Selling your urgent care practice is one of the most significant financial decisions of your career. In New Mexico, the landscape is full of opportunity, driven by market growth and active buyers. However, it also has unique challenges, including a shifting workforce and new state regulations that impact practice sales. This guide offers a clear overview of the market, key considerations for owners, and how to position your practice for a successful exit.
Market Overview
A Growing Market
The U.S. urgent care market is booming, with projected annual growth of over 8.5%. New Mexico reflects this trend, with the outpatient care sector expanding into a billion-dollar industry. This growth attracts buyers, from large health systems to private equity groups, who are looking to enter or expand in the state. For a practice owner, this means there is a strong demand for well-run, profitable urgent care centers.
The Local Challenge
While the market is strong, New Mexico faces a well-documented healthcare workforce shortage. For sellers, this is not just an operational headache. It is a strategic issue that buyers will examine closely during due diligence. A practice that can demonstrate stable staffing and effective recruitment strategies becomes a much more attractive acquisition target. This is a challenge you must address before going to market.
Key Considerations for New Mexico Owners
Beyond national trends, selling in New Mexico requires attention to specific local factors. These issues will directly impact your timeline, valuation, and the smoothness of your transaction.
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New Regulatory Oversight. As of March 2024, New Mexico’s Health Care Consolidation Oversight Act is in effect. This law gives the state a 120-day review period for many healthcare transactions. Failing to navigate this process correctly can delay or even derail your sale. Understanding its requirements is no longer optional.
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Your Payer Mix. Buyers look closely at your mix of commercial, Medicare, Medicaid, and self-pay patients. With New Mexico’s Medicaid reimbursement rates known to be low, a practice with a healthy percentage of commercial payers is often valued more highly. We find that showing a plan to optimize this mix can significantly increase buyer confidence.
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A Staff Retention Plan. You cannot have a successful sale without a plan for your team. Buyers want to see a stable, committed staff. Developing retention incentives and a clear communication plan for the transition is a key part of sale preparation. It protects your team and your practice’s value.
Market Activity: Consolidation Creates Opportunity
The Consolidation Trend
The urgent care industry is a prime target for consolidation. Large healthcare companies and private equity firms are actively buying independent practices to build regional and national platforms. This trend is not just happening elsewhere. It is happening right here in New Mexico. The recent acquisition of 18 NextCare clinics in the region by Ardent Health is a clear signal that sophisticated buyers see value in the state.
What This Means for You
This trend creates a competitive environment for great practices. Instead of hoping a single local buyer comes along, you may have multiple sophisticated groups interested in your business. This competition can drive up your final sale price. However, these buyers are experienced. They expect a professional process and a practice that has its financial and operational house in order. Running a structured sale process ensures you can leverage this interest to your advantage.
The 4 Phases of a Practice Sale
Selling a practice isn’t an event. It’s a process. Even if you plan to sell in 2-3 years, starting the preparation now is what leads to a premium valuation. Buyers pay for proven performance, not just potential.
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Preparation and Valuation. This is the foundation. It involves organizing your financials, understanding your practice’s true profitability, and getting a clear, market-based valuation. This is also the time to fix any operational or compliance issues.
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Confidential Marketing. The goal here is to find the right buyer, not just any buyer. A professional process involves creating a compelling story about your practice’s strengths and growth potential and then confidentially approaching a curated list of qualified buyers.
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Due Diligence. This is where the buyer inspects everything: your financials, contracts, compliance, and clinical data. Many deals encounter problems here. Being thoroughly prepared is the only way to ensure a smooth process and avoid negative surprises.
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Negotiation and Closing. The final phase involves negotiating the purchase agreement and planning the transition. The structure of the deal here is just as important as the price, as it affects your tax burden and future obligations.
How Your Urgent Care Practice is Valued
Your practice is worth what a buyer is willing to pay. But that price is based on a specific financial metric: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Think of this as your true annual cash flow. We calculate it by taking your net income and adding back expenses a new owner wouldn’t have, like your personal car or an above-market salary. Uncovering this “hidden” profitability is often the first step to a higher valuation.
A buyer will apply a multiple to your Adjusted EBITDA to arrive at a sale price. That multiple is not random. It is influenced by a range of factors.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Provider Model | Owner-dependent | Associate-driven, multi-provider |
| Size & Scale | Single location, <$1M revenue | Multi-site, >$3M revenue |
| Payer Mix | Heavy Medicaid / self-pay | Strong commercial insurance mix |
| Growth Profile | Stable, flat patient volume | Documented history of growth |
Understanding these factors is key. It shows you where to focus your efforts to build a more valuable practice before you sell.
Planning for Life After the Sale
A successful transaction goes beyond just the closing date. Thinking about the post-sale period is a critical part of the planning process. It ensures your personal goals are met and your legacy is protected.
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The Transition Plan. What happens on day one after the sale? A smooth transition for your staff and patients is important. This often involves the selling physician staying on for a period of time, which should be clearly defined in the sale agreement.
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Your Financial Future. The headline price is not what you put in the bank. The structure of your sale has major tax implications. Planning ahead with an advisor can help you choose a deal structure that maximizes your after-tax proceeds.
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The “Second Bite.” Selling doesn’t always mean walking away completely. Many owners choose to “roll over” a portion of their sale proceeds into equity in the new, larger company. This allows you to benefit from the future growth of the platform, giving you a potential second major payday when that larger entity is sold down the road. It can be a powerful wealth creation tool.
Frequently Asked Questions
What are the new regulatory requirements for selling an urgent care practice in New Mexico?
As of March 2024, the New Mexico Health Care Consolidation Oversight Act requires a 120-day state review period for many healthcare transactions. Sellers must understand and navigate this process carefully to avoid delays or potential derailment of the sale.
How does the payer mix affect the valuation of an urgent care practice in New Mexico?
Buyers closely examine your mix of commercial, Medicare, Medicaid, and self-pay patients. Practices with a higher percentage of commercial payers tend to have a higher valuation because New Mexico’s Medicaid reimbursement rates are relatively low. Optimizing your payer mix can increase buyer confidence and sale price.
What challenges related to workforce should I address before selling my urgent care practice in New Mexico?
New Mexico faces a healthcare workforce shortage that buyers will scrutinize during due diligence. Demonstrating stable staffing and effective recruitment and retention strategies will make your practice more attractive and can improve your sale outcome.
What are the main phases of selling an urgent care practice, and what should I prepare for each phase?
The sale process involves four phases:
- Preparation and Valuation: Organizing financials, assessing profitability, and addressing operational issues.
- Confidential Marketing: Finding the right buyer through a professional, confidential process.
- Due Diligence: Preparing for buyer inspection of all aspects, including finances and compliance.
- Negotiation and Closing: Finalizing the purchase agreement, deal structure, and transition plans.
Starting preparation early leads to a premium valuation.
How should I plan financially for life after selling my urgent care practice?
Planning should include your transition plan (such as staying on post-sale), understanding the tax implications of the deal structure to maximize after-tax proceeds, and considering reinvesting part of the proceeds into equity in the new company. This reinvestment can provide future growth opportunities and potential additional financial benefits.