$944K
0.7x
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New Price Adjustment: Motivated Seller! Now Only $700,000 | $350,000 Seller Financing Available Established in 1994, this leading gastroenterology practice serves central Massachusetts, offering specialized and comprehensive care for conditions including reflux, dysphagia, GI bleeding, liver and...
Why we like it
- Exceptional cash conversion at 0.74x multiple with $944K cash flow represents immediate yield of 135% on invested capital. The motivated seller with $350K financing available further reduces capital requirements and enhances returns.
- Healthcare practices benefit from sticky patient relationships and high switching costs, creating predictable recurring revenue streams. Gastroenterology specifically has strong procedural revenue with insurance reimbursement providing payment certainty.
- Demographic tailwinds favor gastroenterology with aging population requiring more digestive health services. Massachusetts has higher than average income levels supporting premium healthcare spending and robust insurance coverage.
- Established 30+ year practice with deep community roots provides significant operational leverage for new ownership. The Worcester market offers growth potential through additional locations, extended hours, or expanded service offerings.
How to improve it
- Implement comprehensive revenue cycle management system to reduce days sales outstanding and maximize insurance collections. Most practices leave 10-15% of revenue on the table through billing inefficiencies.
- Expand telehealth offerings for follow-up visits and consultations to increase patient capacity without additional facility costs. Post-COVID adoption has made virtual care standard in gastroenterology.
- Develop direct-pay procedures and wellness programs targeting cash-paying patients for higher margin services. Colonoscopy screening and preventive care have strong direct-pay demand.
- Optimize scheduling systems to reduce patient wait times and increase daily procedure volume. Better scheduling can typically increase capacity 15-20% without additional staff.
- Establish systematic referral relationship development with primary care practices in surrounding markets. Gastroenterology relies heavily on referrals for patient acquisition and growth.
Diligence notes
- Verify physician employment agreements and non-compete terms as doctor retention is critical to practice value. Understand succession planning and any physician retirement timeline that could impact operations.
- Analyze payer mix and reimbursement rates by insurance carrier to identify revenue concentration risk. Medicare/Medicaid heavy practices face reimbursement pressure while commercial payers provide better margins.
- Review malpractice insurance history and claims to assess liability exposure. Gastroenterology procedures carry higher malpractice risk that must be properly covered and factored into ongoing costs.
- Examine facility lease terms and equipment conditions as medical practices require significant ongoing capital expenditure. Endoscopy equipment alone can require hundreds of thousands in periodic replacement costs.