What it costs to buy a medical practice in Australia

Medical practices are not priced off a listing number, they are priced off earnings. The market rule of thumb is a multiple of adjusted net profit, and where a practice lands inside that range has more to do with its doctors than its fit-out.

How practices are priced

GP practices in Australia generally trade at 1.5 to 4 times adjusted net profit. Adjusted means normalised: the seller's own drawings, one-off costs and any related-party rent are added back or corrected so you are looking at what the practice earns, not what the current owner chose to take out of it.

That range is wide on purpose, because the same profit is worth very different money depending on how fragile it is.

What moves the multiple

Doctor retention is the top of the list. A practice whose income depends on two GPs with no contracts and no tie-in is a different risk to one with a stable roster on agreements, and buyers price it accordingly. Ask how long each doctor has been there and what happens to their patients if they leave.

After that: accreditation status, whether the billing mix is bulk, mixed or private, the lease and whether the building is related-party, and how much of the profit walks out the door with the vendor if they were also seeing patients. Sector profit margins average around 11.5%, so there is not a lot of room in the model for a surprise.

The billing mix matters more than it looks

Bulk billing gives volume and predictability with rebate exposure you do not control. Mixed and private billing gives pricing power and more margin, with more sensitivity to the local market. Neither is better as an investment, but they are different businesses, and a practice mid-transition between them is the one to look at hardest.

The sector backdrop is reasonable: revenue is forecast to grow around 2.5% a year to 2031 on an ageing population and rising chronic disease. The pressure sits on the cost side, in workforce shortages, under-indexed rebates and rising operating costs.

Financing a practice purchase

Practice acquisition is mostly goodwill, which means there is little for a lender to hold if things go wrong. Property security changes the conversation completely, moving pricing from roughly 9% to 13% p.a. down to roughly 6% to 9% p.a. and widening the panel prepared to look at it.

Medical is one of the sectors where lender appetite is genuinely better than average, because the income is stable and the profession is regulated. The equipment and any fit-out can be funded separately against their own value. See medical and dental practice finance, and if you are weighing building instead, medical practice fit-out costs.

This is general information only and not financial, credit, or tax advice. Prices are indicative market listings, not Ventas figures, and move with the market. Consider your own circumstances and speak to a professional. All finance is subject to lender assessment and approval.

This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.