How Hospitals Are Actually Valued in a Sale

It is 9 p.m. in a hospital boardroom, and the vote is an hour away. The chief financial officer has a single slide on the screen: a range. Low, high, midpoint. The number is the product of six months of work by a valuation firm the board hired in the spring — auditors in the basement counting beds, appraisers walking the plant, analysts rebuilding five years of financials line by line. The board members are not arguing about the building. They are arguing about the range, because the range is the deal. Too low and the community accuses them of giving the hospital away. Too high and the buyer walks, the bondholders balk, and the hospital stays independent for another year it may not be able to afford.

That range is what hospital valuation produces. It is a professional opinion, not a price tag, and it rests on three methods that have not changed in decades: the income approach, the market approach, and the cost approach. The income approach projects the hospital's future cash flow and discounts it back to today. The market approach compares the hospital to others that sold, and applies their multiples. The cost approach adds up what the assets are worth, net of liabilities. A good opinion uses all three, reconciles them, and says plainly where they disagree.

The market approach is where the argument usually starts, because multiples are the simplest thing in the room to quote and the easiest to misuse. FOCUS Investment Banking's 2026 dashboard of healthcare multiples puts hospitals at 6.3 times EBITDA for the smallest deals — $1 million to $3 million of EBITDA — rising to 8.2 times for $3 million to $5 million, and 9.7 times for $5 million to $10 million. On revenue, the same dashboard shows 1.0 times for hospitals doing $1 million to $5 million, 1.5 times for $6 million to $10 million, and 2.0 times above $10 million. Size pays. A hospital with $10 million of EBITDA is not worth twice a hospital with $5 million of it; at those multiples, it is worth roughly two and a half times as much, because buyers pay up for scale, for a payer mix that leans commercial rather than government, and for earnings they believe will still be there in five years.

Public markets set the ceiling. The median enterprise-value-to-EBITDA multiple across publicly traded healthcare services companies sat near 11.5 times in 2026, down from 14.5 times the prior year, as tighter credit and rising costs compressed what buyers would pay. That decline is the single most important fact in hospital valuation right now: the same hospital, with the same beds and the same doctors, was worth roughly a fifth less in 2026 than the public-market multiple implied a year earlier, before anyone touched its operations.

Real deals show the spread. In 2024, Orlando Health paid about $910 million for Tenet Healthcare's majority interest in Brookwood Baptist Health — five hospitals in Alabama — a price set by the earnings of a multi-facility system, not by the bricks. The same year, UCSF Health paid $100 million for two San Francisco hospitals from CommonSpirit Health, a price that reflected two older urban facilities with thin margins rather than a trophy asset. And at the top of the market, the Kaiser Permanente–Geisinger combination announced under Risant Health carried combined annual operating revenues above $102 billion — a deal so large that no multiple could price it, and the valuation question became one of governance and scale rather than of a sale price at all.

The small end of the market shows the method at its most exacting. When the San Benito Healthcare District in California sold Hazel Hawkins Memorial Hospital, the valuation firm HealthCare Appraisers concluded a fair market value of $54.74 million to $60.50 million as of October 31, 2023 — a range built from a comparable-transaction method, an adjusted-net-asset method, and a 25% discount for lack of marketability. The concluded value excluded cash, debt, and pension assets and liabilities. That is the level of care a hospital sale demands: every line item named, every exclusion stated, every discount justified in writing, because the opinion will be read by a regulator, a bond trustee, and possibly a judge.

Regulation is the reason the work is so formal. In healthcare, fair market value is not just a negotiating position. The federal Stark Law defines it as the value in an arm's-length transaction, consistent with general market value — the price that bona fide bargaining between well-informed buyers and sellers would produce. The Anti-Kickback Statute makes payment above fair market value evidence of payment for referrals. A hospital that sells too cheap to a buyer who then refers patients to it, or too dear to a seller who then refers patients back, has a legal problem, not just a pricing problem. That is why boards hire independent appraisers, and why the appraiser's signature carries weight a broker's opinion does not.

The counterargument deserves its weight. Multiples are blunt. Two hospitals with the same EBITDA can be worth very different amounts: one holds a Certificate of Need that blocks competitors in its county, the other faces a new entrant across the street; one has its physicians employed and aligned, the other rents its medical staff from a group that can walk; one sits on land worth more than the hospital, the other on a lease that eats its margin. A discounted-cash-flow model is only as honest as its assumptions about reimbursement, and reimbursement in American healthcare is set by Congress and by state Medicaid programs, not by the market. A valuation that ignores those facts is precise and wrong at the same time.

That is the work, and it is why the name matters. Hospital valuation is not a niche inside real-estate appraisal and it is not a rounding exercise at the end of a deal. It is the discipline that decides whether a community keeps its hospital, whether a board can defend its vote, and whether a buyer can borrow against the asset it just bought. The hospitals changing hands in 2026 — 56 deals in nine months, $30.4 billion in transacted revenue — each needed that opinion before the first signature. The firms that write them, and the advisors who run the sales, need a name that says exactly what they do. This is that name.

Sources: FOCUS Investment Banking, “Healthcare EBITDA Multiples: 2026 Dashboard”: hospitals 6.3x EBITDA ($1–3M), 8.2x ($3–5M), 9.7x ($5–10M); revenue multiples 1.0x/1.5x/2.0x; public median EV/EBITDA about 11.5x in 2026 versus 14.5x the prior year, https://focusib.com/insights/article/healthcare-ebitda-multiples/. HealthFees, “What Is A Hospital Worth?”: Orlando Health $910 million for Tenet's Brookwood Baptist Health (five hospitals); UCSF Health $100 million for two hospitals from CommonSpirit Health; Kaiser–Geisinger combined revenues above $102 billion, https://www.healthfees.org/insights/company-news/what-is-a-hospital-worth/. HealthCare Appraisers, valuation summary for San Benito Healthcare District / Hazel Hawkins Memorial Hospital: fair market value $54,740,000–$60,501,000 as of October 31, 2023; 25% discount for lack of marketability, https://www.hazelhawkins.com/documents/Valuation-Summary-200376-0001-revised.pdf. Health Capital Consultants, “Valuation Standards in Healthcare”: fair market value standard, Stark Law and Anti-Kickback Statute, https://www.healthcapital.com/hcc/newsletter/02_25/HTML/VAL/convert_hc-val-stds-topics.php. Kaufman Hall M&A data via Becker's Hospital Review, October 14, 2026: 56 deals through Q3 2026, https://www.beckershospitalreview.com/hospital-transactions-and-valuation/hospital-ma-on-pace-for-busiest-year-since-pandemic-as-megamergers-mount/.