Independent vs. Employed: The Financial Case for Staying Independent What PE Buyers Examine Before Making an Offer
Private equity activity in independent specialty medicine has accelerated significantly over the past several years. Orthopedics, cardiology, dermatology, gastroenterology, and ophthalmology have seen the most consolidation, but virtually no specialty is outside the current acquisition landscape.
For physician owners considering a sale, partnership, or merger in the next one to five years, one pattern appears consistently: the practices that achieve strong valuations and clean closings are the ones that examined what buyers look for before a buyer's team showed up to look.
Here is what that actually means in practice.
1. Revenue cycle health
The first thing a buyer's financial team will examine is your revenue cycle. Not your top-line collections, but the quality of what you are collecting. Denial rates, days in accounts receivable, write-off patterns, and payer mix analysis all get scrutinized. Practices with revenue cycle problems that were invisible internally become very visible during due diligence.
More specifically, buyers will look at whether your practice is capturing all the Medicare revenue it qualifies for. Uncaptured CCM, RPM, and care management revenue is not just a missed opportunity. It signals to buyers that the revenue cycle is not fully optimized, which affects how they model post-acquisition upside and how they value the practice today.
2. MIPS scores and compliance posture
Your Merit-based Incentive Payment System score tells a buyer how your practice has been managing its CMS reporting obligations. A low score means your practice has been absorbing payment penalties and will continue to until the score improves. A high score signals operational discipline.
Buyers also examine compliance posture more broadly: whether documentation practices are consistent, whether billing reflects the clinical work being performed, and whether there are patterns that could create liability post-acquisition.
3. Payer contract profitability
Not all contracts pay equally. Buyers analyze your payer mix contract by contract, looking at which plans are paying above fee schedule rates for your specialty, which are paying below, and what the aggregate impact is on practice profitability. Practices that have never done a systematic payer contract review often discover during this process that high-volume plans are generating below-market reimbursement.
This is fixable before a transaction. It is much harder to address once a buyer has already factored it into their valuation.
4. Provider retention and operational dependencies
Buyers want to understand what happens to the practice if one or two physicians leave. Practices where revenue is heavily concentrated in a single physician, where referral relationships are personal rather than structural, or where operational knowledge lives with one administrator represent higher risk, and that risk is priced into the offer.
5. Growth trajectory and market position
A practice that is growing gets valued differently than one that is flat or declining. Buyers model forward revenue based on current trajectory. Practices that have invested in referral network development, digital presence, and service line expansion show a different growth story than ones that have relied entirely on organic demand.
The preparation window matters
The practices that achieve the strongest transaction outcomes typically start examining these five dimensions 18 to 36 months before they expect to transact. That window allows time to close the revenue gaps, improve the compliance posture, negotiate better payer contracts, and document the growth story before a buyer's due diligence team writes their assessment.
The M&A Readiness Accelerator is designed specifically for this preparation window. It scores your practice across all five dimensions buyers examine and identifies where to focus in the time you have before a transaction.
If you are thinking about a sale, partnership, or merger in the next few years and want to understand where you stand before a buyer tells you, a Discovery Call is the right first step.
