How to sell a hospice agency
Selling a hospice takes four to eight months for most owners. The price is set by census stability, aggregate cap headroom, and the survey record, and the deal structure is set by where the agency sits on the CMS 36-month rule.
Decide what you are actually selling
Most hospice sales fall into one of two groups. An operating hospice with patients is priced on its earnings. A certified hospice with little or no census is priced on its license, enrollment, and accreditation, because that is the time a buyer saves by not starting from scratch.
Knowing which group you are in matters before you talk to anyone. It decides which buyers are interested, which documents they will ask for, and whether the conversation starts with a multiple or a flat price.
Check the 36-month rule first
Since January 1, 2024, the CMS 36-month rule applies to hospices. If majority ownership changes within 36 months of the hospice's initial Medicare enrollment, or within 36 months of its last majority ownership change, the provider agreement generally does not carry over to the buyer. The buyer has to enroll as a new hospice and wait for a survey.
Pull your initial enrollment date from your Medicare records, not from memory. If you are close to the 36-month mark, waiting a few months can be worth more than any negotiation.
Gather the documents buyers will ask for
Having these ready before you go to market shortens diligence and keeps the price from slipping late in the deal.
- Three years of profit and loss statements and tax returns, plus year to date
- Census and admissions reports by month, with average length of stay
- Aggregate cap calculations for the last three cap years
- Survey reports and plans of correction, plus your accreditation status (CHAP, ACHC, or Joint Commission)
- Any ADR, TPE, UPIC, or other review activity, open or closed
- Staff roster, key contracts (pharmacy, DME, facilities), and your office lease
Keep the sale confidential
Hospice is a referral business. If staff or referral sources hear the agency is for sale from someone other than you, census can drop before a buyer ever signs.
A good process markets the agency without a name, address, or CCN. Buyers sign an NDA and are screened for their ability to close before they see anything that identifies you, and you approve who gets contacted.
How the sale runs
Preparation takes three to six weeks. Buyer outreach usually takes one to three months. After a letter of intent is signed, diligence and closing take 60 to 120 days, and the state licensure change of ownership and the Medicare 855A filing set most of that clock.
Expect buyers to look hard at cap exposure and survey history. An open review is not a deal killer. It is usually handled with an escrow or an indemnity. A review the buyer finds on their own is what costs you money.
What it costs to sell
Riverbluff is paid a success fee at closing, with no retainer or listing fee. You will also pay your own healthcare attorney and, on larger deals, an accountant for a quality of earnings review.
For a confidential estimate of what your hospice would sell for, request a valuation. It is free, it takes about one business day, and it does not commit you to selling.