Valuing Gastroenterology Practices in 2026: A Comprehensive Guide for GI Physicians, Owners, Investors, and M&A Professionals

Gastroenterology continues to be an attractive specialty for M&A activity, driven by the procedural and somewhat recurring nature of endoscopy. Private equity firms and strategic buyers are actively consolidating the space, targeting practices with multiple providers, ancillary revenue streams, and scalable operations. As competition increases, well-managed GI groups with diversified services and payer stability are commanding premium valuations in today’s market, while smaller practices with affiliated endoscopy centers can command premium multiples as well.

Whether you're preparing to sell a GI practice, evaluating a partnership opportunity, or seeking to benchmark financial performance, this article explores the key valuation methodologies, drivers, and risk factors that determine the value of a gastroenterology physician group.

I. Industry Context: Why Gastroenterology Practices are in Demand

Gastroenterology services are in strong and sustained demand due to demographic trends, disease prevalence, and evolving care delivery models. An aging population, combined with rising incidence of chronic gastrointestinal conditions such as GERD, IBS, and inflammatory bowel disease, continues to drive steady patient volumes. In addition, increased awareness and expanded screening guidelines for colorectal cancer have materially boosted demand for diagnostic and preventive endoscopic procedures. Gastroenterology benefits from a high proportion of medically necessary, non-elective services, which supports consistent utilization across economic cycles. The ongoing shift of endoscopic procedures to lower-cost outpatient and ambulatory surgery center settings has further expanded access and efficiency, increasing overall procedure volumes. Together, these factors create durable demand and predictable cash flow characteristics that make gastroenterology services attractive to operators, investors, and strategic acquirers.

Key Growth Drivers

Key growth drivers for the industry include the following:

• Aging U.S. Population: The prevalence of GI disorders, including colorectal cancer, GERD, IBS, diverticular disease, and liver disease, increases materially with age. As the U.S. population over 65 continues to grow, demand for diagnostic and interventional GI services, particularly colonoscopy and upper endoscopy, is expected to rise on a durable, long-term basis.

  
  

• Colorectal Cancer Screening Mandates and Expanded Guidelines: The lowering of the recommended colorectal cancer screening age from 50 to 45 has expanded the eligible patient population by millions. Combined with strong payer coverage, preventive-care mandates, and quality-metric incentives, this change has driven sustained volume growth for screening colonoscopies.

  
  

• Shift of Procedures to Lower-Cost Ambulatory Settings: There is an ongoing migration of GI procedures from hospitals to ambulatory surgery centers (ASCs) and office-based endoscopy suites. These settings offer lower costs to payers, greater convenience to patients, and higher operating margins for providers, making them attractive platforms for both organic growth and consolidation.

  
  

• Rising Prevalence of Chronic GI and Metabolic-Related Conditions: Increases in obesity, diabetes, alcohol-related liver disease, NAFLD/NASH, inflammatory bowel disease, and GERD are driving higher utilization of GI services. Many of these conditions require recurring diagnostics, surveillance, and long-term management, supporting stable, repeat patient volumes.

  
  

• Technological Advancements and Expanded Service Capabilities: Innovations such as advanced endoscopic imaging, AI-assisted polyp detection, minimally invasive therapeutic procedures, and improved anesthesia workflows have expanded the scope of services GI providers can deliver. These advancements improve clinical outcomes, increase procedural throughput, and support higher reimbursement acuity.

  
  

• Favorable Economics of Preventive and Interventional GI Services: GI benefits from a high proportion of well-reimbursed, elective, and preventive procedures with predictable demand and relatively low bad-debt risk. This combination supports strong cash flow characteristics, making the sector resilient across economic cycles and attractive for continued capital deployment.

Reimbursement Outlook

Reimbursement trends for gastroenterology services have been characterized by moderate fee schedule adjustments, occasional downward pressure on procedure codes such as colonoscopy with biopsy, and ongoing shifts toward bundled and value-based payment models. While Medicare and commercial payers continue to recognize the clinical necessity of GI procedures, persistent reimbursement rate compression has placed a spotlight on operational efficiency and ancillary revenue diversification. As a result, practices are increasingly focused on expanding high-margin services, optimizing coding and documentation, and negotiating stronger managed care contracts to mitigate reimbursement challenges. Looking toward 2026, reimbursement outlook remains cautiously stable, with growth expected in preventive and chronic care management payments, but sustained pressure on procedural fees will likely continue to incentivize consolidation and scale-driven cost management.

II. Top Reasons to Get a Valuation of Your Gastroenterology Practice

The following is a list of common reasons for commissioning a valuation analysis or appraisal of a gastroenterology practice:

1. Preparing for a Sale or Strategic Partnership

• To establish a defensible asking price when marketing the business

• To evaluate offers from private equity, strategic buyers, or joint venture partners

• To understand how your practice compares to market benchmarks

  
  

2. Internal Ownership Transition

• For buy-in or buy-out of partners or associates

• To support fair and compliant equity allocation among clinicians

• To plan for generational succession or family transfers

3. Compliance with Healthcare Regulations

• To support Fair Market Value (FMV) and Commercial Reasonableness (CR) assessments required by Stark Law and Anti-Kickback Statute in deals involving ownership by other healthcare providers

• To document compliance in joint ventures, especially when there is a referral relationships (hospitals, ancillary service providers, or physicians)

  
  

4. Estate & Tax Planning

• For gift or estate tax reporting to the IRS (especially for closely held businesses)

• To support asset protection strategies

• To plan for long-term wealth transfer or charitable contributions

  
  

5. Litigation or Dispute Resolution

• For divorce proceedings involving business asset division

• In shareholder or partnership disputes

• For economic damages assessments in legal proceedings

  
  

6. Business Planning & Strategic Growth

• To establish a valuation baseline for performance benchmarking

• To support capital raise, refinancing, or line-of-credit applications

• To identify value drivers and areas for operational improvement

III. Valuation Approaches for Gastroenterology

Valuation professionals typically apply three core methodologies to estimate the value of a Gastroenterology:

Income Approach (Discounted Cash Flow or Capitalization of Earnings)

This approach values a business based on the present value of its expected future earnings or cash flows. It’s most appropriate when a practice has a stable operating history and predictable future performance.

Key assumptions include:

• Normalized EBITDA or owner’s discretionary earnings

• Growth rate assumptions (organic and acquisitive)

• Risk-adjusted discount rate (typically 10–25% for GI)

• Capital expenditure needs

Pros: Based on the business’ future earning power

Cons: Sensitive to forecasting errors and discount rate subjectivity

Market Approach (Comparable Transaction Method, e.g. Market Multiples)

This method uses observed EBITDA multiples or revenue multiples from recent M&A transactions or public companies in the gastroenterology space. Typical multiples for small to medium -sized GI practices are within the range of 5x to 9x EBITDA, depending on a wide variety of factors.

Pros: Easy to benchmark; useful in active M&A environments

Cons: Requires access to quality private market data and careful adjustment for size, margin, geography, and a variety of other factors

Asset-Based Approach

Used only when the business is underperforming or being liquidated. The value is derived from the net assets (e.g., equipment, leasehold improvements) minus liabilities.

Pros: Useful in distressed scenarios

Cons: Intangible value of the practice can be difficult to quantify under this method

IV. Key Value Drivers in Gastroenterology Valuation

Several specific factors can materially influence a GI practice’s valuation multiple:

Earnings Quality

Buyers and valuation professionals place significant emphasis on normalized EBITDA and / or cash flow. Adjustments often include:

• Owner compensation (if above/below market)

• Non-recurring revenue or expenses

• Related-party lease arrangements

• Post-transaction adjustments

• Out-of-period adjustments

Growth Potential

Discount rates and valuation multiples are a function of perceived risk and growth. Key considerations within the Gastroenterology industry related to growth include the following:

• Sustained Demand Growth: Rising GI disease prevalence, an aging population, and expanded colorectal cancer screening drive long-term patient volume and procedure demand, supporting predictable growth.

  
  

• Ancillary and Integrated Services: Adding high-margin services like anesthesia, pathology, imaging, infusion, and ASC ownership allows practices to diversify revenue and improve profitability.

  
  

• Platform Scalability and Consolidation: Practices with operational infrastructure and acquisition potential are well-positioned for expansion, increasing their attractiveness and enterprise value.

Risk Factors

Key considerations within the Gastroenterology industry related to risk include the following:

• Reimbursement Risk and Payer Concentration: GI practices face ongoing pressure from Medicare and commercial payers, with changes to fee schedules or coverage potentially impacting revenue. Valuations should assess payer mix and the sustainability of current contracts.

  
  

• Physician Dependence and Workforce Constraints: Many GI practices rely on a few high-producing physicians, creating concentration risk if key providers leave or reduce hours. Limited provider depth or succession planning can increase risk in valuations.

  
  

• Regulatory, Compliance, and Ancillary Services Risk: Ancillary services like anesthesia, pathology, imaging, and ASCs add regulatory and compliance complexity. Changes in Stark Law, Anti-Kickback rules, or billing standards can effect profitability and practice value.

V. Current Market Trends in Gastroenterology M&A

While gastroenterology remains an attractive specialty from an M&A perspective, the number of publicly announced transactions has declined in recent years.

Gastroenterology EBITDA Multiple Trends

Large GI platforms typically command higher EBITDA multiples than smaller independent clinics due to their scale, diversified revenue base, and reduced operational risk. These platforms benefit from centralized management, robust referral networks, and greater negotiating leverage with payers and vendors, factors that enhance profitability and stability. Additionally, buyers place a premium on the platform’s ability to support future growth through acquisitions or de novo expansion, while smaller clinics may be more dependent on a single provider or location. This combination of scalability, infrastructure, and lower risk profile makes larger platforms more attractive and valuable in the eyes of strategic and financial buyers.

According to our database, multiples for larger GI platforms with EBITDA of over $10 million annually range from 12x to 15x EBITDA.

Cash Flow Multiples for Small Gastroenterology Practices

There are a number of small GI practices listed for sale at any given time, but it's difficult to glean much useful information from data on smaller businesses where context around the level of owner involvement is unavailable. According to our research, small 1-4 provider practices are listed for sale for between 0.6x and 1x revenue at the 25th and 75th percentiles. Smaller practices with endoscopy centers tend to sell for 6x to 9x EBITDA.

VI. Final Thoughts: Keys to Maximizing Value

If you're a GI practice owner or executive planning to explore a sale or equity partnership, consider the following strategies to enhance your valuation:

• Diversify Revenue Streams: Expand high-margin ancillary services such as anesthesia, pathology, imaging, infusion, or ASC ownership to increase profitability and demonstrate stable, recurring cash flow.

  
  

• Optimize Operational Efficiency: Standardize workflows, implement robust billing and EMR systems, and centralize administrative functions to reduce costs and improve margins.

  
  

• Strengthen Physician and Staff Depth: Develop succession plans and expand the clinical team to reduce dependence on a few key physicians, mitigating concentration risk for buyers.

  
  

• Build a Strong Referral Network: Cultivate relationships with primary care providers and specialists to ensure consistent patient volume and enhance growth potential.

  
  

• Maintain Payor and Contract Stability: Negotiate favorable managed care contracts, optimize payer mix, and ensure compliance with reimbursement policies to reduce revenue risk and increase buyer confidence.

About HealthFMV

HealthFMV specializes in appraising healthcare businesses and services arrangements, including gastroenterology practices.

• Business Valuation: We perform independent, third-party valuations of healthcare businesses to document regulatory, tax, and financial reporting compliance, resolve ownership disputes, and help ensure both parties to the transaction are comfortable with the financial terms.

  
  

• Transaction Advisory: We work with healthcare business owners, organization executives, providers, and their health lawyers to develop transaction structures and deal terms that further their business objectives while maintaining compliance with the complex healthcare regulatory environment.

  
  

• Services Arrangements: We prepare fair market value and commercial reasonableness opinions for a variety of healthcare services arrangements including management services, hospital-based specialty stipends, case rates and PC/TC splits, block leasing, and shared savings distributions, among others.

Contact Will Hamilton at whamilton@healthfmv.com with questions about our healthcare valuation services or to discuss your specific situation. Visit scoperesearch.co for more information about our healthcare M&A research services.