Referral concentration

Why the measure matters in a senior care sale

A source may send many inquiries but few people who start services. Another may send fewer inquiries that lead to long, paid service relationships. Those sources have different effects on the business. A share of inquiries is not the same as a share of revenue or profit.

Choose the period and measure before calculating the share. Explain how repeat inquiries, unknown sources and transfers are counted. Match the service records to the financial reports where needed. IRS recordkeeping guidance supports that use of source records; memory alone does not establish the result. (Source: IRS)

What a buyer should check

Ask who maintains each key relationship and why people choose the provider. Does the source depend on the owner's personal contact, the wider team or a defined process? Review how quickly the business responds and whether it can staff the work being referred.

Counsel should examine financial and contractual relationships. OIG's compliance program guidance is voluntary and nonbinding; applicable laws and facts determine the legal result. A referral channel can be commercially useful and still need legal review. (Source: HHS OIG)

An illustrative comparison

Suppose a fictional cohort has 100 unique inquiries, of which 20 came from one source. Of those same inquiries, 30 become service starts, including 15 from that source. Its inquiry share is 20 percent; its share of starts is 50 percent. Each inquiry and start is counted once. These figures explain different denominators, not a safe concentration threshold. They do not measure collections or profit.

Test both dependence and service capacity. More leads do not create revenue if the team cannot deliver the work. Losing a productive source can affect hours, staffing and cash. A contact list by itself cannot quantify those effects.

How to use and share the result

Keep financials and identifying referral details out of pre-NDA outreach. In authorized diligence, consider grouped or coded schedules that answer the specific question. Small groups can still identify people or businesses. HHS explains why deleting names alone does not establish compliant de-identification. (Source: HHS)

Use the buyer checklist to record the findings and the plan for maintaining relationships. Do not treat a seller introduction as a guarantee of future referrals. People and other businesses still make their own choices after the sale.

Begin with the referral-source definition if the attribution field is unclear. The buyer referral guide then develops the source map, shared-relationship view and a fictional interruption scenario.