheet. Pull your trailing twelve-month net collections report from your billing system — not gross charges, but actual collected amounts after contractual adjustments and write-offs. You'll also need your income statement broken down by expense category, your payer mix report (percentage of revenue from each payer), and a list of major equipment with estimated ages. This data entry takes 45–60 minutes if your billing software generates standard reports. Payer mix is the one data point most practice owners underestimate in importance — it directly affects which multiple range you fall into and how buyers price your reimbursement risk.

Work through the SDE Multiple Approach for smaller practices or the EBITDA Multiple Approach if your practice has multiple physicians or is growing toward institutional buyer territory. In both cases, the physician compensation normalization is the step that requires the most thought: you're separating what you earn as an owner from what a replacement physician would cost in your market. Then complete the Value Drivers Scorecard, scoring each dimension honestly. Most practice owners score themselves above average on patient relationships and below average on billing efficiency — make sure to pull your actual clean claim rate and AR days before scoring those categories.

Review the Valuation Summary sheet to see all methods side by side. For most private practices, you'll use this output in one of two contexts: planning a retirement sale in 3–7 years, or evaluating a DSO or health system acquisition offer that arrives unexpectedly. In the first case, the value drivers scorecard tells you exactly where to focus operational improvement over the next few years. In the second case, the sensitivity table lets you evaluate whether an incoming offer is near the high end, midpoint, or low end of a reasonable range — before you engage the acquirer's advisors, who are paid to justify a lower number.

Healthcare practice valuations use SDE multiples for smaller owner-operated practices and EBITDA multiples for larger groups, but the ranges vary significantly by specialty. A solo family medicine physician carrying a Medicare-heavy patient panel might value at 0.6–0.8x net collections. A four-physician gastroenterology practice with an ambulatory surgery center, strong commercial payer contracts, and a full procedure schedule can command 6–8x EBITDA. The most important variable isn't specialty alone — it's the combination of payer mix quality, recurring procedure revenue, and what happens to the practice if the selling physician leaves. Practices where the owner is one of several providers fare far better in any transaction than solo practices built entirely around the seller's relationships.

Payer mix is the variable that healthcare buyers scrutinize most. Medicare and Medicaid reimbursement rates are set by regulation and typically 20–40% below commercial rates for the same service. A practice with 60%+ government payer revenue has lower revenue quality than one with a commercial-dominant mix, and buyers price that risk directly into the multiple. Billing efficiency matters almost as much: practices with AR days over 60, denial rates above 10%, or net collection rates below 92% are leaving money on the table — and buyers assume they'll have to fix these problems post-acquisition, which reduces the price they're willing to pay. The value drivers scorecard in this template quantifies the impact of these factors on your multiple.

The buyer universe for healthcare practices has expanded significantly with DSO-style platforms in specialties beyond dentistry — dermatology, ophthalmology, gastroenterology, orthopedics, and behavioral health have all seen PE-backed rollup activity. These platforms pay higher multiples than individual physician buyers because they're acquiring recurring cash flow at scale and can spread overhead across many locations. If your specialty has active PE consolidation, it's worth knowing what those buyers are paying before you agree to any single-buyer process. Running through this valuation template annually, starting several years before a planned exit, gives you both a realistic price anchor and a clear roadmap for which operational improvements will move your multiple the most.