What is my GP practice worth?
A buyer prices a GP practice on the earnings it expects after settlement and can verify from the practice's records. The billings belong to the GPs who generate them, the patients follow their GPs, and much of the practice's income rests on arrangements the current owner may never have written down. A buyer treats each of these as a question about whether the revenue will still be there in three years, and the answers set the multiple it will pay.
What sets the price
The GPs, and whether they stay
The GPs generate most of a practice's revenue, and under a standard services arrangement they bill under their own provider numbers. Many patients see one GP by choice and follow that GP, so a GP who leaves takes a share of the revenue. A buyer therefore looks at how the billings are spread across the roster, how long each GP has been at the practice, whether each has a current signed agreement with a notice period, and what the selling owner will do after settlement. Where two GPs generate most of the revenue, or locums fill a large share of sessions, the buyer prices the practice for the risk that the revenue leaves.
The patient base
A buyer looks at active patient numbers, how many patients return from one year to the next, and whether the catchment population is growing. Together these show whether current billings will hold. A full appointment book in a growing area supports the price, because the buyer can see demand that will outlast the handover.
The lease
A buyer who plans to keep the site needs secure tenure, typically three to five years remaining with options to extend. A buyer who plans to move the practice's GPs and patients into a centre it already operates nearby is buying the GPs and the patient list and has no use for the premises, so for that buyer a long lease is a liability to assign or exit.
The billing mix and other income
A buyer looks at the bulk billing rate, chronic disease management revenue, nurse billing and income from co-located services such as a pathology collection room. A buyer counts other income when a written agreement at a market rate supports it. Where a pathology provider pays rent on an informal understanding, the buyer either discounts that income or leaves it out of the earnings it pays for.
How much depends on you
Where the selling owner is also the practice's main biller, much of the goodwill is attached to the owner personally and leaves with them, unless the handover moves their patients to GPs who stay. A practice whose GPs, systems and management function without the owner gives a buyer earnings it can project forward, and it attracts a higher multiple. An owner who commits to a structured transition period after settlement reduces the same risk from the other side.
What practices sell for
The parties to a private practice sale have no obligation to disclose the price, so most prices are never published. Buyers and their advisers price within consistent ranges. A solo practice commonly sells for two to three times normalised earnings at best, because its earnings depend on one GP. A practice with several GPs sells for three to four times, and a well-structured suburban practice with a stable roster and more than ten full time equivalent GPs usually sells for four to five times. Location, access, local demographics and the owner's share of the billings move a practice up or down its range.
Health insurers have paid the highest disclosed prices for group platforms. Medibank invested more than $163 million to acquire Better Medical and its 61 clinics, and Bupa's acquisition of Partnered Health Group was reported at about $450 million.
Medius Global publishes the Australian GP business deal review, which records who bought what and the price where it was disclosed, and the practice sales index on GP Zoo, which records asking prices, price cuts and time on market for advertised practices and is updated weekly.
Normalising the owner's billings
A buyer pays for the earnings the practice keeps after the selling owner stops billing in it. An owner who bills $800,000 annually and then leaves takes that revenue with them, unless the handover moves their patients to GPs who stay.
To show what remains, your accountant restates the practice's profit as if you were a contracted GP. The accountant takes your billings out of the revenue and puts back the practice's service fee share of them, typically about 35%, documents informal arrangements at market rates, and removes one-off and personal costs. The buyer applies its multiple to this restated figure. If little profit remains after the adjustment, most of what the practice earns is your own clinical work, and the priority before a sale is to build earnings that do not depend on you.
Readiness scores and valuations
Proxeno does not value practices. The sale readiness check gives an overall readiness to sell score and a score for each of the five areas a buyer's advisers assess. It then sets out the priority gaps behind those scores and the action that closes each one. It puts no price on the practice.
A valuation is a formal report prepared by an independent valuer with no commercial relationship to Proxeno and no fee that depends on the sale going ahead. It is the document your accountant works from when the practice goes to market.
Assessing your practice before a sale
The sale readiness check scores a practice across the five areas a buyer's advisers test, and shows where a buyer will argue the price down. It is free and anonymous, and takes about twenty minutes with your figures to hand.
The business acuity assessment reviews how the practice operates as a business across six areas, whether or not you plan to sell. It is free, has 26 questions, takes 12 to 15 minutes and does not ask for your practice name.