Healthcare business valuation questions, answered

A healthcare business valuation is an independent opinion of what a practice, pharmacy or provider is worth at a stated valuation date and for a stated purpose. It is usually prepared on a market value basis: the price a willing but not anxious buyer and seller would agree, both informed and neither forced to act. That meaning comes from Spencer v Commonwealth [1907] HCA 82 and is the one the Australian Taxation Office applies for tax purposes. Value in that sense is not a forecast of the price one particular buyer would pay. An independent business valuation records the earnings, method, evidence and assumptions, so the conclusion can be tested.

Capitalisation of future maintainable earnings is the most common primary method for an established, profitable practice, pharmacy or provider. It suits a business with a settled earnings history, because the normalised result of recent trading is a reasonable guide to what a purchaser could expect to sustain. It is less suitable where the business has recently opened, has just lost or gained a principal practitioner, or sits part way through a funding change. In those cases a discounted cash flow, or an earnings assessment built on forward information rather than history, is usually more informative.

A fixed fee. A full valuation report costs $1,500 for up to $1 million, $2,200 for $1 million to $3 million, $4,950 for $3 million to $10 million, $9,450 for above $10 million, all plus GST, set by the annual revenue of the business being valued. An indicative assessment is $950 plus GST and is credited against a full report if you proceed within 3 months. An expert report for a family law matter or a shareholder dispute is a higher fixed fee, set by the same revenue bands and shown in full on this page. Every fee is agreed in writing before work begins and does not change with the conclusion reached.

It may, but much of it is likely to be personal goodwill rather than transferable goodwill. Goodwill is the part of the price that buys no equipment: everything paid over the identifiable assets net of liabilities. Where patients attend because of you and would follow you, that value tends to leave with you unless a structured transition moves it to a successor. A valuation separates the two by asking what a buyer could retain after you leave: the location, the recall system, the team, the equipment and the patients who are loyal to the practice rather than to you. A principal who works through a transition period under a restraint typically converts more personal goodwill into transferable goodwill than one who exits at settlement.

On maintainable earnings: the profit the practice can be expected to sustain once one-off items are removed and every doctor, including the owner, is paid market rates for clinical work. Those earnings are capitalised at a multiple reflecting risk, growth and how much earning capacity would survive a change of owner. Medicare provider numbers are issued to individuals, and Services Australia states you cannot use another health professional's provider number, so billings follow the doctor. A medical practice valuation also weighs billing mix, patient retention, the lease, whether a service entity is involved, and payroll tax exposure of the kind described in Revenue NSW ruling PTA 041.

On maintainable earnings from PBS dispensing, retail sales and funded professional services, capitalised at a multiple reflecting risks attached to the approval, location, margins and workforce. Under section 90 of the National Health Act 1953 a registered pharmacist must apply to the Department of Health, Disability and Ageing for approval to establish a new pharmacy or to change the ownership of an approved one, PBS medicines may only be supplied at or from the approved premises, and the Australian Community Pharmacy Authority assesses applications against the Pharmacy Location Rules. Goodwill in a pharmacy valuation therefore attaches largely to the approved premises rather than to the individual pharmacist.

On the earnings the provider can sustain under the pricing settings at the valuation date, adjusted for participant concentration, workforce cost and compliance risk. The NDIA publishes an NDIS pricing schedule, effective 1 July 2026, setting what it considers appropriate and reasonable maximum prices for NDIS supports, so growth comes from volume rather than price. An NDIS business valuation also tests registration. The NDIS Quality and Safeguards Commission states that registration is linked to a single ABN and cannot be transferred, and that for ownership changes from 1 July 2026 a buyer of a provider delivering high-risk or complex supports must start an audit no later than three months afterwards.

By capitalising its maintainable earnings, after paying every clinician including the owner a market wage, at a rate reflecting how likely those earnings are to continue under a new owner. The sector-specific work sits in three places: restating contractor and owner costs, mapping revenue by funding stream and the rules attached to each, and testing how much goodwill is personal to individual clinicians rather than attached to the practice. Where earnings are changing, a discounted cash flow may be used instead, and a practice whose earnings do not support goodwill is valued on its net assets.

Usually by capitalising future maintainable earnings, assessed after a market salary for the principal veterinarian and market rent for the premises, at a multiple reflecting the risks specific to that practice. The result is then checked against net assets and any comparable sales. The largest normalisation adjustments are typically the principal's remuneration, related-party rent and deferred equipment replacement, and the largest risks are veterinarian dependence and recruitment. Where an equity interest is being valued rather than the business, enterprise value is adjusted for debt, surplus assets and working capital.

No. It gives an opinion of market value: the price a hypothetical willing buyer and seller, properly informed and not under pressure, would agree at the valuation date. An actual sale depends on who is buying, what they can do with the business, the deal terms, the timing and the market at the time. A purchaser with synergies may pay above market value; a rushed sale may realise less. The valuation is the reference point against which offers, appraisals and negotiating positions can be tested, not a prediction of the outcome.

Often yes, because two of the tests are measured in market values. At the time of writing the maximum net asset value test requires the total net value of the CGT assets of you, your connected entities, your affiliates and entities connected with your affiliates not to exceed $6 million just before the CGT event, and the ATO notes that limit is not indexed. Where the asset is a share or trust interest, the modified active asset test compares the market value of active assets against the market value of all assets. Your adviser confirms which conditions apply.

The parties may jointly appoint a single expert witness where they agree that expert evidence will help resolve a substantial issue (rule 7.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021), and the court may order that the evidence be given by a single expert (rule 7.04). The court can also require the parties to confer on who is appointed, to give the court a list of experts who have consented and the fee each will accept, or to settle the instructions itself (rule 7.05). Unless the parties agree or the court orders otherwise, the parties are equally liable for the single expert's reasonable fees and expenses, and the expert is not required to start work until those fees are paid or secured (rule 7.06).