How Much Does it Cost to Buy a Medical Practice in 2025

Thinking about how much to buy a medical practice? 

Whether you’re a physician stepping out on your own or a group looking to expand, the first question is always: What will it actually cost?

Buying a practice isn’t like purchasing a house or launching a startup. You’re acquiring a regulated, operational business with established patients, payer contracts, staff, systems, and clinical risk. 

Below, we break down current pricing benchmarks, how valuations really work, what you’re actually buying, and the “hidden” costs smart buyers plan for.

What does it cost to buy a medical practice in 2025?

There isn’t a universal price tag, but recent transaction data provides useful guardrails:

• Median sale price: $450,000
• Average earnings multiple (SDE multiple): ~2.21× seller’s discretionary earnings (SDE)
• Median revenue / median SDE of sold practices: ~$700,000 revenue / ~$225,000 SDE

These figures come from BizBuySell’s medical practice benchmarking based on 2020–2024 closed deals.

A quick example

If a practice’s normalized SDE averages $200,000, a market-level multiple of ~2.21× implies a value near $442,000. (More on SDE—and why getting it right matters—in a moment.)

Multiples vary by size and quality

Bigger, healthier practices tend to trade higher. For example, practices consistently generating $1.25M+ in annual revenue may command ~2.7× SDE or higher, while smaller clinics under $400k revenue often trade near ~1.4×. Specialty, payer mix, growth, and owner reliance also move the needle. BizBuySell

How are sale prices determined?

Most deals triangulate using three standard approaches:

1. Income Approach – Values the practice on expected future cash flows (commonly via SDE multiples for owner-operated practices, EBITDA for larger groups).
   
2. Market Approach – Benchmarks against comparable practice sales and listings in your market.
   
3. Asset Approach – Values tangible assets net of liabilities; used more often for distressed or low-goodwill practices.
   

SDE defined. Seller’s Discretionary Earnings = net profit plus add-backs such as one owner’s compensation, health insurance, certain non-recurring expenses, interest, depreciation, and amortization. Using a true, well-documented SDE is crucial because small changes get multiplied. BizBuySell

Other price drivers: patient retention and referral patterns, staff stability, payer mix and reimbursement rates, procedure mix, credentialing status, and whether the seller will stay post-close to help transition.

What exactly are you buying?

In an asset purchase (most common for small practices), expect some combination of:

• Goodwill & patient base (the largest value driver in many deals)
  
• Medical & office equipment (exam tables, diagnostics, IT hardware)
  
• Practice management & EHR systems/licenses
  
• Phone numbers, URLs, brand assets
  
• Lease assignment or real estate (sometimes purchased separately)
  
• Optional: Accounts receivable (A/R)—sometimes excluded, sometimes purchased at a negotiated discount
  

Your purchase agreement should spell out exactly what’s included, how A/R is handled, and any working-capital or A/R “true-ups.” M&A Healthcare Advisors

Note on structure: In some states, corporate practice of medicine rules restrict who can own a medical practice (e.g., requiring physician ownership or specific MSO structures). Get healthcare counsel early to ensure your deal structure complies. Association of Corporate Counsel

Beyond the price: what else should you budget for?

1) Legal, financial, and valuation costs

• Healthcare attorney to review entity structure, compliance, contracts, and lease.
  
• CPA/CFO diligence to validate revenue quality, add-backs, payer mix, DSCR, and tax structure.
  
• Independent valuation (optional) to benchmark price and forecast debt capacity.
  

2) Financing and interest costs

Most physician buyers use an SBA 7(a) loan or a conventional practice-acquisition loan. SBA 7(a) programs are widely used for goodwill-heavy acquisitions and offer longer terms. Small Business Administration

• Typical equity/down payment: With SBA 7(a), lenders frequently finance up to ~90–95% of total project costs (i.e., ~5–10% down), sometimes combining buyer equity with a seller note on standby. Conventional loans may require more. fnbsmallbusiness.comSBA 7(a) Loans
  
• Debt coverage: Lenders generally look for a Debt Service Coverage Ratio (DSCR) ≥ ~1.25× on historical cash flows. SBA 7(a) Loans
  

3) Working capital

Plan for several months of operating expenses (payroll, rent, supplies, insurance) to bridge reimbursement lags and credentialing timelines—even profitable practices can experience cash-flow dips during transition. ProMed Financial Inc.

4) Technology and compliance

Budget for EHR/PM migrations or upgrades, HIPAA risk assessments, license renewals, MFA/endpoint security, patient portal, website, and data migration.

5) Transition, marketing, and credentialing

Even if you keep the brand and staff, you’ll need patient communications, referral outreach, updated signage/website, and payer credentialing workstreams to protect volume.

6) Malpractice “tail” coverage (if applicable)

If the seller (or you) is moving off a claims-made policy, tail coverage can cost ~150%–300% of the annual premium, depending on specialty and history—plan for it in close logistics. Griffit Eharris

Is the practice a good buy? A practical checklist

Financial quality

• Recast SDE accurately (owner comp + add-backs) for the past 3 years; avoid double-counting or aggressive add-backs. BizBuySell
  
• Debt capacity: Under realistic interest rates/terms, target DSCR ≥ ~1.25× post-close (including your compensation).
  
• A/R & revenue quality: Review payer mixes, denial rates, refund liabilities, and A/R aging by payer and CPT group.
  

Clinical & operational durability

• Payer mix: Heavily Medicaid/low-reimbursing plans can compress margins; high commercial mix can support higher values.
  
• Procedure mix: CPT distribution, scheduling density, and coding patterns drive revenue per visit.
  
• Owner reliance: If goodwill is tied to one doctor, negotiate an effective transition plan and retention incentives.
  
• Team & lease: Key staff retention risk, compensation parity, and remaining lease term/escalations.
  

Legal & compliance

• Confirm CPOM constraints, Stark/AKS risks (if applicable), OSHA/HIPAA posture, and whether any past issues could follow you after close.
  

Fast valuation math you can sanity-check

1. Normalize SDE (3-year weighted average)
   
2. Apply an SDE multiple based on size, specialty, growth, and risk (typical small-practice range ~1.4×–2.7×+, with national average ~2.21×)
   
3. Adjust for working capital/A/R, capex needs, and any off-balance-sheet items (e.g., tail, deferred maintenance, IT).
   

Final thoughts

Buying a medical practice can be the fastest route to autonomy and growth – if the numbers pencil and the transition is managed well. Beyond the sticker price, budget for diligence, integration, technology, and a few months of working capital. Use a clean SDE, pressure-test DSCR, and structure the deal to comply with state practice-ownership rules.

If you’re serious about a target, we can help you validate the valuation, model debt service, optimize the tax structure, and plan the transition – so you buy a practice that pays you back.

Reach out for a one-on-one consultation, even if you’re just in the initial stages. We’ve helped dozens of doctors buy practices, we’ll make sure your deal is a smart one.