Independent valuations of allied health practices across Australia

Maintainable earnings come first

Every approach starts with maintainable earnings: the profit the practice can produce in a normal year once every clinician, including the owner, is paid a market wage for their clinical work. Reported profit is adjusted through normalisation, which removes one-off items and restates related-party costs at market rates. The usual measure is EBITDA, meaning earnings taken before interest, tax, depreciation and amortisation. Where equipment and fit-out are substantial and replaced on a cycle, EBIT, which carries depreciation and amortisation, gives the fairer picture.

The largest normalisation in allied health is almost always the owner's own billings, because a principal who takes drawings rather than a wage shows a profit no buyer could reproduce without hiring a replacement. See what is maintainable earnings.

Funding mix and what each stream is worth

Allied health revenue comes from more sources than most healthcare sectors, each with its own rules, price cap and payer behaviour. The valuation maps revenue by stream and judges how durable each one is.

• Private fees and health fund extras. Fees set by the practice, often part-paid by the patient's general treatment (extras) cover and subject to the per-service and annual limits in their policy, with claims processed at the point of sale through a terminal such as HICAPS. A service cannot be claimed against both Medicare and a fund. The least regulated stream, and generally the most transferable provided the patients return.
• Medicare chronic condition management. GP chronic condition management plans replaced GP Management Plans and Team Care Arrangements from 1 July 2025. A patient may receive up to five individual allied health services in a calendar year, a limit that applies across all modes of service, so the video item 93000 and the phone item 93013 share it with face-to-face attendances. Each service must run at least 20 minutes, the plan must have been prepared or reviewed in the last 18 months, a referral written since 1 July 2025 lasts for the period it specifies or 18 months from the first service, and a GP Management Plan and Team Care Arrangements prepared before 1 July 2025 support these services until the end of 30 June 2027. The fee is set rather than negotiated: the schedule fee for the physiotherapy item 10960 is $74.55 and the benefit is 85 per cent of it, or $63.40. The stream matters more as a referral channel than as a fee level, so practices leaning on it carry referrer concentration. Psychology practices also bill Medicare mental health items, covered on the psychology page.
• NDIS. The National Disability Insurance Agency sets the price limits for therapy supports, capping physiotherapy at $183.99 an hour. From 1 July 2025 therapy providers may claim half the relevant limit for travel time, $92.00 an hour for that physiotherapist, and only up to 30 minutes each way in metropolitan areas (Modified Monash Model 1 to 3) and 60 minutes each way in regional areas (MMM 4 to 5). Registered providers must not add gap fees, and plan managers cannot pay an invoice priced above a limit whether the provider is registered or not. NDIS-heavy practices are analysed with the tools on the NDIS provider page: participant concentration, plan-management mix and travel share.
• DVA. Under the Department of Veterans' Affairs treatment cycle, a referral lasts either 12 sessions or one year, whichever ends first, and the provider sends an end-of-cycle report to the GP before a further referral. DVA sets the fee, publishing a schedule for each discipline, the current ones effective 1 July 2026, which notes the items needing prior financial authorisation. A provider registered with Services Australia is automatically registered with DVA, so the entitlement to bill follows the practitioner. The revenue is renewed by referrers the practice does not control.
• Workers compensation and CTP. State schemes with their own approval rules and their own fee orders. In New South Wales, accredited exercise physiologists, chiropractors, counsellors, osteopaths, physiotherapists and psychologists must be approved by SIRA before providing services in the workers compensation scheme. Approval takes general Ahpra registration for the board-regulated professions, or Exercise and Sports Science Australia accreditation for exercise physiologists, plus SIRA's introductory training program, and SIRA can decline, suspend or revoke it. SIRA publishes fees separately for workers compensation and for motor crash health services. Victoria runs on a different footing: a worker with an accepted claim can see a WorkSafe-registered physiotherapist without prior approval or a medical referral, but the provider must submit an Allied Health Recovery Management Plan within the first five consultations. Approvals sit with the practitioner, so they leave with them.
• Contracts. Employee assistance programs, employers, schools and aged care providers may engage the practice at agreed session rates. Here the valuation reads the term, notice period and change-of-control clauses rather than the funding behind them. Therapy delivered under Support at Home and other aged care arrangements is dealt with on the aged care page.

Practitioner model: employees, contractors and payroll tax

Practices engage clinicians as employees on a salary, sometimes with a productivity bonus, or as contractors paid a share of their billings. The split model looks cheaper on the profit and loss statement, but it moves risk into the valuation.

Whether a clinician is an employee or a genuine independent contractor affects superannuation and withholding obligations, and the label in the agreement does not settle it. Under the harmonised relevant contract provisions administered by the state revenue offices, payments to a contractor practitioner may also be deemed wages for payroll tax. Queensland's public ruling on medical centres (PTAQ000.6.5, issued 3 March 2025) applies to medical centre businesses including dental clinics and physiotherapy practices unless an exemption applies, such as the contractor ordinarily providing services of that kind to the public generally, or working no more than 90 days in the financial year. The relief Revenue NSW introduced for medical centres is confined to contractor general practitioner wages and expressly does not extend to allied health services.

Contractor splits are therefore tested against what an employed clinician would cost, including superannuation, leave and payroll tax where the wages threshold is likely to be exceeded, a threshold Revenue NSW sets at $1.2 million of annual wages taxed at 5.45 per cent for 2026-27 and every other state sets for itself. Where a practice has run split arrangements without a payroll tax provision, the possible historical liability is disclosed as a matter affecting equity value. Whether a particular arrangement is compliant is a question for your accountant or lawyer. Payroll tax and contractor arrangements explains the mechanics.

Personal goodwill versus transferable goodwill

Goodwill is the value of a business over and above its identifiable net tangible assets, and it is only worth paying for if it transfers. Personal goodwill belongs to the individual clinician: their reputation, their referrers, the patients who ask for them by name. Transferable (commercial) goodwill belongs to the practice: its location, brand, systems, contracts, team and the habit of patients returning to the clinic rather than to the person.

HPNA tests transferability with evidence: billings by practitioner, the share of new patients arriving through the practice's own channels, and whether approvals and contracts are held by the entity or the individual. Key-person risk, the risk that value falls sharply if one person leaves, is then reflected in the capitalisation rate or the cash flows. See how practitioner dependence affects business value.

Capacity, utilisation and delivery model

Allied health earnings are capped by rooms and hours. A clinic sells consultation slots, so the valuation looks at room utilisation across the week, billable hours against paid hours, average fee per consultation, and cancellation, non-attendance and rebooking rates. A waitlist is useful evidence of demand, but only when it is measured and the practice can add capacity to serve it. A mobile or community service has no rooms but carries travel time, which some funders pay in full, some at a reduced rate and some not at all. Telehealth widens the catchment and cuts premises cost, but attracts a Medicare benefit only through the video and phone items 93000 and 93013. Group practices are assessed for genuine cross-referral, since a physiotherapist and a psychologist sharing a reception desk is not an integrated care pathway. Workforce supply sets a further ceiling: the 2025 Occupation Shortage List published by Jobs and Skills Australia rates physiotherapists, occupational therapists, speech pathologists and psychologists in shortage nationally and in every state and territory, so growth plans that assume hiring carry little weight. See the clinical workforce.

From earnings to a value

With maintainable earnings settled, HPNA selects the method that fits the practice and the purpose. The most common is capitalisation of future maintainable earnings: earnings are divided by a capitalisation rate, or equivalently multiplied by a multiple, reflecting the risk of those earnings continuing under a new owner. Higher risk means a higher capitalisation rate and a lower value, and the multiple must match the earnings measure it is applied to, because one derived from EBITDA is not interchangeable with one derived from EBIT or from after-tax earnings. Where earnings are changing, a discounted cash flow model projects the cash flows and discounts them at a rate reflecting their risk. A net assets approach applies where the earnings do not support goodwill, and market evidence is used to cross-check.

Three definitions matter here. The valuation date fixes the facts, because a conclusion reached on one date does not carry forward. Market value is the price that would be agreed between a willing but not anxious buyer and a willing but not anxious seller, both properly informed and at arm's length, which is not the same as price: a deal price can differ because of an earn-out, a retention condition or vendor finance. Enterprise value, the value of the operating business, becomes equity value, the value of the owners' interest, after deducting interest-bearing debt, adding surplus assets and adjusting for surplus or deficient working capital, the current assets less current liabilities the practice needs to trade. Claims on insurers, schemes and plan managers form much of that working capital and are checked for age and rejection rates. See how to value an allied health practice.