How to Buy a Medical Practice in 2026: A Step-by-Step Guide

Buying an existing medical practice is one of the fastest and most financially efficient paths to practice ownership. Instead of spending twelve to eighteen months building a patient base from zero, you acquire one. Instead of operating at a loss for the first three to six months while credentialing and marketing ramp up, you walk into a practice that is already generating revenue on day one. Instead of guessing whether your location and specialty will attract sufficient volume, you can evaluate years of financial data before committing.

It is also one of the most complex transactions a physician will ever navigate. The purchase price of a medical practice typically ranges from 40 to 70 percent of annual collections for smaller practices, and can reach well into the millions for multi-provider groups in high-demand specialties. The due diligence required to evaluate whether a practice is worth its asking price touches every aspect of the business: financial performance, payer mix, patient demographics, lease terms, staff quality, equipment condition, compliance history, and the seller’s willingness to support a smooth transition. A mistake at any point in this process, an overpayment, a missed liability, a poorly structured deal, can cost you hundreds of thousands of dollars and years of financial recovery.

This guide walks through every major step of buying a medical practice, from deciding whether acquisition is right for you through closing the deal and transitioning into ownership. Whether you are finishing residency, leaving an employed position, or expanding an existing practice through acquisition, this is the roadmap.

Decide Whether Buying Is Right for You

Buying a practice has significant advantages over starting from scratch, but it is not the right move for every physician.

The primary advantage of buying is speed to revenue. An established practice comes with an existing patient base, active payer contracts, trained staff, operational workflows, and a physical location that is already built out. You do not face the credentialing gap that costs new practices months of lost revenue, because the practice’s payer enrollments are already in place and can often be transferred or reassigned during the transition. In many cases, a well-purchased practice generates positive cash flow from the first month of ownership.

The primary disadvantage is that you inherit everything, including the problems. A practice with declining patient volume, an unfavorable payer mix, an expensive lease on terms you cannot renegotiate, outdated equipment, or a culture that patients associate with the departing physician presents risks that do not exist when you start fresh. Buying a struggling practice at a discount can be a smart move if you understand exactly why it is struggling and have a realistic plan to fix it. Buying a struggling practice because the price looks attractive without understanding the root causes is one of the most expensive mistakes a physician can make.

You also give up some of the control that comes with building from the ground up. The practice’s location, layout, systems, branding, and reputation already exist. Changing them takes time and money. If you have a very specific vision for your practice, from the floor plan to the patient experience to the technology stack, starting fresh may give you a result more aligned with what you want to build.

For most physicians, the math favors buying. The revenue you generate in the months you would have otherwise spent building a startup typically exceeds the premium you pay for an established practice. But the math only works if you buy the right practice at the right price with the right deal structure.

Build Your Advisory Team Before You Start Looking

Do not begin evaluating practices until you have assembled the team that will guide you through the process. The physicians who close successful acquisitions almost always have experienced advisors. The ones who overpay, miss critical issues in due diligence, or sign unfavorable deal terms are almost always the ones who tried to navigate the process alone.

At minimum, you need a healthcare attorney who specializes in practice transactions. This is not a general business attorney. Healthcare acquisitions involve regulatory requirements, Stark Law and Anti-Kickback Statute considerations, payer contract assignments, HIPAA obligations, and entity structuring decisions that a general attorney is not equipped to handle. Your attorney will review the purchase agreement, negotiate terms, conduct legal due diligence, and ensure the transaction is structured to protect your interests.

You need a CPA who specializes in medical practices. Your CPA will analyze the practice’s financial statements, normalize the seller’s reported earnings to determine the practice’s true profitability, evaluate the tax implications of the deal structure (asset purchase versus stock or equity purchase), and advise on entity formation and tax planning for the acquisition.

You need a practice appraiser or valuation expert. The seller will have their own opinion of what the practice is worth. That opinion is almost always higher than the actual market value. An independent valuation, conducted by someone with no stake in the outcome, gives you an objective basis for negotiation. A formal practice valuation typically costs $5,000 to $15,000 depending on the complexity of the practice, and it is one of the best investments you will make in the entire process.

You may also benefit from a practice broker who can help you identify acquisition opportunities in your target market, though brokers typically represent the seller, not the buyer, so understand whose interests they are serving. Some physicians work with a practice management consultant who can evaluate the operational health of a target practice and help plan the post-acquisition transition.

Hire these people before you sign a letter of intent. The cost of professional guidance is small compared to the cost of overpaying for a practice, missing a hidden liability, or structuring a deal that creates unnecessary tax exposure.

Understand How Practices Are Valued

Practice valuation is where most first-time buyers feel the most uncertainty, and where the most money is at stake. Understanding the basic approaches to valuation protects you from overpaying.

Percentage of collections is the simplest and most commonly used method for smaller physician practices. The practice is valued at a percentage of its annual gross collections, typically 40 to 70 percent. A primary care practice collecting $800,000 per year might be valued between $320,000 and $560,000 under this method. This approach is quick and provides a useful sanity check, but it ignores profitability. Two practices with identical collections but very different overhead structures have very different values to a buyer. A practice collecting $1 million with 55 percent overhead is far more valuable than one collecting $1 million with 75 percent overhead.

EBITDA multiples are the method that serious buyers and lenders prefer. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. To determine the practice’s adjusted EBITDA, you start with reported earnings and add back the seller’s compensation above a market-rate replacement salary, one-time expenses, discretionary spending, and non-recurring items. This gives you the practice’s true cash flow to the owner. You then multiply that number by an industry-appropriate factor.

For smaller single-physician practices, EBITDA multiples typically range from 3 to 6 times. For mid-size multi-provider practices, multiples range from 6 to 9 times. For larger platform-level practices in high-demand specialties like dermatology, cardiology, or orthopedics, multiples can reach 10 to 15 times, driven largely by private equity demand. The appropriate multiple for any given practice depends on its size, specialty, payer mix, growth trajectory, geographic market, and the competitive landscape among buyers.

Asset-based valuation looks at the fair market value of the practice’s tangible assets, including equipment, furniture, supplies, and leasehold improvements, plus an estimate of intangible value (goodwill). Goodwill represents the value of the patient base, reputation, referral relationships, and assembled workforce. In many smaller practice transactions, the majority of the purchase price is allocated to goodwill.

Do not rely on the seller’s asking price as an indicator of value. Sellers have an emotional attachment to their practice and a financial incentive to maximize the sale price. They often conflate the practice’s revenue with its value, or they inflate the asking price based on what they need for retirement rather than what the practice is actually worth. Always get an independent valuation before making an offer, and use that valuation as the foundation for your negotiation.

Conduct Thorough Due Diligence

Due diligence is the most important phase of the entire acquisition process. It is your opportunity to verify every claim the seller has made, uncover problems that are not visible from the outside, and confirm that the practice is worth what you are being asked to pay.

Financial due diligence should include a review of at least three to five years of tax returns, profit and loss statements, balance sheets, accounts receivable aging reports, and collection reports by payer. Look for revenue trends. Is the practice growing, flat, or declining? What are the collection rates by payer? What percentage of revenue comes from commercial insurance versus Medicare versus Medicaid versus self-pay? A practice heavily dependent on a single payer or a single referral source is riskier than one with a diversified revenue base. Look at accounts receivable aging. A practice with a large amount of receivables over 90 days may have billing or collection problems that will become your problem after the acquisition.

Operational due diligence covers staffing, workflows, technology, and compliance. Review employee compensation, tenure, and roles. Are key staff likely to stay through the transition? High turnover or a workforce that is loyal to the departing physician and likely to leave represents a significant risk. Evaluate the electronic health record system and practice management software. If the current systems are outdated, factor the cost of upgrading or replacing them into your acquisition budget. Review OSHA and HIPAA compliance records. Outstanding violations or inadequate compliance programs are liabilities you will inherit.

Payer and credentialing due diligence is critical and often overlooked. Review every payer contract. What are the reimbursement rates? Are any contracts up for renewal or renegotiation? Are any payers known to be reducing rates or narrowing networks in this market? Understand how credentialing will transfer. In many cases, the practice’s payer enrollments are tied to the selling physician, and you will need to go through your own credentialing process to be added to those contracts. If you are not already credentialed with the practice’s major payers, start that process immediately, even before the deal closes, because a gap in credentialing means a gap in revenue.

Lease due diligence is one of the areas where buyers most often get surprised. Review the current lease terms, including the remaining term, the renewal options, the rent escalation schedule, and any restrictions on assignment or transfer. If the lease is expiring soon and the landlord is not willing to offer favorable renewal terms, the practice’s location, which may be a significant part of its value, is at risk. If the lease has above-market rent that you cannot renegotiate, that excess cost reduces the practice’s value to you. If the seller owns the building, the real estate transaction should be evaluated separately from the practice transaction.

Legal due diligence includes reviewing all contracts (vendor agreements, equipment leases, service agreements), any pending or threatened litigation, malpractice claims history, and compliance with healthcare regulations. Your healthcare attorney should lead this process.

Do not rush due diligence. The pressure to close quickly is real, especially if there are competing buyers, but the cost of discovering a major problem after you have signed is always greater than the cost of taking an extra few weeks to get it right.

Structure and Finance the Deal

How you structure the deal has significant implications for your taxes, your risk exposure, and your ongoing relationship with the seller.

Asset purchases are the most common structure for smaller practice acquisitions. You purchase the practice’s assets, including equipment, patient records, goodwill, and the right to assume the lease, but you do not purchase the legal entity itself. This means you generally do not inherit the seller’s liabilities, including any unknown debts, pending lawsuits, or tax obligations. Asset purchases also allow you to “step up” the basis of the acquired assets for depreciation purposes, which provides tax benefits. Most healthcare attorneys recommend asset purchases for physician-to-physician transactions.

Entity purchases (buying the stock or membership interests of the practice’s legal entity) are more common in larger transactions or when the practice holds assets that are difficult to transfer, such as certain payer contracts or government program enrollments. The disadvantage is that you inherit all of the entity’s liabilities, known and unknown.

Financing for practice acquisitions is available through several channels, and physicians are among the most favorable borrowers in the eyes of lenders.

SBA 7(a) loans are the most commonly used financing vehicle for medical practice acquisitions. They offer competitive interest rates, typically in the 7 to 12 percent range, with repayment terms of up to 10 years for practice acquisitions. SBA loans can cover the purchase price, working capital, and equipment upgrades in a single facility. The application process requires extensive documentation, including financial statements, tax returns, a business plan, and an independent practice appraisal, and typically takes 30 to 75 days to close. In fiscal year 2026, over 10 percent of all SBA 7(a) loans have been issued to healthcare businesses, reflecting the strength of medical practices as borrowing profiles.

Conventional bank loans from healthcare-specialized lenders often offer competitive rates for physicians with strong credit and a demonstrated ability to service the debt from the acquired practice’s revenue. Several major banks, including Bank of America, Wells Fargo, and U.S. Bank, offer physician-specific lending programs that recognize the unique financial profiles of medical professionals.

Seller financing is common in practice acquisitions and can be a valuable component of the deal structure. The departing physician carries a note for 20 to 40 percent of the purchase price, with the buyer making payments over three to ten years. Seller financing aligns the seller’s interests with a successful transition, because they only get paid if the practice continues to perform. It also reduces the amount of bank financing required, which can make the deal more feasible for buyers who are early in their careers.

Most successful acquisitions use a combination of bank financing and seller financing, with the buyer contributing minimal personal capital. Healthcare lenders understand that physicians typically have high student loan debt and limited savings in the early career years, and they underwrite based on the practice’s cash flow rather than the buyer’s personal balance sheet.

We have vetted healthcare lenders and real estate professionals across the country who specialize in practice acquisitions, and we match physicians with the right financing partners for their market, deal size, and situation.

Plan the Transition

The transition period between closing the deal and establishing yourself as the practice’s new physician is the highest-risk phase of the acquisition. Patients leave, staff leave, and referral relationships weaken if the transition is not managed carefully.

Negotiate a seller transition period. The single most valuable thing the selling physician can do for you is stay for 30 to 90 days after the sale to introduce you to patients, facilitate warm handoffs, and provide continuity of care. Lenders view seller transitions favorably because they reduce the risk of patient attrition. The purchase agreement should specify the length of the transition, the seller’s role and compensation during that period, and a non-compete clause that prevents the seller from opening a competing practice nearby after they leave.

Communicate with patients early and clearly. Patients need to know that the practice is continuing and that their care will not be disrupted. A letter from the departing physician introducing you and endorsing the transition is one of the most effective patient retention tools available. It should go out before the transition happens, not after.

Retain key staff. The front desk team, medical assistants, and office manager know the patients, the workflows, and the operational details that keep the practice running. Losing them during the transition creates disruption that directly impacts patient experience and revenue. Have individual conversations with key staff members before the deal closes. Understand their concerns. Offer continuity of employment and, if appropriate, modest retention incentives to ensure they stay through the transition period.

Notify payers and update credentialing. Work with your credentialing team or credentialing company to ensure that your provider enrollment with each payer is in process well before the closing date. If there is a gap between when the selling physician’s enrollment terminates and when yours becomes effective, you cannot bill those payers during that window. This is one of the most common and most expensive transition mistakes, and it is avoidable with early planning.

Update everything. DEA registration, state licenses, NPI linkage, malpractice insurance, CLIA certificates if applicable, business licenses, bank accounts, merchant services, vendor contracts, and insurance policies all need to be transferred or reestablished in your name. Create a checklist and start working through it weeks before closing, not after.

Red Flags in a Practice Acquisition

Not every practice that is for sale is worth buying. Certain patterns should cause you to slow down, dig deeper, or walk away.

Declining patient volume without a clear explanation. If the practice has lost 15 to 20 percent of its patient volume over the past two to three years, you need to understand why. A physician who has been winding down in preparation for retirement may explain some decline, but a practice that is losing patients to competitors, losing referral relationships, or losing volume due to poor online reputation has structural problems that will not resolve simply because you take over.

Heavy dependence on a single payer or referral source. A practice that derives 50 percent or more of its revenue from a single insurance company or a single referring physician is vulnerable to disruption. If that payer reduces rates or that referral source redirects patients, your revenue drops dramatically with no immediate way to replace it.

An unfavorable or short-term lease. If the lease expires within one to two years of the acquisition and the landlord has not committed to renewal terms, the practice’s location, which is often the foundation of its patient base, is at risk. If the lease has above-market rent, that cost differential reduces the true value of the practice.

The seller wants a fast close with limited due diligence. A seller who resists providing financial records, rushes you through the process, or objects to an independent valuation is a seller who may be hiding problems. Due diligence exists to protect you. Never let urgency or competitive pressure cause you to skip it.

Significant staff turnover or a disengaged workforce. If key staff members are already looking for other jobs or express uncertainty about staying through a transition, you may be buying a practice that will need to be partially rebuilt from an operations standpoint. Staff turnover during a transition accelerates patient attrition and increases costs.

Outstanding compliance issues. Unresolved OSHA violations, HIPAA deficiencies, billing irregularities, or malpractice claims are liabilities that transfer to you in an entity purchase and can create operational and financial problems even in an asset purchase if they affect the practice’s reputation or payer relationships.

The asking price is based on potential rather than performance. A seller who values the practice based on what it could earn with a few changes rather than what it has actually earned is not offering you a fair price. You are buying the practice as it is today, not as the seller imagines it could be. Pay for performance, not potential.

How We Help Physicians Buy Practices

At New Practice Guide, we work with physicians across the country who are evaluating whether to buy or start a practice, and we guide them through both paths. For physicians pursuing acquisitions, we connect them with the advisory team and professional partners they need to execute a successful transaction.

We have vetted the best healthcare lenders, real estate agents, attorneys, and practice management consultants in markets across the country. We know which lenders offer the most competitive terms for practice acquisitions in your specialty and deal size. We know which real estate professionals specialize in healthcare properties and understand the unique requirements of medical office leases. And we know which credentialing, billing, and operational partners will support a smooth transition from acquisition through stabilization.

When a physician comes to us exploring a practice acquisition, we do not just hand them a list. We match them with the right professionals for their market, their specialty, and their situation, and we stay involved to make sure the process stays on track.

If you are considering buying a medical practice and want guidance on finding the right opportunity, financing the deal, or assembling your advisory team, we are happy to help.

Frequently Asked Questions

How much does it cost to buy a medical practice?

The purchase price varies widely depending on specialty, location, size, and profitability. Smaller single-physician primary care practices typically sell for $200,000 to $500,000. Multi-provider specialty practices can range from $500,000 to several million dollars. The most common valuation methods are a percentage of annual collections (40 to 70 percent) and a multiple of adjusted EBITDA (3 to 8 times for smaller practices, higher for larger or specialty practices). Always get an independent valuation before making an offer. The seller’s asking price is a starting point for negotiation, not a fair market value determination.

How do I finance a practice acquisition?

SBA 7(a) loans are the most common financing vehicle, offering competitive rates and terms of up to 10 years. Conventional bank loans from healthcare-specialized lenders are also available, particularly for physicians with strong credit. Many acquisitions include a seller financing component where the departing physician carries a note for 20 to 40 percent of the purchase price. Most successful deals combine bank and seller financing, with the buyer contributing minimal personal capital. Physicians are among the most favorable borrowers in the eyes of lenders due to low default rates and strong income potential.

How long does it take to buy a medical practice?

From initial identification of a target practice through closing, the process typically takes four to eight months. Due diligence takes four to eight weeks. Financing takes 30 to 75 days depending on the loan type. Legal documentation and negotiation can take several weeks beyond that. The seller transition period after closing typically adds 30 to 90 days. Plan for a six-month process from start to finish, and do not try to compress the timeline at the expense of thorough due diligence.

Should I buy a practice or start one from scratch?

Buying is typically faster to revenue, lower risk in terms of patient volume, and allows you to leverage an existing operation. Starting from scratch offers more control over location, design, systems, and culture, but requires a longer ramp-up period and more upfront investment in building a patient base. The total startup cost for a new practice is typically $100,000 to $500,000 or more, and most new practices operate at a loss for the first three to six months. The total cost of acquiring an existing practice is often similar or lower, with the significant advantage of immediate revenue. For most physicians, buying is the stronger financial move if the right practice is available in the right market at the right price.

What is the biggest mistake buyers make?

Skipping or rushing due diligence. The excitement of finding a practice that seems like a good fit, combined with pressure from the seller or competing buyers to move quickly, causes some physicians to sign purchase agreements without fully understanding the practice’s financials, payer contracts, lease terms, or operational health. Every dollar you spend on professional due diligence, including independent valuations, legal review, and financial analysis, pays for itself many times over by protecting you from overpaying or inheriting hidden problems.

What happens to the existing patients when I buy a practice?

The patients are the practice’s primary asset, but they do not transfer automatically. Patients choose their physician, and some will leave regardless of how well you manage the transition. The key to maximizing patient retention is a structured transition that includes a warm introduction from the selling physician, direct communication with patients about the change, and continuity of care during the transition period. Practices that execute a well-planned transition with a 30 to 90 day seller overlap typically retain 80 to 90 percent of active patients. Practices with abrupt transitions and no seller involvement often retain significantly less.

Do I need to get re-credentialed with the practice’s payers?

In most cases, yes. Payer contracts are typically tied to the individual physician, not the practice entity, which means you will need to go through your own credentialing and enrollment process with each payer. Start this process as early as possible, ideally three to four months before the anticipated closing date, to minimize any gap in billing capability. A credentialing company that specializes in practice acquisitions can manage this process and ensure continuity of payer enrollment through the transition.

New Practice Guide is a trusted resource built by healthcare providers to connect you with vetted professionals in lending, real estate, credentialing, billing, construction, and more. We have worked with physicians across the country navigating practice acquisitions and have identified the lenders, real estate agents, attorneys, and operational partners that consistently deliver in every major market. Tell us about your practice and we will match you with the right team.