Do You Need Help Buying or Selling a Hospice?

Four primary factors are contributing to the rise of home healthcare expenditure in the US. Major factors include an aging population, a move towards value-based care, and recognition by providers and payors that staying at home will reduce hospital admissions – overall, pushing for cost control within the healthcare system. Seniors are choosing to stay at home rather than move into assisted living facilities more often than ever before.

Recently the Centers for Medicare and Medicare Services (CMS) replaced their reimbursement model Prospective Payment Systems (PPS) with Patient Driven Grouping Model (PDGM) which requires hospice agencies to hire more staff members and buy new technology and more capital if they’re going to comply with these new reimbursement requirements. this will drive smaller agency owners to sell if they are unwilling or unable to make those investments.

With consolidation at the forefront of hospice market trends, smaller hospices are increasingly looking towards Private Equity and Corporate buyers as viable options as part of their exit plan. These larger players are often better suited to bear higher costs associated with new federal reimbursement policies that are impacting smaller operations’ profits.

It is essential for any seller looking to get the best value out of their hospice to understand both macro and micro-level changes occurring in the hospice marketplace before marketing their company. It is especially important to research strategic buyers actively pursuing opportunities in the hospice sector to take advantage of this unique sales environment and realize the added profits achieved from getting the best possible sales price.

The best buyer for your hospice will depend on a variety of factors, including your goals for the sale of the business, the financial performance of the business, and the specific assets being sold. Some potential buyers for your hospice may include:

1. Strategic buyers: Strategic buyers are companies that are in the same industry as your hospice and are interested in acquiring your business to expand their operations or gain a competitive advantage.
2. Financial buyers: Financial buyers, such as private equity firms, are interested in investing in businesses that have strong financial performance and growth potential. They may be interested in acquiring your hospice as part of a larger investment strategy.
3. Individual buyers: Individual buyers may be interested in acquiring your hospice if they are looking to enter the healthcare industry or expand their existing operations.

Thoroughly consider the specific goals and needs of each potential buyer and work with a business broker like Next Best Exit who can help you identify the best buyer for your hospice. We can help you evaluate the offers of potential buyers, negotiate the terms of the sale, and manage the legal and logistical aspects of the sale. Working with a professional can help ensure that the sale process goes as smoothly as possible and that you get the best possible price for your business.

There are a few key factors to consider when determining the value of a hospice. These include:

1. Financial performance: This includes factors such as revenue, profitability, and cash flow. A hospice with strong financial performance is likely to be more valuable than one with weaker financial performance.
2. Market conditions: The value of a hospice may be influenced by the demand for hospice services in the local market, as well as the supply of other hospice providers.
3. Quality of care: The quality of care provided by a hospice can also impact its value. A hospice that is known for providing high-quality care is likely to be more valuable than one with a poor reputation.
4. Size and scale: A larger, more established hospice may be more valuable than a smaller, newer one.

Several methods can be used to determine the value of a hospice, including the income approach, the market approach, and the asset-based approach. It is important to consult with a qualified professional like Next Best Exit to determine the most appropriate method for valuing a hospice.

5 key steps to increase the sales value of your hospice when selling to a strategic buyer or private equity firm:

1. Focus on financial performance: One of the most important factors that buyers consider when evaluating a hospice is its financial performance. You can increase the value of your hospice by improving its revenue, profitability, and cash flow.
2. Enhance the quality of care: Buyers are also likely to be interested in the quality of care provided by your hospice. You can increase the value of your hospice by investing in training and development for your staff, implementing innovative technology and processes to improve efficiency and effectiveness, and maintaining strong relationships with referral sources and payers.
3. Expand your services: You may be able to increase the value of your hospice by expanding the range of services you offer. This could include adding new care modalities, such as palliative care or home health care, or expanding into new geographic markets.
4. Build a strong brand: A strong brand can be a key driver of value for a hospice. You can increase the value of your hospice by building a strong reputation for high-quality care and building strong relationships with your patients, their families, and the wider community.
5. Seek professional guidance: If you are considering selling your hospice, it is important to seek the guidance of a professional, like Next Best Exit to help you maximize the value of your hospice and prepare it for sale.