Guide to Selling a Neurology Practice in Hawaii

If you own a neurology practice in Hawaii, you are in a unique and powerful position. The state faces a significant 28% shortage of neurologists, creating intense demand for established practices like yours. This guide provides a clear roadmap for navigating the sale process, from understanding the market dynamics to securing your legacy. We will explore the key factors that can turn this high-demand environment into a successful and profitable transition for you.

Curious about what your practice might be worth in today’s market?

Market Overview

The market for neurology practices in Hawaii is not just stable; it’s a seller’s market defined by overwhelming demand and an undersupply of providers. Understanding these forces is the first step toward realizing your practice’s full value.

A Market Forged by Need

With a 28% neurologist deficit, patients in Hawaii often face long waits for care, with median times of 34 days and some waiting over three months. For a potential buyer, an established practice with a full patient panel isn’t just an asset; it’s a turnkey solution to a pressing community need. This scarcity gives you, the seller, significant leverage.

Demographics Driving Demand

Hawaii’s aging population ensures that the need for neurological care will only increase. This demographic trend, combined with the states consistent high ranking in healthcare quality, makes it an attractive market for larger healthcare systems and private equity groups looking to expand their footprint in a robust and growing healthcare ecosystem.

Timing your practice sale correctly can be the difference between average and premium valuations.

Key Considerations

A strong market is a great starting point. However, a successful sale depends on navigating factors unique to Hawaii. Answering these questions now will prepare you for a smoother process later.

1. How is your patient base unique? Hawaiis distinct demographics, such as its large Asian and Pacific Islander population, may mean a higher prevalence of certain neurological conditions. Highlighting this unique patient data can be a significant value driver for sophisticated buyers seeking a specific strategic fit.

2. Does your financial story address the ‘paradise tax’? Buyers, especially from the mainland, are aware of Hawaii’s high cost of living and operating expenses. It is not enough to be profitable. You must present clean financials that clearly demonstrate strong, stable earnings despite these costs.

3. How do you mitigate perceived risk? The state has a history of high malpractice payouts per capita. A buyer will look closely at your practice’s operational history and risk management protocols. Showcasing a clean record and strong procedures can effectively neutralize this concern before it becomes a negotiation point.

Every practice sale has unique considerations that require personalized guidance.

Market Activity

The demand for Hawaiian neurology practices is not just theoretical. We see active interest from a diverse range of buyers. This includes local hospital systems seeking to expand their neurology service lines and mainland private equity-backed groups looking for a strategic entry into the underserved Hawaiian market. This competitive tension is a clear advantage for a well-prepared seller.

We often hear physicians say, “I’m not looking to sell for another 2-3 years.” That is the perfect time to start the conversation. Buyers pay for proven, consistent performance, not last-minute potential. The strategic decisions you make over the next 24 months12from cleaning up your financials to optimizing operations12will have a greater impact on your final valuation than anything you do in the 6 months before a sale. Preparing now ensures you will sell on your terms, not a buyer’s.

Not sure if selling is right for you? Our advisors can help you understand your options without any pressure.

The Sale Process

Selling your practice is a structured project, not a single event. While every sale is unique, a successful transition follows a clear path. Understanding these stages helps you prepare for what lies ahead and avoid common pitfalls. The most critical phase is often due diligence, where a buyer scrutinizes every aspect of your operations and financials. A lack of preparation here can unravel a promising deal.

Here is a look at the typical stages and the key considerations for each.

The due diligence process is where many practice sales encounter unexpected challenges.

Valuation

One of the first questions any owner asks is, “What is my practice worth?” Many have heard of simple valuations based on a percentage of gross revenue. While easy to calculate, this method often leaves significant value on the table. Sophisticated buyers do not value you on revenue. They value you on profitability.

The key metric is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This starts with your net income and adds back non-operational or owner-specific costs, like a vehicle lease or an above-market owner salary. This calculation reveals the true underlying profitability of your practice to a new owner. This Adjusted EBITDA figure is then multiplied by a factor (a “multiple”) to determine your practice’s enterprise value. For a specialty practice like neurology, this multiple can be significantly higher than for general practitioners, with market rates often ranging from 2.6x to over 3.6x EBITDA or more depending on your specific situation. The final multiple is influenced by factors like having multiple providers, a favorable payer mix, and demonstrated growth.

A comprehensive valuation is the foundation of a successful practice transition strategy.

Post-Sale Considerations

The transaction itself is not the end of the journey. Planning for what comes after the sale is just as important as planning for the sale itself. A well-structured deal protects your financial future, your staff, and your legacy in the community.

Here are a few key post-sale elements to consider early in the process.

• What is your role after closing?
  Do you want to leave medicine entirely, or continue practicing without the burden of administrative duties? A sale can be structured to accommodate your goals, from a clean break to a multi-year employment agreement. Control is not always a binary choice. Many deals are structured as partnerships that preserve your clinical autonomy.

• How are your staff and legacy protected?
  You have spent years building a team and a reputation. The right buyer will see them as assets to be preserved. We help you negotiate terms that ensure staff retention and a smooth transition that honors the patient-centric culture you created.

• How do you maximize your financial outcome?
  The final sale price is only part of the equation. The structure of the deal, including potential earnouts (future payments based on performance) or equity rollovers (retaining a minority stake), can have a massive impact on your total long-term return. Proper tax planning from the start is also critical to maximizing your net proceeds.

Your legacy and staff deserve protection during the transition to new ownership.