$2.8M
$880K
1.8x
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Rare opportunity to acquire a well-established, full-service family medicine practice serving the Bellevue...
Why we like it
- Earnings quality is strong on the surface: $880k of cash flow on $2.8M revenue is a 31% margin, and primary care revenue is a mix of insurance reimbursement and repeat patient visits that produce predictable, recurring cash. That kind of margin in a service business is rare and worth chasing if it survives a change in ownership.
- Family medicine is about as recession-proof as healthcare gets. People do not stop managing diabetes, hypertension, or getting physicals when the economy turns, and a large share of the bill is paid by insurers rather than out of pocket. This is boring, essential demand that compounds with a growing patient panel.
- Omaha and Bellevue are stable, growing metro markets with an established payer environment and steady population demand for primary care. An entrenched practice with an existing panel enjoys real switching friction because patients rarely leave a doctor they trust.
- The 1.82x multiple is well below what a durable, transferable cash flow stream should command. If a buyer can de-risk the physician dependence, there is meaningful room to buy at a discount and rerate the asset over time.
How to improve it
- Immediately map revenue by provider to understand how much of the $880k depends on the selling physician personally. If the seller drives most of the panel, structure an earnout or extended employment agreement so the transition does not evaporate the cash flow you paid for.
- Recruit and credential at least one additional physician or nurse practitioner in the first 90 days of planning to reduce single-provider dependence and expand capacity. Adding mid-level providers is the fastest way to grow visit volume without proportionally growing overhead.
- Audit the payer mix and renegotiate the highest-volume commercial contracts. Small reimbursement rate improvements flow almost entirely to the bottom line given the fixed cost base of a practice.
- Add ancillary revenue lines that patients already need, such as in-house labs, chronic care management billing, annual wellness visits, and remote patient monitoring. These are high-margin add-ons that leverage the existing panel and Medicare reimbursement codes.
- Tighten scheduling and reduce no-show rates with automated reminders and online booking. Filling existing provider hours is free revenue and directly lifts the margin without adding cost.
- Formalize referral relationships with local specialists and hospital systems to create a two-way patient flow. A dependable inbound referral pipeline reduces reliance on the founder's personal reputation.
- Standardize the billing and coding process to capture the full value of each visit. Under-coding is common in owner-run practices and a coding review often recovers real dollars already earned.
Diligence notes
- Determine exactly who provides care and how transferable the revenue is. A 1.82x multiple on a 31% margin practice usually signals heavy dependence on a single physician, and you must confirm whether patients follow the practice or the person before you commit capital.
- Pull the payer mix and reimbursement detail, including the split between Medicare, Medicaid, and commercial insurance. Reimbursement rate changes and payer concentration are the biggest swing factors in a primary care valuation.
- Verify the reported $879,659 cash flow against tax returns and financials, and clarify what is included in the add-backs. Confirm whether physician compensation is treated as owner benefit or as a replaceable cost, because a buyer who is not a physician must budget for a hired doctor.
- Check credentialing, licensing, malpractice history, and any regulatory or billing compliance issues. Healthcare acquisitions carry compliance liability, and unresolved coding or billing problems can surface as clawbacks after close.
- Confirm the lease terms and location economics, since real estate is not included. Understand renewal options, rent escalation, and whether the practice can stay put, because relocating a patient panel destroys value.
- Assess staff tenure and retention risk, especially clinical support staff and front-office personnel. In a small practice, losing a key nurse or office manager can disrupt operations as much as losing the physician.
Source
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