Placement and Care Management Due Diligence

Define each service and the assets in the offer

List the legal entities, services, people served and payers. Separate placement, hourly care-management work, retainers and any related business. List the contracts, brands, systems and balances included in the offer. Explain what depends on the founder or another entity that will not transfer.

Read actual service descriptions and agreements against current practice. ALCA describes work that includes assessment, planning, coordination and advocacy. (Source: ALCA) Its overview does not prove that the seller is qualified. It also does not grant permission to combine every service in one business.

Use the placement and care-management overview to frame the economics. A client list, phone number or provider agreement is not a guarantee of future work. State what the evidence supports before using those assets in the purchase forecast.

Check law and professional standards before shared-cost assumptions

Map the actual jurisdictions, activities, people and payments with suitable advisers. Washington's referral chapter has definitions and exemptions that control its scope. (Source: RCW 18.330) Do not apply it to every national placement business or assume an agreement label settles the legal question.

Review ALCA standards 21–23 where relevant to the people and practice. They address truthful credentials, ties that must be disclosed, referral fees that are barred and the need to keep related businesses separate. (Source: ALCA standards) These are association standards, not laws for every state. Disclosing a tie does not make a barred referral fee acceptable.

Verify the proposed owners, staff, brands and payment terms before accepting cost savings from integration. State which conclusions require professional or legal review. The buyer needs a workable lawful plan, not only a spreadsheet that combines revenues and removes duplicated expense.

Sample placement files through final fee adjustments

Select a supported sample from inquiry through intake, disclosure, provider options, client choice and the event that earns the fee. Compare the agreement, case record, invoice, payment and later adjustments. Include refunds and disputed cases. Expand the review when exceptions suggest a broader issue.

Keep pending referrals outside historical earned fees. A tour or introduction may not meet the agreement's billing condition. Confirm that payment is permitted under the relevant rules, even when the parties signed a contract. Record the scope of sampling rather than calling it a complete legal or claims audit.

Reconcile refunds, disclosures and payment limits

Read the refund and cancellation terms with the law that applies. Washington requires a prorated refund for specified events soon after admission. It also has a separate limit on payments tied to medical assistance. (Source: RCW 18.330) Check the event, payer and rule. Do not assume that every early departure leads to the same refund.

Reconcile paid and pending refunds with bank evidence, invoices and credits. List the person owed payment and the party responsible after closing. Check whether management's revenue schedule includes unresolved disputes. Receipt of a fee does not prove that all related duties have ended.

Review client disclosures, provider information and freedom to choose. Assess actual files against the relevant requirements and professional standards. Do not treat a signature as proof of every underlying fact or as permission for a prohibited arrangement. Keep missing evidence and required remedies visible in the decision record.

Test professional hours, fees and remaining receivables

Compare supported work records, service agreements, rates and invoices for matching periods. Review nonbillable but necessary work, corrections and uncollected balances. A billed-hour total does not show the full staff cost. The AR aging guide helps distinguish an older balance from its actual collection risk.

Consider a fictional completed service month with 120 supported billable hours at $140 per hour. Assume no credits or other revenue adjustments. Receipts of $15,400 apply only to those same fees by the review cutoff, with no receipts from another period included.

Earned fees are 120 × $140 = $16,800. The remaining receivable is $16,800 − $15,400 = $1,400. That balance is not automatically a write-off or guaranteed future cash. Review claim or invoice status and later receipts before deciding what can be collected.

The figures are invented, not a market rate or workload recommendation. The example excludes operating costs, retainers and cash from other periods; it is not profit or a bank balance. Reconcile any unfinished services separately so the buyer understands both the fee balance and the work still owed.

A prepaid balance raises a different question from the receivable above. The placement fee guide compares a fictional deposit with work completed under its agreement. An unused balance remains under those terms. The example does not decide an actual refund right or an automatic deduction from the purchase price.

Verify founder replacement and individual qualifications

Map the founder's client work, management, marketing, supervision and emergency cover. Compare the map with time records, schedules and payroll. State which duties require particular credentials or authority. The owner replacement guide helps cost necessary work without double counting or omitting recurring expense.

Use the placement transfer evidence guide to check the identity on registration, insurance and screening records alongside those individual qualifications. Its fictional example leaves a missing document unresolved even after other records have been corrected.

Verify licenses, certifications, memberships and marketing claims through the relevant bodies. State who will perform each service after the sale and the limits of any seller support. Ownership of a business name or domain does not grant a purchaser the founder's individual professional status.

Review staff availability, absences, training and backup. Keep clinical or professional decisions with qualified people. A forecast with fewer staff or more billed hours needs a supported service plan. The buyer should be able to explain how current clients will receive the work promised under their agreements.

Review channels, contracts and relationship concentration

Confirm rights to domains, phone numbers, software, advertising accounts and other systems. Read assignment, cancellation and consent terms in provider, client and vendor agreements. A shared login does not establish lawful access to all data or permission to use a name or endorsement indefinitely.

Review inquiries, completed work and fees by source for consistent periods. The referral concentration guide distinguishes introductions from the payer relationship. Identify dependence on the founder or a small group of contacts, while respecting clients' choices. A long contact list does not establish recurring revenue.

Test growth assumptions against qualified staff, service capacity, lawful fee arrangements and marketing cost. Separate a plan from a change already producing results. A purchase price based on future cases needs evidence of the conditions behind them, with uncertainty made clear rather than hidden in a conversion rate.

Plan lawful records access and ongoing custody

Pre-NDA outreach excludes financials and identifying business, owner, exact location, client, staff, vendor and referral details. Later commercial diligence follows screening and authorization. Small case groups and coded records can still identify people. Removing names alone does not establish de-identification. (Source: HHS)

An NDA does not create disclosure authority. Assess the actual purpose, legal basis, consent duties and safeguards with advisers. Apply minimum necessary where required, with its exceptions. (Source: HHS minimum necessary) Other state, professional and contract duties may matter even when a specific HIPAA rule does not apply.

Use the records custody guide to assign storage, retrieval, corrections and requests. Washington's chapter has a scoped six-year record requirement; it is not a national retention rule for every service. Confirm the rules for the actual records and preserve access if the sale does not close.

Connect terms, cash and unfinished work

List old receivables, retainers, refunds, disputed fees and services still owed. Reconcile the amounts with agreements and evidence. Specify which party receives later cash and handles adjustments. The buyer needs both funding and qualified staff for the obligations assumed, rather than treating every receipt as free purchase cash.

Build a dated operating forecast for payroll, insurance, vendors and collection delays. Review proposed price, seller work, future payments and retained risks with advisers. The letter-of-intent guide helps tie findings to terms, while the seller document guide organizes supporting evidence.

SBA recommends an objective investigation of the business and its source documents with professional help. (Source: SBA buying-business section) That general advice does not confirm a specific fee, financing plan or professional structure. Keep those conclusions tied to the actual reviews.

Rehearse the handoff and record the decision

Walk through a week using fictional cases. Confirm who responds to inquiries, explains fees, checks providers, covers absences, completes records and handles refund questions. Check permissions and backup. This business rehearsal should reveal gaps in assigned work without disclosing private client information or making clinical decisions.

Prepare accurate communication under the actual client, staff, provider and notice duties. Respect freedom to continue, change or end services. Founder introductions may help, but they do not guarantee retention. Assign a person to handle questions and unresolved work, with clear limits on any seller support.

Refresh key facts near closing and carry accepted duties into the first 90 days plan. The decision record should explain the evidence, open issues, reviewers in charge and cash effects. A checklist or price discount cannot confer missing authority, qualifications or resources.

Apply the buyer’s role exercise before treating a billing contact as the person authorized to decide everything. Use the seller’s departure exercise to review service cover. An accepted introduction and a request for alternatives need different responses. Each finding should lead to an assigned task in the handoff.