Industry guide

Buying a medical or urgent care practice in New York

Medical practices are one of the most heavily regulated acquisition categories in New York — bifurcated between NYS Department of Health (Article 28 facilities) and NYS Education Department Office of the Professions (private physician practices), with a federal overlay for Medicare/Medicaid provider enrollment and Stark Law compliance. This guide covers the valuation method, the regulatory overlay, and the diligence red flags specific to medical practices.

Last updated: July 21, 2026. Educational only — not legal, tax, lending, or investment advice. Medical practice regulation is complex; verify the current requirements with the relevant NYS authority and a healthcare attorney before relying on any specific item.

The 30-second version

Medical practices are typically valued on a multiple of EBITDA (not SDE — most have an office manager in place and physician compensation is a real operating expense). The valuation premium comes from: (1) payer mix (private > Medicare > Medicaid); (2) specialty (procedural > primary care); (3) patient panel retention through transition; (4) physician retention. The diligence job is to identify which regulatory regime applies (Article 28 vs. Professions), verify the Medicare/Medicaid provider enrollment transfer process, and review any Stark exposure.

How medical practices are valued

Medical practices are typically priced on a multiple of EBITDA. See the SDE vs EBITDA guide for the formula. Common medical practice add-backs:

• Depreciation on medical equipment (non-cash — but verify equipment age and replacement cycles).
• One-time legal or regulatory compliance fees.
• Owner physician compensation is a real operating expense (NOT an add-back) — this is the key distinction between SDE-based and EBITDA-based valuation.

Add-backs a SBA lender will challenge:

• Equipment repair and replacement — ongoing capex, not a discretionary add-back ^[2] . Medical equipment has strict replacement cycles and calibration requirements.
• Owner physician 'salary' that's actually two physicians' compensation when only one will be replaced.
• Marketing that drives ongoing patient acquisition.

The three real value drivers

1. Payer mix

The most important medical practice valuation factor: payer mix — what % of revenue comes from private insurance vs. Medicare vs. Medicaid vs. self-pay. Private insurance typically reimburses 1.5–3× Medicare rates for the same procedure; Medicaid typically reimburses below Medicare. A practice with 70% private insurance is fundamentally more profitable than one with 30% private insurance on the same revenue base.

Diligence: get trailing 12 months of revenue by payer. A practice with declining private payer % is losing the most profitable revenue stream — structural problem.

2. Specialty mix

Procedural specialties (orthopedics, gastroenterology, dermatology, ophthalmology) typically command higher EBITDA multiples than primary care (family medicine, internal medicine, pediatrics) because procedural revenue is higher per visit and the practice is more scalable. But procedural specialties also have higher equipment capex and Stark exposure (ancillary revenue from in-house imaging, surgery centers, etc.).

3. Patient panel retention through transition

The patient panel is the asset. But patients are mobile — they can choose a new provider, follow the selling physician, or move to a competitor. The transition plan is the diligence question:

• Is the selling physician staying on for 2–6 months post-close to transition patients?
• Is there a replacement physician in place, or does the buyer need to hire one?
• What's the patient notification protocol?
• What's the historical patient attrition rate when physicians leave?

Model 10–25% patient attrition at close for valuation purposes — more if the selling physician is leaving entirely, less if they're staying on for transition.

The regulatory bifurcation — Article 28 vs. Professions

This is the diligence angle most buyers miss. Medical practices in NYS fall under one of two regulatory regimes:

• NYS DOH Article 28 (Public Health Law). Regulates diagnostic and treatment centers, urgent care centers, ambulatory surgery centers, and clinical laboratories. The Article 28 operating license is held by the entity and is a materially heavier transfer process than a private practice. Requires DOH approval of the change of ownership.
• NYS Education Department, Office of the Professions. Regulates the practice of medicine itself — physician licenses, professional corporation (PC) registration, professional misconduct. Each individual physician must be licensed individually. The PC registration is entity-level.

For buyers: identify which regime the target falls under before signing an LOI. Article 28 transfers are materially slower (60–180+ days) and require DOH review. Private practice transfers (Professions only) are faster but the buyer must be a licensed physician (or employ one) to operate the practice.

Medicare / Medicaid provider enrollment transfer

If the practice bills Medicare or Medicaid (most do), the provider enrollment must transfer or be re-enrolled:

• Medicare provider enrollment with the Medicare Administrative Contractor (MAC). The provider number (NPI for the practice; PTAN for billing) is tied to the entity and individual providers. A change of ownership requires a new or amended enrollment — typically 60–120+ days.
• Medicaid provider enrollment with the NYS Department of Health. Similar process; the new owner must qualify individually.

The provider enrollment transfer is a financing contingency. SBA lenders and conventional lenders both want to see active enrollment transfer processes before approving the loan. Build the timeline into your LOI.

Stark Law compliance

The federal Stark Law (Ethics in Patient Referrals Act) prohibits physician self-referral — a physician cannot refer Medicare/Medicaid patients to an entity with which the physician (or an immediate family member) has a financial relationship, unless an exception applies. For a medical practice acquisition, diligence:

• Any existing physician referral patterns to ancillary services (in-house imaging, lab, physical therapy).
• The structure of physician compensation — productivity-based pay must meet Stark's "in-office ancillary" exception.
• Any physician recruitment arrangements or non-compete terms.
• Any vendor relationships (medical device suppliers, pharmacies) that could be construed as kickback.

Use a healthcare attorney. Stark is complex and mistakes are expensive — both civil penalties and False Claims Act exposure.

Medical practice-specific diligence red flags

• Declining private payer %. The most profitable revenue stream is shrinking. Structural.
• Selling physician leaving entirely. Model 20–35% patient attrition at close.
• No transition plan. Patient panel walks with the physician; the practice loses its primary asset.
• Pending Stark or Anti-Kickback review. Real liability; can suspend Medicare/Medicaid billing — which effectively shuts down the practice.
• Outstanding Medicare/Medicaid recoupment actions. Verify with the MAC and NYS DOH.
• Medical equipment at end of life. Medical equipment has strict replacement cycles and calibration requirements; outdated equipment is real capex.
• Patient records retention non-compliance. NYS DOH sets minimum retention (typically 6 years for adult patients, longer for minors). Gaps create regulatory exposure.
• Declining gross margin with stable revenue. Payer mix is shifting toward Medicare/Medicaid. Structural.
• Physician non-compete enforceability. NYS limits physician non-competes; verify current rules with a healthcare attorney.
• Seller pushing to skip Stark review or Medicare enrollment diligence. Walk.

New York State-specific items

• NYS DOH Article 28 license — required for free-standing surgery centers, urgent care, ambulatory care, and certain diagnostic facilities.
• NYS Education Department, Office of the Professions — regulates physician licenses and the professional corporation (PC).
• Medicaid provider enrollment with NYS DOH.
• Combined NYS + local sales tax — most medical services are exempt; ancillary services (cosmetic, certain OTC products) may be taxable. Verify with a CPA ^[3] .
• NYC DOHMH overlay — additional NYC health permits for facilities in the five boroughs.
• Workers' comp, statutory disability, PFL — mandatory for staff ^[5] . WC rates for healthcare (lifting, needlesticks) are typically higher than many service businesses.
• UI registration (NYS 100) via NYS DOL ^[6] .
• HIPAA compliance — federal, but applies at the practice level. Verify the seller's HIPAA compliance program and any breach history.

SBA 7(a) financing for medical practice acquisitions

Medical practices are a common SBA 7(a) use case, particularly for physician buyers acquiring from a retiring physician. Key SBA items:

• Max 7(a) loan $5M; allowed for "changes of ownership" ^[1] .
• DSCR typically 1.15–1.25 ^[2] .
• Buyer equity injection typically 10% minimum.
• Buyer must be a licensed physician (or employ one) to operate the practice. Lenders heavily weight the buyer's medical credentials.
• Medicare/Medicaid enrollment transfer is a financing contingency. The lender will want to see active enrollment transfer processes before approving the loan.
• Article 28 license transfer (if applicable) is a financing contingency.
• Stark compliance review — lenders may require a healthcare attorney's opinion on existing arrangements.
• Medical equipment can typically be financed as part of the loan.

See the affordability calculator for the full SBA 7(a) math.

Where to go next

• Reconstruct EBITDA — SDE vs EBITDA + calculator
• Check what you can afford — Affordability calculator
• Run full diligence — Due diligence checklist
• NYC guide — NYC DOHMH overlay
• Long Island guide — suburban medical practice demand