Hospice Mergers & Acquisitions

The hospice acquisition market has been white hot for the last few years and we expect that to continue for the foreseeable future. Unlike home health, hospice has evaded cuts from the Congressional Budget Office (CBO) and most hospices over 50 patients are enjoying 15% to as much as 30% profit margins. As a result, some of our buyers are willing to pay as much as $100,000 per patient for hospices with a census over 400. For those types of numbers, it is no surprise that hospice has led the way in terms of volume of transactions.

Hospice M&A: A Seller’s Market

Furthermore, a seller’s market can allow a business owner to have their cake and eat it too. In other words, getting a great price and getting the right hospice acquisition partner that will take care of the employees and patients are not necessarily mutually exclusive. That is why we take extra care to understand the details of what makes up an ideal sale. In today’s world, ideal is achievable.

Timing is Everything in Hospice M&A

We’ve all learned that nothing stays constant in M&A. Increasing numbers of ADRs and continued tightening on average length of stay are indicators that reimbursement cuts may not be far behind. Just like any other investment, a hospice business owner should continuously ask the question, “Would I buy my hospice for what it is worth today?” If the answer is “no,” some form of divestiture is probably in order.

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