What does a medical practice valuation cost?
A practice valuation is a written estimate of fair market value prepared by a credentialed appraiser for sale, partner buy-in, divorce, estate, or financing purposes.
Quick answer
A formal medical practice valuation typically costs $5,000 to $25,000 depending on practice size, valuation purpose, and whether a calculation engagement or full opinion is required.
The detail
The American Society of Appraisers and NACVA define three engagement levels that drive cost. A calculation engagement uses limited procedures and runs $3,500 to $8,000. A summary valuation report runs $7,500 to $15,000. A full conclusion of value with a detailed report runs $15,000 to $40,000 and is required for litigation, IRS filings, and most fairness opinions. Healthcare adds complexity because of Stark and Anti-Kickback fair market value requirements, which often force the use of a healthcare-specialized appraiser at the upper end of the range. For a typical $3M to $10M outpatient clinic, expect $8,000 to $18,000 for a defensible report you can use in a partner transaction or third-party sale process. Less formal opinions of value from M&A advisors or fractional CFOs can be much cheaper but should not be substituted for a written appraisal in regulated contexts.
NACVA and ASA recognize three engagement levels: calculation, summary, and conclusion of value.
Source: NACVA Professional Standards
Stark Law and Anti-Kickback Statute compliance requires fair market value documentation for most physician compensation arrangements.
Source: CMS Stark Law
Most healthcare practice valuations use three approaches: income, market, and asset-based.
Source: AICPA SSVS No. 1
What this means for clinic owners
From Sorso
If you are within three years of selling, get a baseline valuation now. The $10,000 you spend identifies value drivers and add-back opportunities that typically move the final purchase price by 5 to 15 percent. That ROI is hard to match anywhere else in the business.
Related questions
What is the average EBITDA multiple for dental practices?
Dental practices typically sell for 5x to 8x EBITDA for single-location and add-on acquisitions, and 8x to 11x EBITDA for multi-location DSO platforms, depending on growth, payer mix, and provider retention.
What is the average EBITDA multiple for PT clinics?
Physical therapy clinics typically sell for 5x to 7x EBITDA for single-location and add-on acquisitions, and 7x to 9x EBITDA for multi-location platforms with $1M+ in EBITDA.
How do PE firms value medical practices?
Private equity firms value medical practices primarily on a multiple of trailing twelve-month adjusted EBITDA, typically 5x to 12x, with the multiple driven by scale, growth, payer mix, and provider retention.
What are EBITDA add-backs in practice valuation?
EBITDA add-backs are non-recurring or owner-related expenses added back to reported EBITDA to show normalized earnings, typically increasing reported EBITDA by 10 to 30 percent in owner-operated practices.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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