The Practice Operator Brief · Q3 2026
Capital is consolidating care — and the terms have moved against sellers.
The consolidation story in healthcare is not new. What is new in 2026 is that terms have moved against sellers, more than a dozen states have inserted themselves into the closing process, and several categories that looked like sure things three years ago are working through a correction.
Consolidation is furthest along where you would least expect it.
At least 47% of physicians were employed by or affiliated with hospital systems in 2024, up from less than 30% in 2012, per the GAO. Private equity ownership of physician practices remains comparatively small at about 6.5% nationally in 2024 — up from 4.5% in 2022 — though it varies sharply by specialty and market.
Veterinary is far more consolidated than most operators realize, with industry reporting putting roughly three quarters of specialty and emergency practices and about a quarter of primary care practices under corporate ownership. Dental sits in between, with the three largest support organizations together supporting a mid-teens share of US dentists. Chiropractic is earliest, at roughly 15% to 20% corporate alignment.
Multiples compressed. Structures got harder.
The 2021 comparables are gone. Reported ranges now put behavioral health around 12–18× EBITDA, orthopedics 8–12×, dental support organizations 8–14× post-correction, and urgent care 8–12× on multi-site platforms. FTC scrutiny and state attorney general activity through 2024–2025 changed the calculus for physician rollups.
Deal structures reflect it. Buyers increasingly require 20% to 40% rollover equity, longer earnouts, regulatory escrows, and tighter management incentive plans than 2022 deals did. The buyer mix has shifted too, with search funders, family offices, and strategic operators replacing first-wave private equity in several sub-sectors.
The scale premium survived the compression, and it is the widest spread in the market. Solo, owner-dependent veterinary practices reportedly cap in the mid-single-digit multiples and sell to SBA-funded individuals, while multi-DVM practices with meaningful EBITDA clear low-teens. Dental runs around 5× seller’s discretionary earnings at single-practice level against low-teens adjusted EBITDA at platform level. That arbitrage is the entire consolidation model.
Regulators are now in the deal.
More than a dozen states have pre-closing healthcare transaction notice requirements, including California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New York, Oregon, and Washington.
California is the clearest illustration. AB 1415, signed October 2025 and effective January 1, 2026, expands the Office of Health Care Affordability notice framework to cover private equity groups, hedge funds, and management services organizations, requiring written notice at least 90 days before a material transaction. SB 351, signed October 2025 and effective the same date, codifies the state’s corporate practice of medicine doctrine and restricts private equity groups and hedge funds from interfering with the professional judgment of licensed providers.
Practically, review has moved past paperwork. Regulators read through the management services agreement to see who actually controls clinical hiring, scheduling, and diagnostic protocols. Reporting on recent reviews describes requests extending to internal messaging archives and payroll authorization logs — which is a documentation problem before it is a legal one.
The demand signal worth looking at.
Veterinary invoice volume has been reported in decline for several consecutive years, with the AVMA’s chief economist describing the profession as in a recessionary period beginning late 2024. Private equity acquired a substantial share of US veterinary clinics during the pandemic and has found exits harder as dealmaking slowed alongside visits.
If you are underwriting an exit in this category on 2021 assumptions, the gap is not small.
What buyers, lenders, and regulators now want — which is the same thing.
Scale changes how you are evaluated by all three, and all three want consolidated, normalized financials that show what is happening site by site, plus a clean documented line between clinical and business decisions.
1. Are your financials consolidated and normalized across every site?
In a group sale, inconsistent site-level reporting is what turns a platform story into a bolt-on price. See multi-entity accounting.
2. Can you model the deal, not just the headline?
Fee escalators, ancillary carve-outs, and earnout benchmarks determine what you actually take home. Rollover equity of 20–40% means most of your value remains at risk after close — and those terms are modelable in advance by a seller whose numbers support the exercise.
3. Can you document clinical independence?
If a non-licensed executive is directing clinical decisions in writing anywhere in your organization, that is structural risk now rather than a compliance footnote. This is a question for healthcare counsel, not for us — we raise it because it shapes what your records need to show.
Three themes for your back office.
Site-level P&Ls determine your buyer pool. A group that cannot show per-location contribution margin gets priced as a collection of practices rather than a platform.
Collections, not billings. Practices collect a materially smaller share of what they bill than most valuations assume, and any figure built on gross billings overstates the business. See revenue cycle management.
Pre-closing review is a documentation exercise. States want financial statements and governance data 90 days or more before close. That clock starts well before you have a signed letter of intent, which means the records have to exist beforehand rather than be assembled on request. See growth and sale readiness.
Frequently asked.
How consolidated is physician practice ownership?
According to the Government Accountability Office, at least 47 percent of physicians were employed by or affiliated with hospital systems in 2024, up from less than 30 percent in 2012. Private equity ownership of physician practices remains comparatively small at about 6.5 percent nationally in 2024, up from 4.5 percent in 2022, though it varies sharply by specialty and geographic market.
What are practice valuation multiples in 2026?
Reported ranges vary by category and have compressed from 2021 comparables. Industry reporting places behavioral health around 12 to 18 times EBITDA, orthopedics 8 to 12 times, dental support organizations 8 to 14 times post-correction, and urgent care 8 to 12 times on multi-site platforms. These are directional market observations rather than appraisals, and the spread between a single practice and a platform is typically much wider than the spread within either.
Which states require pre-closing notice for healthcare transactions?
More than a dozen states now have some form of pre-closing healthcare transaction notice requirement, including California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New York, Oregon, and Washington. Requirements and thresholds differ substantially by state, so the applicable rule depends on where the entities and the transaction sit.
What do California AB 1415 and SB 351 require?
AB 1415, signed in October 2025 and effective January 1, 2026, expands California's Office of Health Care Affordability notice framework to include private equity groups, hedge funds, and management services organizations, requiring written notice at least 90 days before a material transaction. SB 351, signed October 2025 and also effective January 1, 2026, codifies California's corporate practice of medicine doctrine and restricts private equity groups and hedge funds from interfering with the professional judgment of licensed providers.
Why do site-level profit and loss statements affect valuation?
A group that cannot show per-location contribution margin gets evaluated as a collection of individual practices rather than as a platform, and the two are priced very differently. Platform pricing depends on demonstrating that the group operates as a coordinated business with consistent reporting, which is difficult to assert without location-level financials that reconcile to the consolidated statements.
Where does your group sit?
The Medical Practice Finance Diagnostic includes a multi-site track — location contribution comparison, shared cost allocation, and consolidation readiness. Free, and everything runs in your browser.
Working on this in your own group?
Capital Advisors provides practice bookkeeping, fractional CFO support, and multi-entity consolidated reporting for practice groups. Talk to us about your sites →
By Heather Engler, Esq.
Founder & Principal, Capital Advisors
Heather blends legal training with deep expertise in bookkeeping and tax compliance, giving her a unique perspective on financial strategy, risk management, and operations. Under her leadership, Capital Advisors serves hundreds of clients across bookkeeping, tax, payroll, and financial advisory. More about the team →