South Florida Gastroenterology Practice with In-House Endoscopy Lab

$520K

Revenue

$1.8M

SDE

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Full Editorial Writeup

This is an established gastroenterology practice in South Florida with an in-house endoscopy lab. GI is one of the more attractive specialties to own because a large share of revenue comes from procedures (colonoscopies, endoscopies) rather than pure office visits, and doing those procedures in-house rather than referring them to a hospital or ambulatory surgical center captures the facility fee that would otherwise walk out the door. The practice reports trailing revenue of roughly $1.6M against a three-year average closer to $1.82M, with cash flow of about $831K on the most recent year.

The patient base for GI skews older and chronic, which fits the South Florida demographic profile perfectly. Screening colonoscopies are recommended on recurring intervals, and conditions like reflux, IBS, IBD, and Barrett's esophagus generate ongoing surveillance and repeat procedures. That creates a returning patient panel and a predictable procedural pipeline rather than one-and-done transactions.

At a $5.0M ask on $831K of cash flow, this is priced at roughly 6.0x, which is a full multiple for a single-provider or small-group medical practice. The premium is presumably justified by the endoscopy lab, the demographic tailwind, and the recurring surveillance revenue, but the buyer needs to underwrite how much of the earnings depend on the selling physician personally generating and performing the procedures.

Why we like it

Earnings quality is strong for a practice this size, with $830,800 of cash flow on $1.6M of revenue, a roughly 52% margin driven by the in-house endoscopy lab capturing facility fees instead of ceding them to a hospital or surgical center. The three-year average revenue of $1.818M running above the trailing $1.602M suggests the base year may be understated, though it also flags a possible recent softening to verify.
GI is about as durable and recession-resistant as medicine gets, because colon cancer screening and management of chronic digestive disease are non-discretionary and largely insurance-reimbursed. Patients do not defer a symptomatic GI workup because the economy softened, and screening guidelines drive procedures on a fixed clinical calendar regardless of the business cycle.
The demographic tailwind in South Florida is real and structural, with a dense, aging, insured population that consumes GI care at high rates. Screening age was lowered to 45, expanding the eligible pool, and the surveillance nature of GI means each patient generates repeat procedures over years rather than a single visit.
The recurring, procedural mix creates a predictable revenue engine that a competent operator can scale by adding provider capacity. A buyer who recruits a second gastroenterologist or a nurse practitioner to handle office visits can free the physician to run more procedures through the existing lab, leveraging fixed facility costs against incremental high-margin volume.

How to improve it

Audit the payer mix and renegotiate the worst commercial contracts within the first quarter, because facility-fee reimbursement for endoscopy varies widely by payer and even small rate improvements flow straight to the bottom line. Pull the fee schedule for every major payer and benchmark against regional norms before touching anything else.
Maximize the endoscopy lab's utilization by measuring procedures per operating day and filling open block time. If the lab runs below capacity, adding scheduled procedure days or a second proceduralist spreads the fixed cost of the suite, staff, and equipment across more revenue and is the single fastest lever on margin.
Build a systematic surveillance recall program so patients due for repeat colonoscopies and endoscopies are proactively rebooked. Many single-physician practices leak revenue because no one owns the recall list, and a simple automated outreach system converts the recurring clinical calendar into recurring booked revenue.
Add mid-level providers (NP or PA) to handle routine office visits, follow-ups, and pre/post-procedure consults. This offloads low-margin physician time and lets the gastroenterologist concentrate on high-margin procedures, expanding capacity without the cost or difficulty of recruiting a second MD immediately.
Formalize referral relationships with primary care groups, urgent care clinics, and internists in the catchment area. GI volume is heavily referral-driven, so a structured outreach program to feeder physicians protects and grows the funnel that too often depends on the departing owner's personal relationships.
Evaluate ancillary revenue lines such as pathology handling, infusion services for IBD patients, and cash-pay procedures. These adjacencies use the existing patient base and can add margin without proportional overhead, and they diversify away from screening-colonoscopy reimbursement risk.

Diligence notes

Quantify exactly how dependent earnings are on the selling physician, because in a single-provider practice the doctor typically generates the referrals and performs every procedure. Confirm whether the seller will stay through a transition, whether a replacement gastroenterologist can be recruited and credentialed, and how quickly payer contracts and hospital privileges transfer to a new owner.
Reconcile the gap between the $1.818M three-year average revenue and the $1.602M trailing figure. Determine whether recent volume declined, whether a partial year or COVID period skews the average, and which number is the true run-rate the 6.0x multiple should be applied against.
Scrutinize the endoscopy lab's regulatory and accreditation status, including CLIA, AAAHC or equivalent facility accreditation, and compliance with any Stark Law and anti-kickback constraints on in-office ancillary services. Facility-fee billing is a common audit target, so review the coding practices and any prior payer recoupments or audits.
Break down the payer mix between Medicare, Medicare Advantage, and commercial, since a South Florida senior-heavy panel likely carries heavy Medicare exposure that caps reimbursement upside and is subject to CMS rate changes on GI codes. Model the earnings impact of announced or likely cuts to endoscopy reimbursement.
Verify the malpractice history, provider credentialing, and whether real estate is owned or leased, including the lease terms and any related-party rent that could be inflating or deflating reported cash flow. Confirm the age and condition of the endoscopy equipment and any near-term capital replacement needs.

Source

Originally listed on Sunbelt Business Brokers. View original listing →