Buying or selling home health agencies

Define the agency and the rights being acquired

Start with the services the agency actually provides. List its legal entities, licensed locations, service area, clinical disciplines and payers. Identify branches and related businesses. Match the operating reports to that list so the buyer understands which services produce the reported revenue and which staff support them.

Skilled home health differs from non-medical home care and hospice. They can share an owner or office while using different care and payment models. Separate the service lines, then explain shared office, staff and system costs. A blended profit total can conceal work that the buyer will have to fund separately.

State what the proposed deal includes: assets or equity, contracts, equipment, software rights, leased space and unpaid invoices. Name the items the seller keeps. A bid for the whole company and a bid for selected assets may cover very different obligations, even if the stated prices are similar.

The commercial package must fit the lawful operating pathway. The parties cannot settle enrollment or license questions simply by labeling the contract an asset sale or stock sale. Establish what must continue, who holds each right and what the buyer needs before relying on a closing date.

The home-health seller guide compares fictional files with one upload date but different evidence periods. The buyer guide examines four proposed changes with separate decision roles. Use them to identify what the current package supports. Keep future plans visible until each has the relevant qualified review.

Connect care activity with the payment model

A completed visit, a payment period, a claim and a bank receipt measure different things. Use consistent service dates when comparing them. Ask the clinical and payment reviewers to explain the reports' definitions. Patient count alone does not show the work required, the amount earned or the cash available for payroll.

CMS describes Medicare home-health payment under PDGM using 30-day periods with case-mix and wage adjustments. Periods below their applicable visit threshold receive per-visit payment. The payment period is separate from the timeframes for certification and care-plan review. (Source: CMS Home Health PPS)

Review the agency's actual mix of payment periods, claims and care costs. One national base rate cannot estimate all of its revenue. Different patient needs, adjustments and payer terms affect the result. Likewise, a change in visits may reflect care needs or staffing problems rather than a change in financial strength.

Have qualified reviewers investigate the reason behind a variance. The financial plan must support appropriate care. Do not turn a payment threshold into a target for unnecessary visits or a reason to withhold needed services. A proposed improvement belongs in the forecast only when the underlying care and operating plan supports it.

Separate payers before comparing margins

Build schedules for the Medicare fee-for-service, Medicare Advantage, Medicaid and other payer business actually present. Read each contract and its payment basis. List relevant authorizations, billing conditions, adjustments and collection history. A payer name in the accounting system is a starting point for review, not a complete description of the arrangement.

Compare earned revenue and delivery cost for the same periods. Keep direct care costs and office costs visible. A favorable blended result can hide one contract that creates losses or requires more cash while invoices remain unpaid. Explain the accounting boundary before comparing the agency with another provider.

Review AR aging by payer with subsequent receipts and credits. Ask which balances are disputed, denied, appealed or waiting for ordinary processing. Old balances are not all worthless, and new ones are not all collectible. Each material assumption needs evidence from the actual claims and payment records.

Read assignment and change-of-control terms as part of the buyer's review. Continued state licensure does not prove that every contract continues at the same rate. Keep confirmation of payer rights separate from the agency's historical earnings and the seller's expectation that nothing will change.

See why earnings and cash can move differently

Suppose a fictional, closed service cohort has $220,000 of gross claims and $20,000 of final contractual reductions, with no other revenue adjustments. The agency collects $170,000 against that cohort. Its $140,000 care-cost total and separate $40,000 office-cost total cover all operating expenses assumed here and have both been paid. Office costs include the assumed owner replacement; they exclude the care costs already counted.

Net revenue is $220,000 − $20,000 = $200,000. Remaining AR is $200,000 − $170,000 = $30,000. Operating earnings are $200,000 − $140,000 − $40,000 = $20,000. The cohort's cash balance change from these items is $170,000 − $140,000 − $40,000 = -$10,000.

This example excludes purchase debt, tax, capital spending and cash flows from other service cohorts. It is not a whole-agency bank balance, payment-rate forecast or valuation. Collection of the remaining AR is still a separate question. The example shows why supported earnings and an adequate cash reserve must both appear in the buyer's plan.

Test owner adjustments and the cost of staffing

Begin with reconciled accounts and document each proposed change to earnings. Keep past results separate from the buyer's future plans. A temporary receipt should not fund permanent debt service, and a necessary recurring cost should not disappear just because the seller describes it as unusual.

Map who manages clinical care, intake, scheduling, billing, payroll, recruiting and quality work. Include the owner's duties and tasks performed outside normal office hours. A buyer who plans to retain management still needs to confirm roles, availability and cost. Job titles alone do not establish that the team can carry out the plan.

Use owner replacement cost to connect any compensation adjustment with work that must continue. A buyer may perform some duties personally, but the forecast should say which duties and how much time they require. A clinical role also needs the appropriate qualifications; business experience alone cannot fill that gap.

Check actual payroll and contractor costs against service delivery. Include travel, supervision, paid nonbillable time, training and backup cover. Review vacancies and work declined because staff were unavailable. The valuation guide helps organize earnings evidence, but it does not supply a verified home-health multiple for this agency.

Match quality performance to the right payment year

Request survey reports, complaints, correction plans and relevant quality reports. Read what the agency did in response and what evidence confirms the latest status. A plan to correct a problem is different from a completed correction. A public rating also cannot answer every question about the operation.

Under expanded HHVBP, performance in an earlier year affects later Medicare fee-for-service payments. CMS identifies 2025 as the first payment year, based on 2023 performance, with an applicable adjustment range of minus 5% to plus 5%. Use the agency's own reports and the relevant year. (Source: CMS expanded HHVBP)

Show which payment determination supports each forecast year. Keep a known adjustment apart from an estimate of future performance. Recent improvement does not necessarily change receipts at once, and a favorable prior adjustment should not be repeated indefinitely without support. Do not substitute a public star rating for the actual payment report.

The home-health earnings exercise applies separate fictional payment and cost changes to one fixed service population. A provider adjustment is shown separately. Higher modeled payment leaves less contribution after the stated costs. The figures do not set an agency rate or predict a clinical result for its patients.

Identify the people responsible for quality reporting, review and follow-up. A departing employee may hold knowledge that a password transfer cannot replace. Assign trained owners, access rights, deadlines and backup support. This work belongs in the transition budget as well as the care plan.

Establish the Medicare ownership pathway early

Collect the initial enrollment effective date, every relevant majority-ownership change and the current ownership interests. Match those facts to the proposed buyer and deal documents. An old business name can hide a recent ownership event. The relevant chronology is not simply the date the agency first opened its office.

Under 42 CFR 424.550, a covered majority-ownership change within the relevant 36 months can prevent the provider agreement and billing privileges from conveying. Unless a listed exception applies, the buyer must enroll as a new provider and obtain a state survey or approved accreditation. Asset sales, stock transfers, mergers and consolidations can be covered. (Source: 42 CFR 424.550)

Use the 36-month rule guide to organize the chronology and exception evidence. Have counsel and enrollment specialists assess the actual facts with the Medicare Administrative Contractor. A seller's assurance that its number is transferable cannot replace that review.

The Medicare CHOW guide addresses provider-agreement assignment under a related framework. Keep that analysis distinct from the majority-ownership question. Federal rules prohibit the standalone sale or unauthorized use of billing privileges. A legitimate acquisition needs its own supported route to continued participation and payment.

Include the current enrollment moratorium in feasibility

CMS's current page, reviewed September 6, 2026, describes a nationwide HHA and hospice enrollment moratorium that began May 13, 2026. It affects initial applications, including non-exempt majority-ownership changes. CMS states that affected applications submitted after implementation will be denied. This can prevent the proposed pathway, not merely add a routine processing delay. (Source: CMS moratoria)

The moratorium is not a ban on every acquisition of an existing agency. Determine which application the actual transaction requires. A stock purchase is not an automatic workaround, and an old provider identifier does not resolve the question. Establish the pathway before treating a lender's timetable or a target closing date as dependable.

CMS's FAQs describe a six-month initial period with possible extensions. They do not allow individual-provider exceptions to the moratorium. A listed exception to the majority-ownership rule answers a different question. The moratorium guide explains the distinction. (Source: CMS moratorium FAQs)

CMS also says the moratorium bars adding new practice locations, including branches, to an existing enrollment. Its FAQ distinguishes transfers of already-recognized sites in qualifying deals. Do not assume a purchase permits the buyer to add a new branch.

Recheck current status when the deal advances. Do not assume automatic expiration or unconditional approval of a relocation. The agency's actual locations, patients and staff can matter to whether a proposed change continues an existing operation. Keep unresolved questions visible in the issue log and financing plan.

Track state licenses and other consents separately

Federal enrollment is only one part of the operating plan. List state licenses, locations, payer agreements, leases, software rights and other material consents. Name the legal holder and the proposed change for each. An approval for one item does not prove that the others are complete.

The home health location and service register connects each branch with its actual support and public service claims. Use it to spot differences among approvals, staff, written arrangements and the buyer’s plan before calling the handoff ready.

California's CDPH HHA guidance requires a state license and a completed ownership-change packet submitted to its Centralized Applications Branch. This is a home-health process, distinct from CDSS residential-care licensing and from the federal Medicare decision. Confirm current instructions for the actual change. (Source: CDPH HHA CHOW)

Use a status table that separates requested, submitted, complete, approved and effective. Record the evidence behind each label. Ask whether a remaining action is a closing condition or an operating step after a permitted handoff. Avoid treating a filed application as final authority.

The schedule should reflect the real dependencies: the chosen structure, accurate applications, specialist review, financing and staff readiness. Buyer and seller can agree on targets without promising a universal time to close. Set a clear process for deciding what happens if a critical condition remains unresolved.

Prepare a sale that protects patients and staff

Sellers can organize records before any buyer sees them. Reconcile financial reports, prepare the ownership chronology and list known issues with their supporting evidence. Use the seller document guide to assign the work. A clear explanation of a gap is more useful than a large folder with no review trail.

Pre-NDA outreach should exclude financials, identity, exact location and identifying patient, worker, vendor or referral details. Later authorized diligence can use grouped or coded financial schedules, but small groups may still identify people. Removing names alone does not establish de-identification. (Source: HHS de-identification)

Arrange any necessary clinical-record access through qualified reviewers and a lawful privacy process. HHS minimum-necessary guidance has its own scope and exceptions. An NDA alone does not authorize protected-health-information disclosure. Decide who needs access, for what purpose and how copies will be handled. (Source: HHS minimum necessary)

Plan required notices alongside staff and patient communication. Buyers should use the seller's agreed interview process. Keep the agency focused on care while the deal team manages requests. Do not promise unchanged services or personnel unless the incoming team has agreed and can support that commitment.

Match the buyer's team and funds to the plan

Compare offers on operating capability, funds, conditions and the seller's expected role as well as price. An existing provider may have useful systems but still face integration work. A first-time buyer needs qualified clinical leadership and specialist support. Neither buyer type should assume the current team can absorb every change without time or cost.

Review oversight, reporting channels and responses to concerns. OIG's General Compliance Program Guidance is voluntary; it can help frame management questions without certifying the agency's compliance. Ask how staff use the actual process and how concerns are resolved. (Source: OIG guidance)

Build a complete funding budget for price, fees, deposits, systems, hiring and operating cash. The working-capital guide explains why the closing account terms and payroll reserve are different decisions. State who receives old invoices and who handles mixed-period payments, credits and refunds.

SBA 7(a) includes eligible business-acquisition uses, subject to program and lender review. Give the lender supported earnings and the actual enrollment pathway. A financing discussion is not approval for this borrower or agency. Test slower receipts while keeping care and payroll funded. (Source: SBA 7(a))

Turn the deal terms into a supported handoff

Before closing, name who leads care, schedules visits, handles intake, pays staff, submits claims and responds to urgent issues. Assign backups and confirm authorized system access. Separate the seller's temporary training duties from permanent management roles. The incoming team should be able to explain how a routine week and an unexpected absence will be handled.

Use the home-health diligence checklist to connect each open question with evidence and a decision. Some findings affect price or cash reserves. Others require resolution before the buyer can lawfully operate. A financial concession alone cannot supply missing authority or qualified care capacity.

Refresh the review if a key employee leaves, collections change or new agency correspondence arrives. Record the information cutoff and who assessed the new fact. The final recommendation must describe the agency that will actually transfer, rather than a cleaner version examined months earlier.

After closing, compare results with the supported forecast and address the highest service risks first. The first 90 days guide helps organize that work. Keep clinical, financial and legal responsibilities connected so the transaction supports a functioning care agency under its next owner.

The PDGM definition introduces the payment-grouping framework. The LUPA definition explains the separate per-visit adjustment and why a payment threshold is not a clinical care target.

The referral-source definition distinguishes attribution from the clinical order and payer. Use the buyer referral guide to examine how the relationships are grouped and maintained, with patient choice and legal scope kept explicit.

Read whether a home-health agency can be sold before 36 months when recent enrollment or ownership history could affect a proposed deal. The example shows why an established company name does not resolve the buyer’s enrollment path.