Buying or selling hospice agencies

Identify the hospice operation and its care duties

Begin with the people served, the legal provider and the services it must provide or arrange. List licensed locations, payer participation, the service area and any inpatient component. List related businesses and the assets in the proposed sale. A shared name or office does not make these the same care model.

CMS describes the Medicare hospice benefit through eligibility, certification, patient election and an individual care plan. It includes a range of clinical and supportive services for the terminal illness and related conditions. The daily payment is not simply a fee for whichever visits happened that day. (Source: CMS hospice benefit)

Keep home health and non-medical home care separate where the seller also provides them. Trace each service line's earnings, staff and approvals. Shared costs need a stated method of allocation. Otherwise, a buyer may price one business using costs that will remain with the seller or must be replaced after closing.

State which contracts, systems, receivables and obligations are included. Then check that the ownership pathway and funding plan fit that package. Growth and cost proposals must fit the care duties. A higher projected margin cannot decide patient eligibility or justify services that do not meet patients' needs.

The hospice seller guide follows responsibilities that remain after a fictional patient’s death. The buyer guide tests three service files against an unresolved inpatient question. Both exercises ask what still needs support before the handoff. A census count and a vendor folder answer different parts of that question.

Read patient days and care levels in context

Average daily census and patient days describe activity. Review them with admissions, discharges, stay lengths and levels of care for the same periods. Explain whether a report counts all payers or a subset. A snapshot on one date may give a different picture from a monthly average or a full-year trend.

Medicare generally pays based on four levels of hospice care: routine home care, continuous home care, inpatient respite and general inpatient care. Each has specific conditions. For example, continuous home care addresses brief periods of crisis under the applicable rules. The levels are not interchangeable choices for improving revenue. (Source: 42 CFR 418.302)

Match activity to claims, payment adjustments and receipts. Include the cost of clinical staff, medicines, equipment, supplies and support. A rise in daily revenue may reflect a different care mix and higher costs. Ask the right reviewers what changed. Establish the cause before treating the gain as lasting earnings.

The hospice earnings guide compares two fictional periods with equal total patient days. Its stated care mix differs, revenue rises and costs rise by more, reducing the amount left. That example does not prescribe care levels or prove that mix explains every expense change in an actual agency.

Keep care decisions separate from financial targets. Patient circumstances and the care plan govern service needs. The business forecast should cost that plan and state what remains uncertain. It should not depend on adding unnecessary services, withholding needed care or changing a person's stay to meet a revenue target.

Understand eligibility and length of stay

A stay-length average can hide very different patterns. Review the distribution and ask qualified clinicians to assess a defined sample of records through the lawful access process. A long stay alone does not prove improper billing. A short stay alone does not establish that the required support for payment is complete.

CMS describes a prognosis of six months or less if the illness runs its normal course, with the applicable certification and election conditions. The benefit has two 90-day periods followed by subsequent 60-day periods with recertification requirements. Six months is not an automatic maximum stay for every patient. (Source: CMS hospice eligibility)

Ask the clinical reviewer to explain any finding, its scope and what further evidence is needed. The accountant then checks its effect on revenue, unpaid claims or amounts that may be owed. A broker's financial analysis does not replace a clinical conclusion, and a small sample cannot establish the status of every patient record.

Separate documentation work, actual care delivery and billing review. They may reveal related issues, but each has its own responsible reviewer. A proposed correction needs an appropriate process and evidence. Do not assume that later paperwork automatically resolves an earlier payment or care problem.

Reconcile earnings before selecting a price assumption

Request monthly accounts, tax returns, claims, remittances, receipts and AR aging by payer. Explain differences between earned revenue, billed charges and cash. Review refunds, recoupments and receipts tied to old periods. One strong collection month should not become a new recurring revenue assumption.

Trace operating costs through payroll, contractors, pharmacy, equipment and other suppliers. Identify what is shared, what is prepaid and what remains unpaid. State the cost boundary before comparing margins. The buyer needs the resources required to support the actual care model, even when the seller records those costs in separate accounts.

Examine each proposed earnings adjustment on its own evidence. Include necessary owner replacement and costs that will continue after the sale. A departing owner may perform both business and care-related work. Use the owner replacement definition to connect any adjustment with the duties and qualifications the buyer must retain.

The valuation guide sets out the wider earnings framework. This page supplies no verified hospice transaction multiple or price per patient. A supported valuation must reflect earnings, liabilities, operating capacity and the actual deal terms. An asking price or a broadly advertised market range cannot settle those questions.

Give aggregate cap exposure its own review

The aggregate cap limits total Medicare hospice payments under the applicable method. It is not simply a ceiling on one patient's invoice. Request the hospice's cap calculations, filings, supporting data, contractor determinations, appeals and repayment records by cap period. Mark what is final and what may still change.

The cap-liability sale guide reconciles a revised determination with applied repayments. Its fictional record separates completed-period balances from an unfinished-period estimate. Use that version history before deciding which figure belongs in the transaction discussion.

Under 42 CFR 418.308, the hospice must file its determination within five months after cap-year end using data no earlier than three months after period end. It must remit any overpayment due, and excess payments are refundable. Filing status and later determinations therefore matter to the transaction. (Source: 42 CFR 418.308)

Have a payment specialist review the historical periods and the period that spans closing. An accounting accrual is evidence to examine, not proof that the liability is settled. Likewise, dividing the year at closing does not by itself establish the correct legal allocation between buyer and seller.

Keep other payment limits and review findings separate from the aggregate cap. A single general reserve can conceal duties with different evidence, timing and settlement terms. Counsel should connect the supported findings with the agreement, records access, cooperation duties and responsibility for later changes. The contract may not bind a payer or regulator.

Separate an identified obligation from operating cash

Assume a fictional review establishes $1,000,000 of counted payments and a $940,000 hospice-specific aggregate cap for one closed period. The hospice has already repaid $20,000 toward the resulting excess. Assume those figures are final for this example, with no other cap adjustments. The cap amount is an invented input, not a national per-beneficiary limit or a calculation of the actual cap method.

Excess is $1,000,000 − $940,000 = $60,000. The remaining obligation is $60,000 − $20,000 = $40,000. A recorded liability does not itself set aside cash, and a prior payment should not be deducted twice when planning the remaining obligation.

Now assume $120,000 of cash is available after the earlier repayment, before any new set-aside. Reserving the remaining $40,000 leaves $80,000. If the separately supported operating reserve is $90,000, the plan has a $10,000 shortfall. These figures illustrate two distinct funding needs; they do not set a reserve percentage, payment deadline or allocation of liability to a buyer.

Test the resilience of the care team and vendors

Map clinical leadership, nursing, medical director arrangements, social work, counseling, aides and office support as applicable. Check the required skills and credentials. Confirm duties, cover and backup. The right names on a staff chart do not show how the agency handles an urgent need, a key absence or difficult travel outside ordinary office hours.

Review employee and contractor costs together. Include training, recruiting, supervision and necessary backup. Identify duties performed by the owner and determine who will assume them. A buyer who plans to retain staff needs confirmation of roles and terms, as well as a reasonable plan if someone chooses to leave.

Examine pharmacy, equipment, supplies and inpatient-service arrangements. Check what the agency must provide, how orders are fulfilled and who handles urgent problems. Review contract consents, balances and service concerns. A buyer should not assume a new vendor can replace a critical arrangement immediately without planning, cost or disruption.

Separate ongoing costs from one-time handoff costs. Recruiting, retention arrangements, system training and temporary support may affect the purchase budget differently from recurring payroll. Price the actual plan and name the responsible people. Avoid double-counting a cost or treating an essential duty as free after the seller leaves.

Review referrals while preserving patient choice

Measure referral concentration using a stated period and outcome. Separate inquiries, admissions and receipts linked to those services. The resulting shares answer different questions. A referral source may be important to new admissions without being the payer or controlling a patient's later choices.

Ownership and patient choice also need separate evidence. The hospice license-transfer guide distinguishes a continuing provider from an actual beneficiary-requested change of hospice. Use its record groups to avoid treating a business sale as each patient’s choice.

Identify relationships managed mainly by the owner or another person who may leave. Ask how the wider team already communicates with the source and supports patients. An introduction plan can help a handoff, but it cannot guarantee future patients. Keep promised volume out of the valuation unless the underlying assumption has appropriate support and legal review.

Healthcare counsel should assess relevant arrangements. OIG's General Compliance Program Guidance is a voluntary framework for oversight, reporting and response. It does not certify the agency or make every contract compliant. Ask how the actual process works, who reviews concerns and what evidence shows that management responds. (Source: OIG guidance)

Growth plans need evidence of demand, care capacity and funding. A larger service area or another marketer does not establish future admissions or profit. State the steps, costs and uncertainties. Patient choice and appropriate care remain constraints on the plan, rather than variables to change for a better financial result.

Keep oversight programs and individual findings distinct

Collect surveys, complaints, correction plans, medical-review requests, denials, appeals and other relevant correspondence. Follow each matter to its latest disposition. A reply submitted to an agency is different from final resolution. The absence of a public search result also does not prove the hospice has no open issue.

CMS's Special Focus Program page states that implementation for calendar year 2025 ceased on February 14, 2025. That specific statement does not mean all hospice oversight ended or establish the target's current standing. (Source: CMS Hospice SFP)

Separate CMS materials describe enhanced oversight and prepayment review for hospices within their stated scope. Confirm which processes apply to the target and obtain its actual notices. The hospice diligence checklist organizes the resulting evidence and financial questions. (Source: CMS hospice medical review)

Assign a qualified reviewer to explain each major finding. Some need clinical work, some need a payment response and others need legal analysis. Understand the scope first. Then assess the effect on the deal. Neither a broad program announcement nor an internal policy should substitute for evidence about the hospice being acquired.

Resolve enrollment and state authority before assuming continuity

Build a record of initial Medicare enrollment, later majority changes and current ownership. Compare them with the proposed transaction. A long-established trade name does not show how recently a relevant ownership event occurred. Keep the chronology supported by filings and contractor correspondence.

The current majority-ownership rule includes hospice and home health. A covered change within the relevant 36 months prevents conveyance of the provider agreement and billing privileges unless a listed exception applies. New enrollment and a state survey or approved accreditation are then required. Asset and stock transactions can be covered. (Source: 42 CFR 424.550)

CMS's moratorium page, reviewed September 6, 2026, describes the nationwide HHA and hospice restriction effective May 13, 2026. It affects initial applications, including non-exempt majority changes. It does not prohibit every acquisition. The 36-month guide and moratorium guide address the separate questions. (Source: CMS moratoria)

CMS describes six-month periods that may be extended. It does not permit individual-provider exceptions to the moratorium. Do not assume a stock deal, an automatic expiry or a filing alone solves an affected application. Counsel and enrollment specialists should confirm the actual route with the contractor. Track state licenses, payer contracts and other consents separately. (Source: CMS moratorium FAQs)

Prepare a confidential sale and a complete funding plan

Organize records before buyer review. List known issues, their current status and the evidence needed to understand them. Pre-NDA outreach should exclude financials, identity, exact location and identifying patient, worker, vendor or referral details. Review combinations of otherwise broad facts for identification risk.

During later authorized financial diligence, grouped or coded records may still reveal identities. Removing names alone does not establish de-identification. A lawful clinical-record review needs an appropriate purpose, qualified reviewers and safeguards. HHS minimum-necessary guidance has scope and exceptions; an NDA alone does not authorize disclosure. (Sources: HHS de-identification, minimum necessary)

Match the buyer's funds and operating team to price, fees, staffing, vendor support, systems and potential settlements. Use the working-capital guide to separate operating reserves from a reserve for a specific obligation. Do not count the same cash as both acquisition funding and money available for patient services.

SBA 7(a) can support eligible acquisitions subject to program and lender requirements. No approval is established for this buyer or hospice. Present the actual operating and enrollment plan to the lender, and test slower receipts while preserving care funding. (Source: SBA 7(a))

Assign responsibility through closing and the first months

Define who handles historical claims, cap settlements, refunds, records requests and open reviews. Agree on access, cooperation and the process for later information. Counsel should evaluate contractual allocation and recourse. A promise between buyer and seller does not necessarily control a third party's right to pursue an obligation.

Name the incoming owners of clinical leadership, on-call support, pharmacy and equipment arrangements, payroll, billing and records. Confirm they have agreed to their roles and will have lawful access. Set a communication plan for staff, patients and families that includes required notices and accurate statements about actual changes.

Refresh the review if a key person leaves, a vendor changes terms or a new payment notice arrives. The deal team should assess the effect rather than rely on an earlier clean report. Some findings affect price; others require a solution before the handoff can safely and lawfully proceed.

The first 90 days guide provides a framework for tracking care continuity and testing the purchase assumptions. Maintain required services, follow unresolved matters and make supported changes. The financial, clinical and legal plans should all describe the same operation that the buyer is prepared to run.

The hospice cap definition separates payment limits and remaining refunds. The live-discharge example keeps reasons, patient choice and rate denominators visible.

The hospice sale-price question follows a fictional offer from its headline amount to cash received at closing. Keep the deferred payments and open obligations beside the care and earnings records before comparing offers.