$5.8M
$1.6M
4.1x
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The practice is comprised of multiple MDs and PAs and typically sees 50-65 patients per day. The seller is looking for a buyer who will also purchase the accompanying real estate, which is valued at $2m.
Why we like it
- Earnings quality is strong: $1.65m of cash flow on $5.83m revenue is a 28 percent margin backed by a multi-provider staff and 40 years of operating history. This is not a one-doctor practice where the earnings walk out the door with the seller, the volume is distributed across multiple MDs and PAs.
- Durability is real: pediatric care is non-discretionary and insurance-funded, so well-child visits, vaccines, and school physicals continue through any downturn. A 40-year brand in a defined New York market carries referral inertia and multi-generational patient loyalty that new entrants cannot easily replicate.
- Market tailwinds favor established primary care: consolidation of independent practices by PE-backed groups and health systems means a mature, staffed pediatric practice is an attractive bolt-on. Steady daily volume of 50 to 65 patients gives a buyer a predictable base to build referrals, ancillary services, and expanded hours around.
- Operator advantage is clear: because the practice already runs on multiple providers, an owner does not need to personally see patients if they are not a physician. A buyer with practice-management or MSO experience can improve scheduling density, billing capture, and payer mix without disrupting clinical care.
How to improve it
- Audit and renegotiate payer contracts in the first 90 days: pediatric reimbursement varies widely by carrier, and even a few points of rate improvement on this revenue base drops meaningfully to cash flow. Identify the lowest-yield contracts and either renegotiate or shift scheduling toward higher-yield payers.
- Increase daily patient throughput toward the top of the 50 to 65 range and beyond by tightening scheduling templates, adding evening or weekend sick-visit hours, and reducing no-shows with automated reminders. Each incremental visit per provider per day is nearly pure margin given fixed overhead.
- Add or expand ancillary services such as in-office lab, developmental screening, lactation support, or behavioral health, which capture revenue that currently leaks to outside referrals. These services fit the existing patient base and require modest capital relative to the incremental margin.
- Build a lactation-of-billing function: bring revenue cycle management in-house or to a specialist vendor to cut denials and accelerate collections. Pediatric practices often leave money on the table with unbilled vaccine administration codes and missed after-visit charges.
- Lock in provider retention with employment agreements, non-competes where enforceable in New York, and performance incentives before close. The entire enterprise value rests on the MDs and PAs staying, so aligning compensation to volume and quality protects the earnings you are buying.
- Modernize patient acquisition with a refreshed website, online booking, and reviews strategy so the 40-year reputation translates to new-family sign-ups. A practice this established often underinvests in digital front door, which is where young parents now start.
Diligence notes
- Verify the true source of the $1.65m cash flow and how much depends on any single physician. Confirm whether the seller is one of the practicing MDs and what happens to that patient volume and production if the seller departs at close.
- Scrutinize the payer mix and reimbursement rates, including Medicaid versus commercial split, because New York pediatric Medicaid rates can be low and materially affect sustainability of margins. Request a payer-level revenue breakdown and the actual fee schedules.
- Confirm provider employment status, compensation structures, and whether key MDs and PAs intend to stay post-sale. Review any existing non-competes and whether they survive a change of ownership under New York law.
- Clarify the real estate structure: the $2m property sits outside the $6.8m asking price, so model the total capital required and negotiate whether it is a required purchase or optional. If required, underwrite the building on its own merits and market rent to avoid overpaying versus a lease alternative.
- Review billing and coding compliance, including vaccine inventory accounting (VFC program participation), documentation quality, and any prior audits or clawbacks. Pediatric practices carry specific compliance exposure around immunization billing that can create liability.
- Validate patient volume trends over the last three to five years to confirm the 50 to 65 daily count is stable or growing, not declining. Pull visit counts, new-patient additions, and payer trends to ensure the mature practice is not quietly shrinking.
Source
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