Independent diagnostic imaging practice valuations across Australia

Diagnostic imaging practices are valued on maintainable earnings: the profit the practice can sustain once non-recurring, non-commercial and owner-specific items are adjusted out, a process called normalisation. Those earnings are capitalised, or projected cash flows are discounted, at a rate that reflects the practice's risks. The sector work is deciding what is maintainable when Medicare benefits depend on registrations tied to a site, requests written by other doctors, radiologists who can leave, and machines with a Medicare life age.

The entity and the equipment

An imaging business can look like one practice and be several legal entities. We establish which entity holds the LSPN and the accreditation, which engages the radiologists, which owns each machine and who holds the lease. Services Australia states that a practice must tell it when a provider who owns equipment listed on the LSPN register stops working there, so equipment owned personally by a departing radiologist is not an asset a buyer acquires.

Registration and accreditation: why they do not simply transfer

Services Australia states that Medicare benefits for diagnostic imaging can be claimed if a practice has an LSPN and accreditation, and the Medicare Benefits Schedule (MBS) explanatory notes add that benefits are not payable unless equipment of an appropriate type is listed on the register. LSPN records are location specific: a practice that moves needs a new record, applied for before the move. The MBS notes require changes to the proprietor, ACN, business name, ABN, address or equipment types to be notified within 28 days, and state that a site whose registration is cancelled involuntarily may not re-register for 12 months unless permitted.

Accreditation under the Diagnostic Imaging Accreditation Scheme (DIAS) is awarded for a stated period. The Australian Commission on Safety and Quality in Health Care states that full suite accreditation is valid for four years, that first-time practices may hold entry level accreditation once, for two years, that accreditation cannot be backdated and that Medicare benefits are not payable for any period without it. It also states that revised standards, the National Medical Imaging Standards, are expected to be implemented in early 2028.

The sources we reviewed do not say that an LSPN registration or an accreditation passes automatically to a buyer. A valuation therefore treats both as a due diligence matter: whether the proprietor, ACN, ABN or site changes, when accreditation expires relative to the sale, and how the handover would be notified. Confirm the position in writing with Services Australia and the accrediting agency.

Revenue and billing policy

The Department of Health, Disability and Ageing states that the Government sets Medicare fees and rebates while providers set their own, so a practice chooses between bulk billing, where the patient pays nothing out of pocket, and charging above the benefit. The MBS notes state that bulk billed out-of-hospital services attract a benefit of 95 per cent of the schedule fee for most items, and the Department's July 2026 MBS news states that indexation applied from 1 July 2026 to most imaging services (excluding PET and nuclear medicine modifier items) at 2.6 per cent.

Bulk bill incentive items 64990 to 64995 are set by Modified Monash location and apply only to unreferred services for patients under 16 or holding a Commonwealth concession card who are not admitted hospital patients. The multiple services rules also reduce the schedule fee for additional services on the same day, so yield depends on case mix as well as volume.

Referral dependence

The MBS notes state that benefits are not payable for requested (R-type) services unless the practitioner receives a request before starting the service, with limited exemptions. MRI services can generally only be requested by a recognised specialist or consultant physician, with listed exceptions.

A request need not be addressed to a particular provider, and provider-supplied request forms must tell the patient the request may be taken to a provider of their choice, so referral volume is earned continuously rather than held. Part IIBA of the Health Insurance Act 1973 prohibits inducements to request imaging, and the notes list permitted arrangements such as shared property or services at a proportionate amount and payments at market value. We treat income that depends on a questionable arrangement as at risk, and whether an arrangement complies is a question for your lawyer.

Radiologists, supervision and reporting

The MBS notes state that CT services are not eligible for a Medicare benefit unless performed under the professional supervision of a specialist in diagnostic radiology and reported by one, with exceptions for emergencies and remote locations. MRI follows a similar pattern, with supervision and reporting by an eligible provider who is a specialist in diagnostic radiology. For procedures reported remotely, the site registration requirement applies to the site for which the procedure is reported.

The Department of Health, Disability and Ageing's Radiology Supply and Demand Compendium Report (August 2026) projects a national radiologist shortage throughout 2024 to 2048 and a growing reliance on older radiologists, and states that remote and teleradiology services have become increasingly important. We therefore ask who reports, under what contract and notice, and whether a new owner could buy the same reporting on the same terms. Where a founding radiologist reports a large share of the work, much of the earnings is personal, which is key-person risk: the risk that value leaves with one individual.

For radiographers and sonographers, DIAS Standard 1.2 requires evidence of current Ahpra registration for medical radiation practitioners and of each ultrasound sonographer's accreditation on the Australian Sonographer Accreditation Register, and the Department's Medical Radiation Practice Supply and Demand Compendium Report (August 2026) projects a national shortage of medical radiation practitioners, including diagnostic radiographers, throughout 2024 to 2038.

Equipment, the Medicare life age and MRI eligibility

The Department of Health, Disability and Ageing states that once equipment has reached the end of its expected life, Medicare no longer pays any benefits for imaging taken using it, a rule called capital sensitivity, which does not apply to PET equipment. Age runs from first installation for new equipment and, for used equipment, from first use in Australia or, if previously used overseas, from manufacture of its oldest component. The effective life is 10 years for MRI equipment, extendable to a maximum of 20; 10 years for CT, ultrasound, mammography, angiography and nuclear medicine other than PET, extendable to 15; and 15 years for other diagnostic radiology (X-ray), orthopantomogram and fluoroscopy equipment, extendable to 20. An upgrade is recognised where it brings the equipment to the standard of new equipment supplied in Australia at the time, and an exemption may be granted where circumstances beyond the practice's control prevent replacement in time.

Tax depreciation runs on a different clock. The Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 lists effective lives for radiologists' assets of 7 years for MRI systems, 10 for CT systems, 5 for ultrasound systems and 15 for fixed X-ray systems. A machine can be fully depreciated and still earn benefits, so we build a sustaining capital expenditure allowance from each machine's Medicare age and upgrade history, not from the depreciation charge.

MRI is gated further. Services Australia states that MRI services must be performed in a comprehensive practice, one that also offers X-ray, ultrasound and CT, and that from 1 July 2025 an MRI at a practice in a Modified Monash 1 location needs practice-based approval from the Department, while a comprehensive practice in Modified Monash 2 to 7 locations can list fully eligible MRI equipment without prior approval. The Department's FAQ (last updated 16 September 2024) adds that a transfer of approval to another practice will generally be considered only in exceptional circumstances.

A second stage is still ahead. The Department's MBS Online page on MRI eligibility, last updated 18 June 2025, states that, subject to the passage of legislation, the requirement for MRI equipment to have a licence with the Commonwealth will be removed from 1 July 2027. At the time of writing, the Federal Register compilation of the Diagnostic Imaging Services Table Regulations dated 1 July 2026 still requires MRI equipment in a Modified Monash 1 area to be made available by a person subject to a current deed with the Commonwealth, and we have not found an instrument that gives effect to the 2027 change. We treat it as proposed, not settled, and check the position at the valuation date.

State radiation licensing

Radiation licensing sits with state and territory regulators and is not uniform. The Victorian Department of Health states that a management licence is required before conducting any radiation practice, such as possessing X-ray units, and that the licence lists the sites and sources authorised, so a practice that acquires a CT scanner or moves must have the licence varied first. A radiation management plan is required for a transfer to another legal entity, and the Department asks practices to contact it before a sale.

The New South Wales Environment Protection Authority (EPA) states that a person responsible for regulated material must hold a radiation management licence, that diagnostic imaging apparatus must be certified by an EPA-accredited consulting radiation expert before use and again at intervals, and that the legislation does not permit the transfer of management licences, so an entity receiving equipment must hold its own licence before taking possession. The MBS notes add that Medicare benefits are not payable where a service contravenes a state or territory law relating to imaging equipment, so a licensing gap is a revenue risk as well as a compliance one.

Contractor radiologists and payroll tax

State guidance names radiology centres in its payroll tax treatment of contractor practitioners. Revenue NSW describes the medical services industry as including radiology centres and states that payments to contractors may be subject to payroll tax under the relevant contract provisions, and the Victorian State Revenue Office applies Revenue Ruling PTA-041, issued 11 August 2023 and listed as current, to medical centre businesses including radiology centres. Ongoing payroll tax belongs in maintainable earnings, and unresolved prior-period exposure is deducted from value. Confirm your position with your accountant or the relevant state revenue office. See payroll tax and medical practice value.

Premises and co-location

Registration and licensing tie the practice to its site. The NSW EPA states that premises where regulated material is kept or used should meet its shielding design guideline, which applies to newly built premises and where the building, equipment or surrounding use changes, so a short remaining lease, no option or no right of assignment is a registration and licensing problem as well as a property one. See premises and lease terms. Arrangements with a landlord or a co-located provider are read against the inducement rules described above.

From earnings to value

Capitalising maintainable EBITDA (earnings before interest, tax, depreciation and amortisation) produces enterprise value, the value of the operating business before financing. Equity value is what remains after deducting interest-bearing debt, including equipment finance and any registration, licensing or payroll tax exposure treated as debt-like, and adding surplus assets.

An earnings-based value assumes a normal level of working capital: the funding tied up between doing the work and being paid, which in imaging includes claims lodged but unpaid, patient accounts and work performed but not yet billed. Where a share is valued, a minority interest that cannot direct distributions, appoint radiologists or force a sale is typically worth less per share than a controlling one, and the report states which basis it uses.