Buying or selling hospice agencies

Begin with the care model and the people it serves

A hospice acquisition transfers responsibility for a service business supporting patients and families during a vulnerable time. The commercial plan must fit the care model. Growth, staffing and cost decisions cannot be evaluated solely through their effect on a purchase-price calculation.

CMS describes hospice as comprehensive care and support for terminally ill patients and families. Medicare benefit eligibility includes certification and patient election, with care organized around an individualized plan. The agency must provide or arrange the applicable services, rather than treating a daily payment as payment for only the visits completed that day. (Source: CMS hospice coverage)

Identify the actual operation being sold: the legal entity, service footprint, licensed locations, payer participation, contracts and any inpatient component. Determine whether a related home health or personal-care business is included. Separate each service line before comparing margins or assigning value.

The home health overview and home care overview help distinguish adjacent models. Shared ownership, an office or a referral relationship does not make their payment and regulatory requirements interchangeable.

Understand patient-day revenue without reducing care to a metric

Average daily census and patient days help describe activity, but they are starting points. Review admissions, discharges, length-of-stay distribution, care levels, billed amounts, adjustments, refunds and cash receipts. Use consistent periods and document changes in reporting definitions.

Medicare generally pays hospice a daily amount based on one of four levels of care: routine home care, continuous home care, inpatient respite and general inpatient care. The applicable level depends on care circumstances and requirements. It is not a discretionary choice to improve the agency's margin. (Source: CMS hospice levels of care)

Connect revenue with the costs of nursing, other clinical and supportive services, medications, equipment, supplies and administration. Determine what is employed, contracted or shared. A strong collection month does not show the recurring cost of meeting all care obligations.

Read length-of-stay information carefully

An average can conceal very different patient populations and operating patterns. Ask qualified reviewers to interpret distributions and selected records, including the basis for eligibility and recertification. A long stay alone does not establish improper billing; a short stay alone does not prove sound documentation.

Do not forecast improvements by assuming the business can alter a patient's stay to fit a financial target. Patient circumstances, choice and clinical requirements govern care decisions. The acquisition model should estimate resources for appropriate services and distinguish confirmed performance from speculative changes.

Reconcile earnings before discussing a multiple

Request monthly financial statements, tax returns, the general ledger, patient activity, claims, remittances, bank reconciliations and receivable aging. Explain differences among revenue recognized, amounts billed and cash collected. Separate prior-period recoveries or refunds from current operating trends.

Normalize earnings using documented adjustments. If an owner is also responsible for administration, referral coordination or another essential function, include a credible replacement cost. A buyer cannot assume a departing person's work vanishes with their compensation.

Review temporary expenses and unusual receipts with equal skepticism. One-time revenue should not support recurring debt service, and a necessary recurring expense should not be removed merely because the seller hopes the buyer will perform the task more cheaply.

The senior care valuation guide provides the broader framework. No universal hospice multiple is established here. A credible valuation must reflect the target's evidence and the terms of the actual transaction, including its liabilities and funding needs.

Treat aggregate cap exposure as a separate workstream

Hospice cap analysis should not be buried inside one unexplained earnings adjustment. Request historical self-determined filings, supporting data, contractor determinations, repayment evidence, appeals and current estimates. Label which periods and amounts are final and which can still change.

Federal regulation limits total Medicare hospice payments through the applicable aggregate cap framework. It requires a cap determination filing within five months after cap-year end using data no earlier than three months after the period, with overpayments due and refundable excess payments. (Source: 42 CFR 418.308)

A reimbursement specialist should evaluate the historical periods and the period spanning closing. The buyer and seller then need a legal allocation that addresses later determinations, records access, cooperation and payment. Do not assume that a simple pro rata division by days produces the right transaction result.

Distinguish aggregate cap exposure from other payment limitations and review findings. Each can have different evidence and settlement mechanics. Avoid a generic reserve percentage without a supported calculation and an explanation of what it covers.

Review the cost and resilience of the care team

Map clinical leadership, nursing, medical director arrangements, social work, counseling, aides and administrative functions as applicable. Identify the actual people performing the work, their qualifications, schedules, employment status and backup coverage. Review vacancies and dependence on temporary or contracted staff.

Ask how the agency handles urgent needs, absences, difficult coverage periods and coordination with outside facilities. An organization chart can appear complete while practical capacity remains fragile. Use operational evidence to understand how care is delivered outside ordinary office hours.

Examine medication, equipment and supply arrangements and any inpatient service contracts. Confirm what continues after transfer and on what terms. Review outstanding balances, service issues and proposed changes before assuming the buyer can immediately replace vendors without disruption.

Price the actual transition plan. Retaining key staff, recruiting replacements, training a new team and maintaining backup support may create one-time and recurring costs. Separate them in the forecast so the seller's earnings and the buyer's funding need are both presented accurately.

Examine referral relationships with appropriate care

Measure referral concentration consistently by source, period and outcome. Inquiries, admissions and collected revenue answer different questions. Review shifts over time and identify dependence on relationships managed personally by the departing owner.

Consider how the organization communicates with referring providers, facilities, patients and families. An introduction plan can be useful, but no buyer should treat future patient choices or referral volume as guaranteed assets. Review relevant arrangements with healthcare counsel.

OIG's General Compliance Program Guidance offers a voluntary framework for examining oversight, reporting channels and responses to concerns. Use it to ask how practices are supervised and corrected. A signed policy does not establish that every arrangement or activity is compliant. (Source: OIG General Compliance Program Guidance)

Growth assumptions deserve the same evidence standard as historical results. A larger service area, another salesperson or a new facility relationship does not by itself prove future admissions, staffing capacity or profitability.

Keep survey, medical-review and program status distinct

Collect survey findings, complaint records, corrective actions, medical-review requests, denials, appeals and other relevant oversight correspondence. Track each matter to its latest status. A response submitted by the agency is different from a documented final resolution.

CMS states that implementation of its Hospice Special Focus Program for calendar year 2025 ceased on February 14, 2025. This specific statement should not be broadened into a claim that hospice oversight ended. (Source: CMS Hospice Special Focus Program)

Separate CMS materials address medical review and other hospice oversight mechanisms. Verify which processes apply to the target and request the underlying correspondence. Neither a general policy announcement nor the absence of an item in public search proves that an agency has no open issues. (Source: CMS hospice medical review and oversight)

The hospice diligence guide explains how to connect these findings with clinical review, financial exposure and transaction decisions.

Verify ownership history before choosing a closing structure

Collect the effective date of initial Medicare enrollment, subsequent majority-ownership changes, current ownership interests and proposed buyer structure. Compare those facts with the purchase documents. The age of the business name does not establish the relevant enrollment chronology.

Current 42 CFR 424.550 includes hospice in its majority-ownership rule. A covered change within the relevant 36-month period can require new enrollment and a survey or approved accreditation unless an enumerated exception applies. The rule can include asset sales, stock transfers, mergers and consolidations. (Source: 42 CFR 424.550)

Document any proposed exception rather than relying on an informal description. Counsel and enrollment specialists should coordinate with the Medicare Administrative Contractor on the actual facts. A purchase agreement cannot grant Medicare billing authority or make a provider number freely transferable.

State licenses, payer contracts, leases and other consents require separate attention. Keep an approval matrix that distinguishes required notices, applications, consents and final confirmations. The deal should have a coherent operating pathway before the buyer assumes revenue continues on the closing date.

Include the current HHA and hospice moratorium in feasibility review

CMS implemented a nationwide enrollment moratorium for home health agencies and hospices effective May 13, 2026. Its affected applications include initial enrollment and non-exempt majority-ownership changes. The scope matters when the proposed hospice acquisition would otherwise require a new initial enrollment. (Source: CMS provider enrollment moratoria)

The moratorium does not mean every transaction involving an existing hospice is prohibited. It also does not mean a buyer can solve an affected application merely by switching the purchase agreement from assets to stock. Have the actual structure assessed before treating financing or a target close as dependable.

CMS explains that moratoria operate for six-month periods and may be extended. Avoid assuming an automatic end date or a discretionary exception for the parties. The moratorium guide and 36-month rule guide explain the separate questions. (Source: CMS moratorium FAQs)

Prepare the seller's records and disclosure plan

Organize a sale package with clear periods, reconciled figures and known limitations. Include ownership history, financials, payer and vendor agreements, staffing duties, cap records and open-review correspondence. A buyer should be able to distinguish verified performance from estimates and management expectations.

Use a blind teaser for appropriate early marketing and qualify buyers before releasing sensitive information. Even anonymous details can identify an agency when combined, so review service geography and distinctive facts carefully.

Patient-level information requires a legally supported access process. HHS minimum-necessary guidance applies to relevant uses and disclosures, and an NDA alone does not resolve privacy obligations. Arrange necessary clinical review through qualified reviewers and appropriate safeguards. (Source: HHS minimum necessary)

Plan required notices and communication alongside confidentiality. Patients and families deserve accurate information at the appropriate time. Avoid assurances about continued personnel, services or arrangements unless the buyer has committed and prepared to support them.

Match buyer capability and financing to the actual operation

A prospective buyer needs enough capital to acquire the business and sustain care after closing. Assess the buyer's management plan, clinical leadership, staffing resources, reimbursement support and ability to respond to identified issues. Financial interest alone does not establish operating readiness.

Build a complete transaction budget: price, fees, lender expenses, necessary systems work, vendor deposits, recruiting, retention arrangements and operating cash. Include potential repayment or settlement exposure according to the negotiated structure and professional advice. Do not count the same reserve as available working capital twice.

SBA 7(a) can finance eligible business acquisitions under program and lender requirements, but eligibility and approval are specific to the borrower and deal. A lender needs a realistic operating and authorization plan, not just a revenue total. (Source: SBA 7(a))

Use the working-capital guide to model cash timing and receivable treatment. Stress-test delayed receipts while preserving funding for payroll, medication, equipment and other necessary services.

Connect the purchase terms to day-one responsibility

Resolve who handles historical claims, cap settlements, refunds, records requests and open reviews. Define information access and cooperation after closing. Counsel should assess contractual allocation, recourse and any negotiated escrow; those terms do not necessarily control what third parties can pursue.

Write a transition responsibility list covering clinical leadership, on-call arrangements, pharmacy and equipment vendors, payroll, billing, records, staff communication and patient or family questions. Test whether the people named have agreed to their roles and will have the necessary access and resources.

Refresh diligence before closing if material facts change. New payer correspondence, a key departure or a collection problem may alter a previously reasonable assumption. A clear process for updates helps the parties address evidence without reopening every settled commercial point.

The first 90 days guide helps organize the next stage. Preserve care continuity first, compare results with the acquisition assumptions, and make supported operational changes. A successful handoff requires the financial, clinical and legal plans to describe the same functioning business.