Buying/Selling a Hospice Business

Hospice facilities provide what is known as palliative care. Patients are provided a safe, comfortable environment to live out their last days – -usually not expected to exceed 6 months. This is a sensitive and complicated industry which involves passion and attention to detail to handle the many factors that play into running a successful hospice care operation.

Intermediaries, commonly business brokerage firms, are a reliable source for arranging a hospice purchase or sale, especially those that specialize in the particular industry in question. The intermediaries brokering the deal typically charge what is known as a “success fee”, which is a percentage of the sale. We specialize in evaluating a hospice and can ensure the seller gets maximum market price while the buyer also gets the maximum value. As an intermediary, Stoneridge Partners is equipped to handle the entire buy/sell process.

In our case, Stone Ridge Partners typically negotiates sales on behalf of the owners, although, in same cases specially selected buyers are provided with catered sales assistance. Buyers must be equipped with the knowledge and skills of running a hospice including but not limited to the following:


Administrative and customer service duties

A long line of bureaucratic red tape is involved with running a hospice, from emails to paper trails.

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Understanding regulations
Health codes, state, and federal laws are among the bureaucracy mentioned above. Owners need to be able to understand what it takes to navigate this red tape.

Logistical organization
Record keeping is essential, especially when it comes to the sale of the hospice.

Budgeting and finance
Record keeping and red tape mentioned above are both heavily involved in the financial side of the hospice or any business.

In addition to this skillset, the drive and overall disposition of a hospice owner can sometimes be the determinant success factor between two experienced businessmen or women.
Other, supplemental skills that can aid in a successful hospice operation – and most any business venture – include:

Assertiveness
Since there are so many different factors involved in running a hospice, the owner has to be able to take initiative and delegate critical duties to the qualified parties. For example, a competent owner understands the sale of their hospice is best handled by an expert intermediary.

Straightforward communication
An owner needs to be able to state exactly what is needed to ensure their hospice’s functionality. Time management – A variety of schedules need to be kept in the daily operation of a hospice.

Critical thinking and problem solving
Even if every bullet point listed is satisfied, this doesn’t guarantee all parties will run smoothly all the time. A single missed digit is all it takes to throw everything off.

Financial records are of particular concern when assessing the market value of a hospice. The AEBITDA is important but, in no way the single factor indicating value. According to lawinsider.com’s dictionary of terms, AEBITDA is an acronym which stands for “earnings before interest, taxes, depreciation and amortization” We look for clear record keeping of such business matters as payroll, taxes, and overhead, to name a few. We even provide a worksheet for calculating adjusted AEBITDA, available on our website.

We’re among a number of “Private Equity Groups”, which connect through an organization of intermediaries called M&A Source. The meetings organized by M&A Source inform groups like ours on what the going market rate is for hospices and other assets in the health industry niche that are up for sale. The organization also affords ongoing education for brokering the buying and selling of hospices.

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