Selling your Orthopedic & Post-Surgical Rehab practice in Washington requires careful thought. The current market presents a significant opportunity for owners, driven by strong buyer interest and favorable long-term trends. This guide offers insights into the market, key valuation drivers, and the sale process itself. Success depends on understanding your options and executing a strategy to protect your legacy and maximize your financial outcome.
Washington’s Orthopedic Market: A Prime Opportunity
If you own an orthopedic and post-surgical rehab practice in Washington, you are in a strong position. Your specialty is highly profitable and in high demand. An aging population, an increase in sports-related injuries, and a shift toward outpatient procedures mean the need for your services is growing. The U.S. saw orthopedic surgeries increase by nearly 30% in a recent 17-month period, and the rehabilitation market is projected to grow by over 6% annually.
The orthopedic market is also a fragmented market. This makes it very attractive to buyers like private equity groups and larger health systems looking to expand their footprint. In Washington, we see this trend with the presence of large alliances like Proliance Surgeons. This environment creates competition among buyers, which is great news for sellers. It means you have options, but it also means you need a plan to navigate them.
Key Considerations for Your Washington Practice
Beyond general market trends, several factors specific to your practice will influence its sale. Understanding these will help you prepare.
Your Ancillary Services are Key
Your post-surgical rehab and physical therapy services are not just a feature; they are a primary driver of your practice’s value. Buyers see these integrated services as a source of stable, high-margin revenue. The data shows that collections for physical therapy services often far exceed the costs. Highlighting the success and efficiency of your rehab center is critical.
Navigating State Regulations
Washington has specific rules governing physical therapy under RCW 18.74, covering everything from licensure to supervision and direct access. A potential buyer’s due diligence team will scrutinize your compliance. Ensuring your records and operations are perfectly aligned with state regulations is not just good practice. It is a necessary step to prevent delays or complications during a sale.
The Shift to Value-Based Care
Buyers are increasingly looking for practices that can manage a full episode of care, from surgery through rehabilitation. This allows them to negotiate bundled payment rates with insurers, a growing trend in healthcare. If your practice is set up to do this, it is a major selling point. If it is not, this presents an opportunity for growth that can be highlighted to potential partners.
Market Activity is Driving Strong Valuations
The interest in orthopedic practices is not just theoretical. It is translating into real transactions at strong prices. We are in a period of robust M&A activity, with private equity (PE) firms and strategic health systems actively competing to acquire or partner with practices like yours. This competition benefits sellers.
Orthopedic practices consistently command higher valuation multiples than most other medical specialties. This is due to their profitability, growth potential, and the high value of ancillary services like rehab. While a smaller “tuck-in” acquisition might see a mid-single digit multiple of its earnings, larger, well-run practices can command multiples in the high single or even low double-digits. For market-leading “platform” practices, valuations can reach the mid-teens. The key is understanding how to position your practice to attract the best buyers and the highest multiple.
Valuation multiples vary significantly based on specialty, location, and profitability.
Your 4-Step Path to a Successful Sale
Selling a practice is a structured process. Many sales run into trouble not because the practice is flawed, but because the process was managed poorly. Here is a simplified overview of the journey.
-
Preparation and Strategy. This is the most important phase. It happens long before your practice is shown to any buyer. Here, you work with advisors to clean up your financial statements, assess the practices strengths and weaknesses, and build a strategy to achieve your specific goals. This is when we answer the “I don’t want to sell for 2-3 years” concern. The preparation for a premium valuation starts now, not when you decide to sell.
-
Marketing to the Right Buyers. This is not like listing a house. The goal is to run a confidential, competitive process. We identify a curated list of buyers whose goals align with yours. We present your practice’s story in a way that highlights its unique value, creating demand and giving you negotiating leverage.
-
Navigating Due Diligence. Once you accept an offer, the buyer will begin a deep dive into your practice’s financials, operations, and legal compliance. Being prepared for this is critical. Unorganized books or unexpected issues discovered here can lower the final price or even cause the deal to fail.
-
Negotiation and Closing. The final stage involves negotiating the definitive legal agreements and finalizing the terms. An experienced advisor ensures your interests are protected and that the deal structure works for you, your family, and your staff.
The due diligence process is where many practice sales encounter unexpected challenges.
How Your Orthopedic Practice is Valued
A common question we get is, “What is my practice worth?” The answer is more complex than a simple rule of thumb. Sophisticated buyers value your practice based on its true profitability and future potential, not just its revenue.
The core formula is: Adjusted EBITDA x Multiple = Enterprise Value.
EBITDA is your Earnings Before Interest, Taxes, Depreciation, and Amortization. But the key word is “Adjusted.” We analyze your financials to normalize for items that a new owner would not incur. This includes things like your personal auto lease, excess owner salary, or one-time expenses. This process almost always reveals a higher level of profitability than what you see on a standard profit and loss statement. We find that many practices are undervalued until this work is done.
The multiple is determined by risk and opportunity. A practice that relies entirely on one doctor is riskier and gets a lower multiple. A multi-provider practice with strong ancillary rehab services, a good payer mix, and a track record of growth is less risky and gets a higher multiple. Our job is to tell your story in a way that justifies the highest possible multiple.
A comprehensive valuation is the foundation of a successful practice transition strategy.
Planning Your Life After the Sale
The transaction is not the end of the story. It is the beginning of your next chapter. What that chapter looks like is a key part of the deal structure. Many owners fear losing control or are unsure of their role after a sale. The truth is, you have more options than you might think.
A partnership should be designed to meet your personal and financial goals. For some, that means a clean break to retire or pursue other interests. For others, it means continuing to practice medicine without the headaches of running the business. For those who believe in the future growth, it can mean retaining equity for a potential second, often larger, payday down the road.
Here are a few common scenarios:
| Post-Sale Option | Key Consideration | Best For Owners Who… |
|---|---|---|
| Clean Exit | Maximizing cash at close, cleanly detaching. | …are ready to retire or start a new venture. |
| Continued Clinical Role | Negotiating employment terms, salary, and autonomy. | …love practicing medicine but not managing a business. |
| Equity Rollover | Retaining a minority stake for future growth. | …believe in the new platform’s vision and want to share in its future success. |
Thinking about these outcomes early helps us find the right partner and structure the right deal for you.
The right exit approach depends on your personal and financial objectives.
Frequently Asked Questions
Why is now a good time to sell an Orthopedic & Post-Surgical Rehab practice in Washington?
The current market is very favorable due to strong buyer interest and long-term growth trends in orthopedics and rehab services. Factors such as an aging population, increased sports injuries, and more outpatient procedures drive demand. Additionally, the fragmentation of the orthopedic market creates competition among buyers like private equity groups and health systems, which can lead to attractive sale prices.
What practice aspects most influence its valuation when selling?
Key valuation drivers include the profitability and efficiency of ancillary services like post-surgical rehab and physical therapy, compliance with Washington state regulations especially RCW 18.74, and the ability to manage a full episode of care enabling value-based payment models. Larger practices with stable high-margin revenue and good payer mix typically command higher valuation multiples.
What are important steps in preparing my practice for sale?
Preparation involves cleaning up financial statements, assessing strengths and weaknesses, and building a strategic plan aligned with your goals. This phase should begin well before marketing to buyers to maximize valuation. Organization and regulatory compliance readiness are also critical to preventing delays during due diligence.
How does the actual sale process work?
Selling your practice generally follows a 4-step process: 1) Preparation and strategy development, 2) Confidential marketing to select buyers to create competition, 3) Navigating buyer due diligence where they review financials and compliance, and 4) Negotiation and closing where legal agreements are finalized. Effective management of each phase is crucial to a successful sale.
What options do I have regarding my role and financial arrangement after selling my practice?
Options include a clean exit where you fully retire or move on, continuing in a clinical role without management responsibilities, or an equity rollover allowing you to retain partial ownership and share in future growth. Choosing the right post-sale path depends on your personal and financial goals and is a key consideration during deal structuring.
