Arizona’s oncology landscape is active. New facilities are opening and a national consolidation trend is creating new opportunities for practice owners. For physicians considering an exit, this means the timing may be right. However, navigating this growing market requires a clear strategy to achieve the best possible valuation and terms for your practice. This guide provides initial insights into the key factors you need to consider.
Market Overview
The market for oncology services in Arizona is expanding. We see this with the recent opening of new, modern cancer centers by groups like OneOncology and Arizona Blood and Cancer Specialists. This growth signals strong investor confidence in the region. Unlike many other states, Arizona does not have a Certificate of Need (CON) law for medical practices. This removes a significant regulatory barrier, making it easier for buyers to enter the market and for existing practices to expand. For a seller, this creates a dynamic environment with a potentially larger pool of interested buyers. It also means your practice’s individual strengths become even more important.
Key Considerations for Sellers
When preparing your Arizona oncology practice for sale, buyers will look beyond just your financial statements. They are interested in the quality and defensibility of your operations. Here are three areas that can significantly impact your practice’s appeal and value.
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Focus on Value-Based Care. Buyers are increasingly focused on practices that can demonstrate high-quality patient outcomes and comprehensive support, not just treatment volume. Highlighting your practice’s approach to value-based care is a powerful selling point.
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Highlight Quality Certifications. A certification from the Quality Oncology Practice Initiative (QOPI) is a clear signal to buyers that your practice adheres to rigorous national standards. It immediately builds credibility and can distinguish you from competitors.
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Leverage Network Affiliations. If your practice is part of a larger organization like The US Oncology Network, this is a major asset. It provides access to resources, favorable contracts, and a built-in support system that is very attractive to a potential new owner.
Market Activity
The biggest trend impacting oncology practices today is consolidation. Across the country, and right here in Arizona, we are seeing a steady flow of acquisitions by private equity groups and larger strategic healthcare corporations. These buyers are looking for well-run practices to serve as platforms for growth or to integrate into their existing networks. For a practice owner, this means there is significant demand and capital in the market. Many owners think they should wait until they are ready to retire to think about selling. We find the opposite is true. The best time to start planning is one to three years before your target exit, while market conditions are strong. This allows you to prepare your practice to command the highest possible value.
The Sale Process
Selling a medical practice is not a single event. It is a structured process with several distinct phases. Understanding these stages can help you prepare for a smoother, more successful transition.
Phase 1: Preparation and Valuation
This is where the most important work happens. It involves organizing your financial and operational documents, identifying areas for improvement, and getting a clear, objective understanding of what your practice is worth. A comprehensive valuation forms the foundation of your entire exit strategy.
Phase 2: Marketing and Buyer Engagement
Once prepared, the next step is to confidentially market the practice to a curated list of qualified buyers. The goal here is to create a competitive environment where multiple buyers are interested. This is how you ensure you get the best terms, not just the first offer that comes along.
Phase 3: Due Diligence and Closing
After you accept an offer, the buyer will begin a detailed review of your practice, known as due diligence. This is often the most intensive phase. Proper preparation upfront can prevent surprises and delays here, leading to a successful closing.
Understanding Your Practice’s Valuation
A common question we hear is, “What is my practice worth?” The answer isn’t a simple percentage of revenue. Sophisticated buyers value your practice based on its cash flow, specifically its Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure is your net income with certain costs added back, like your personal salary above a market rate or other one-time expenses. This Adjusted EBITDA is then multiplied by a number, or a “multiple,” to arrive at your practice’s Enterprise Value. For a practice with over $1M in EBITDA, this multiple could range from 5.5x to 7.5x or higher, depending on factors like your provider mix, growth rate, and market position. Getting this calculation right is the difference between an average price and a premium one.
Planning for Life After the Sale
The final sale price is only one part of the deal. How the deal is structured has major implications for your taxes, your future role, and your long-term financial success. You are not just selling your practice. You are transitioning your legacy. For many physicians, this doesn’t mean walking away entirely. Many partnerships are structured to keep you involved, combining your clinical expertise with the buyer’s business resources. Understanding these options is key to designing an exit that aligns with your personal and financial goals.
| Post-Sale Structure | What It Means for You | Best For Owners Who… |
|---|---|---|
| 100% Cash at Close | You receive all proceeds upfront and have a clean exit. | …want maximum certainty and a clear departure. |
| Earnout | A portion of the sale price is paid later if the practice meets performance targets. | …are confident in future growth and want to share in that upside. |
| Equity Rollover | You retain a minority ownership stake (e.g., 10-30%) in the new, larger entity. | …want to remain involved and get a “second bite of the apple” when the larger entity sells. |
Frequently Asked Questions
What is the current market situation for selling an oncology practice in Arizona?
The market for oncology services in Arizona is expanding with new cancer centers opening and strong investor confidence. Arizona does not have a Certificate of Need (CON) law, making it easier for buyers to enter and practices to expand. This creates a dynamic environment with many interested buyers.
What factors do buyers consider when purchasing an Arizona oncology practice?
Buyers look beyond financials and consider the quality and defensibility of operations, including value-based care approach, quality certifications like QOPI, and network affiliations such as membership in The US Oncology Network.
When is the best time to start planning the sale of an oncology practice?
The best time to plan your exit is one to three years before your target retirement or exit date, especially when market conditions are strong. Early planning helps prepare your practice to achieve the highest valuation.
How is the value of an oncology practice in Arizona typically determined?
Valuation is primarily based on Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiplied by a market multiple (usually between 5.5x to 7.5x for practices with over $1M in EBITDA). Factors like provider mix, growth rate, and market position influence the multiple.
What are common sale structures and what do they mean for the seller?
Sale structures include:
– 100% Cash at Close for a clean exit, best for those wanting certainty.
– Earnout, where part of the price is paid later if targets are met, suitable for confident owners.
– Equity Rollover, retaining minority ownership in the new entity, ideal for those wanting continued involvement and future upside.