A Guide for Ortho & MSK Owners in Washington State
The market for Ortho & MSK practices in Washington is experiencing a period of intense activity and opportunity. With strong buyer demand from private equity and health systems, now is a critical time to understand what your practice is worth and how to navigate a potential sale. This guide provides a direct overview of the current landscape, key steps, and what you need to consider for a successful transition. Proper preparation is the foundation of a great outcome.
Market Overview
The demand for musculoskeletal services in Washington is growing, driven by an aging population and a greater focus on health and mobility. At the same time, the healthcare landscape is shifting. We are seeing two major forces at play that directly impact the value of your practice.
A Growing and Consolidating Field
There is a clear trend of orthopedic surgeons moving from solo practices into larger, integrated groups. This consolidation means buyers are actively looking for established practices to build regional platforms. They are not just buying a business. They are buying a strategic piece of a larger puzzle. This makes well-run practices in desirable locations like Washington very attractive.
The Value of an Established Practice
Projections show a coming shortage of orthopedic surgeons by 2034. This makes your existing, operational practice with a stable patient base more valuable. Buyers understand that it’s easier to acquire a proven practice than to build one from the ground up in a competitive market. Your years of work have created an asset that is increasingly in demand.
Key Considerations
Selling your practice is more than a financial transaction. It involves specific legal and operational details that you must get right. In Washington, you need to be aware of state-specific rules around the corporate practice of medicine, on top of federal laws like the Stark Law and the Anti-Kickback Statute. Handling patient records according to state and federal regulations is another critical step. Buyers will perform deep due diligence, examining your financials, legal compliance, and operational efficiency. Many practice owners we talk to find that this is where unexpected issues can stall a deal. Getting your books and records in order ahead of time is not just good practice. It is a necessary step to protect your deal’s value and momentum.
Market Activity
The idea of selling is not abstract. It’s happening right now across Washington. The market is fueled by different types of buyers, each with their own goals and structures.
The two most common acquirers we see for Ortho & MSK practices are:
1. Private Equity-Backed Platforms. These groups are often physician-led and are looking to partner with successful practices to grow a larger organization. They bring business expertise and capital, while often seeking to have the selling physicians remain involved clinically. For instance, the acquisition of Washington Orthopaedics and Sports Medicine by Aligned Orthopedic Partners is a clear example of this trend at work in your state.
2. Regional Health Systems and Hospitals. Hospitals continue to acquire independent practices to expand their service lines and secure their referral networks.
Understanding the motivations of these different buyers is key to finding the right fit for your personal and financial goals.
The Sale Process
A successful practice sale does not start when you get an offer. It starts months or even years earlier with careful preparation. Most owners think selling maybe in a couple of years, but that is exactly when you should start the work. Buyers pay for proven performance, not just potential. The process generally follows a clear path: Preparation, Valuation, Marketing, Negotiation, Due Diligence, and Closing. The due diligence phase is particularly important. This is where a buyer verifies every aspect of your practice. We find that a well-prepared practice can move through this stage smoothly, while a practice with disorganized financials or unclear compliance can face significant delays or a reduction in price. Managing this process from start to finish ensures you are selling on your terms, not the buyer’s.
Valuation
“What is my practice worth?” is the first question every owner asks. The answer is based on more than a simple rule of thumb. The most common method uses a multiple of your practice’s Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Adjusted EBITDA is a crucial metric because it reflects the true cash flow of your business, adding back personal expenses or one-time costs to show the real profitability to a buyer.
For an Ortho & MSK practice, this multiple can range from 3x to over 7x, depending on several factors. It’s a blend of math and market narrative.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Model | Solo-doctor dependent | Associate-driven, multiple providers |
| Revenue Streams | Core services only | Diverse, with ancillary services |
| Financials | Unorganized records | Clean, normalized financials |
| Growth Profile | Stagnant patient base | Demonstrable growth trajectory |
Understanding these drivers allows you to see your practice through a buyer’s eyes and take steps now to increase its future value.
Post-Sale Considerations
The day you close the deal is not the end of the story. It is the beginning of your next chapter. Thinking about this future state is a critical part of the planning process. A key area to consider is your role after the sale. Many buyers, especially private equity partners, want you to stay on clinically, often with an opportunity to share in the future growth. This can be structured through an earnout or rollover equity, which can provide a “second bite at the apple.” It also addresses the common fear of losing control. We help owners structure deals that preserve clinical autonomy. Finally, planning for staff retention and creating a clear tax strategy for your proceeds ensures that your legacy is protected and your financial goals are met.
Frequently Asked Questions
What is driving the current demand for Ortho & MSK practices in Washington?
The demand is driven by an aging population and a greater focus on health and mobility, alongside a trend toward consolidation of practices into larger groups, making well-run practices in desirable locations very attractive.
Who are the main types of buyers for Ortho & MSK practices in Washington?
The two most common buyers are Private Equity-Backed Platforms, which often involve physician-led groups looking to grow larger organizations, and Regional Health Systems or Hospitals, which acquire practices to expand service lines and referral networks.
What legal considerations should owners be aware of when selling an Ortho & MSK practice in Washington?
Owners must navigate state-specific laws regarding the corporate practice of medicine, as well as federal laws like the Stark Law and the Anti-Kickback Statute. Proper handling of patient records in compliance with state and federal regulations is also critical.
How is the value of an Ortho & MSK practice typically determined in Washington?
Valuation is commonly based on a multiple of Adjusted EBITDA, reflecting the practice’s true cash flow after adjusting for personal expenses and one-time costs. Multiples generally range from 3x to over 7x depending on factors like provider model, revenue diversity, financial organization, and growth profile.
What happens after the sale of an Ortho & MSK practice and what should sellers consider?
Post-sale considerations include the seller’s potential continued clinical role, often involving earnout or rollover equity arrangements to share in future growth. Planning for staff retention and developing a tax strategy for the proceeds are also crucial to protect legacy and financial goals.