What is my medical practice worth? How GP and medical practices are valued in Australia.
A medical practice is usually valued as a multiple of its maintainable earnings, after allowing for what it would cost to replace the owner's own doctoring. In many practices the owner is also one of the busiest GPs, so a large share of the profit is their own clinical work. What moves the value most is whether the doctors will stay after the sale, how the practice earns from them, how payroll tax applies, accreditation, and the lease.
This guide covers general practices and small specialist or skin-check clinics. Dental, physio and other allied health practices have their own guides: dental and allied health. Pharmacies: What is my pharmacy worth?
Start with maintainable earnings
Start from net profit before tax and add back the usual owner items: depreciation, interest, private use of a car, and genuine one-off costs. Add-backs explained.
Then make the practice-specific adjustment:
- The cost of replacing your own doctoring. If you consult and take your income as profit, a buyer has to engage another GP to see those patients. In the common service-fee model, a GP keeps around 60–70% of their billings and pays the rest to the practice. Deduct what another GP would keep for the work you do.
- Unpaid or underpaid help, such as a partner who manages the practice or the books, is costed at a market wage.
What's left is what the practice earns from its doctors, rooms, nurses and services, separate from what you earn as a doctor.
What moves the price
Keeping the doctors
A practice is only worth what its doctors bill, so buyers look hardest at whether they'll stay. Show each doctor's share of billings (names removed at first), how long they've been there, their agreements, and any restraint clauses. If you're one of the main doctors, buyers will ask you to stay on for a period after the sale, often one to two years.
How the practice earns: service fees or employment
- Most GP practices engage doctors as contractors who pay the practice a service fee. The practice's income is those fees, plus nursing, procedures and any rent from co-located services.
- Payroll tax on payments to contractor GPs became a major issue after a 2022 tribunal decision in New South Wales, and states have since announced different amnesties and rules. A buyer's accountant will check how your doctors are engaged and whether payroll tax exposure exists, so have the agreements and any advice ready.
Billing mix and patients
- Know your split between bulk billing and private or mixed billing, and how it has changed. Buyers want to see that patients keep coming at the current fees.
- Active patients over the last two years, new patients per month, and the share of chronic-disease and care-plan work show how settled the patient base is.
Accreditation, incentives and location
- Accreditation against the RACGP Standards is needed for practice incentive payments. Current accreditation is a selling point; an overdue one is a cost a buyer will allow for.
- Whether the practice is in a Distribution Priority Area affects how easily it can recruit overseas-trained doctors, which matters a lot to buyers in regional and outer-suburban areas.
- Medicare provider numbers are personal to each doctor and location, so new doctors need their own.
Equipment, records and the lease
- List consulting and treatment room equipment, any procedure or skin-check equipment, and practice software, with age, condition and any finance.
- Patient records go with the practice, but privacy law applies. Plan how patients will be told about the change of ownership.
- A buyer will want a long lease, with options, at a site that suits a medical practice, and will check the make-good clause.
A worked example
All figures are illustrative, made up for this example, and are not industry data.
A suburban general practice has six consulting rooms, a treatment room and two practice nurses. The owner GP consults four days a week, and five contractor GPs pay the practice a service fee. Net profit before tax was $380,000, and the owner takes no wage: their income includes the billings they keep. The owner's own consultations billed $440,000.
| Item | Amount |
|---|---|
| Net profit before tax | $380,000 |
| + Depreciation (fit-out and medical equipment) | $20,000 |
| + Interest on equipment finance | $8,000 |
| + Private use of the owner's car | $5,000 |
| – What another GP would keep for the owner's work (65% of $440,000) | –$286,000 |
| Maintainable earnings (EBITDA) | $127,000 |
If buyers were paying, say, 2.0 to 3.0 times earnings for a practice like this (illustrative), it would be worth about $255,000 to $380,000, including the fit-out and equipment.
That's very different from "the practice makes $380,000 a year", because most of that is the owner's own doctoring. Two things would move it within the range: whether the five contractor GPs stay, and whether payroll tax has been dealt with. Signed agreements and clear advice push it toward the top.
What buyers of medical practices will ask for
- Two to three years of profit and loss statements, plus the current year to date
- Billings by doctor, service-fee rates, and the billing mix
- Doctor and staff agreements, roles, hours and pay (no names at first), and any payroll tax advice
- Active patient numbers and new patients per month
- Accreditation status and incentive payments received
- A list of equipment with age, condition and any finance
- The lease, including options, the current rent and the make-good clause
Selling it yourself? How to sell your business yourself in Australia. Not sure about appraisal versus valuation? Business appraisal vs valuation.
What's your practice worth?
Upload your P&L, and add your lease and staff list if you have them. AUS Brokers works out your maintainable earnings with the add-backs explained, applies the multiple range for practices of your size, and checks comparable practices for sale in your state. You can add a buyer-ready profile to market it yourself.
An indicative business appraisal only. AUS Brokers doesn't provide valuations, and doesn't act for buyers or sellers. If you need a valuation for finance or a partner buy-out, use a qualified valuer. Selling in Victoria? Vic Brokers can sell it for you.
Frequently asked questions
How much is a medical practice worth in Australia?
It depends mainly on its maintainable earnings: the profit after adding back owner items and deducting what another GP would keep for the owner's own consulting. That figure is multiplied by what buyers pay for practices of that size. Settled doctors on signed agreements, current accreditation and a long lease push the price up.
Why deduct the cost of my own consulting?
Because a buyer has to engage a doctor to see those patients. If the owner's clinical income is counted as profit, the practice looks far more valuable than it is to anyone who isn't you.
Does payroll tax affect the price?
It can. How contractor doctors are engaged decides whether payroll tax applies, and the rules differ by state. A buyer will check this closely, so get advice and have the doctor agreements ready before you sell.
Will I have to keep working after the sale?
If you're one of the practice's main doctors, usually yes, for a set period, so patients and other doctors stay. The more the practice depends on you, the longer a buyer will want.
Can someone who isn't a doctor buy a medical practice?
Generally yes. Many practices are owned by non-doctors or corporate groups, but the practice needs doctors in place who'll stay, and accreditation kept up.
Is an appraisal enough for a bank or a partner buy-out?
No. An appraisal is an indicative estimate to help you plan and price a sale. For finance, a partner buy-out, family law or tax, you need a formal valuation from a qualified valuer.
General information only, not financial, tax or legal advice. Figures in the worked example are illustrative.