The trend in physician practice acquisitions continues.
- Hospitals and health systems continue to acquire physician practices to expand their networks and create integrated healthcare delivery systems.
- Private equity firms see potential in consolidating practices, achieving economies of scale, and optimizing operational efficiency. Private equity involvement can bring capital investment, management expertise, and resources to support practice growth.
- Administrative burdens, regulatory complexities, and financial pressures are driving many physicians to choose employment over independent practice ownership.
- There is a growing trend of specialty-specific acquisitions, particularly in areas like dermatology, ophthalmology, orthopedics, and gastroenterology.
- Acquiring physician practices also enables healthcare organizations to integrate ancillary services such as imaging centers, ambulatory surgery centers (ASCs), and diagnostic facilities.
It’s interesting to note that surgical specialty practices sell for an approximate 26% premium to primary care practices. In addition, “size matters”. The larger the EBITDA of the target practice, the larger the acquisition multiple. For example, a specialty practice with $500k in annual EBITDA trades for around 7.8x multiple while a larger practice with EBITDA of $8.0M trades for around a 12x multiple.