How To Prepare Your Home Care Agency For an Acquisition

Are you eyeing an exit from your business? 

Don’t start the conversation when you’re ready to call it quits; start the dialogue as soon as you can so that you can be adequately prepared for what’s to come. 

According to Steve Weiss of Home Care Evolution, the tipping point for exiting the home care agency “around that 10 year in business mark.” Is this true for you? 

Whether you’re a start-up or 25 years in business, it’s never too early to start that conversation. With looming CDPAP and other program cuts/changes and an ever-changing regulatory landscape, now might be a good time to have the conversation with your team about optimizing processes and cleaning up the clutter. 

Start the exit conversation before and during your start-up phase.

One of the best ways to set up a home care agency for success is to take some time to think about how you want to grow and scale. 

Are you looking to create a business, grow it to a certain threshold, and go into maintenance mode? Or, are you looking to create a lasting, potentially familial legacy with a corporation that you build from the ground up? 

If you lean toward the latter, this can lead you on the path toward an acquisition. Having this frame of mind from the beginning, will help you come up with a business plan that supports this goal. 

How does it impact your business planning?

It impacts every area of your business. From your caregiver recruitment plans to your client acquisition plans, to the manner you teach your teams to find and reach out to referral sources. It touches everything that you do.

Most importantly, it touches the way you conduct yourself. Preparing for an acquisition also means taking the processes that solely live in your head and put them on paper. It means preparing your fellow team members to be able to do what you do. 

Now, we’ll go over tactical strategies on how to prepare your home care agency for acquisition. 

Strategies to prepare for an acquisition

Here’s what you need to know—and do before selling your home care agency. 

1. Keep a pulse on your numbers. Preparing for acquisition means another party is evaluating your business—likely against several others. Knowing your KPIs and day-to-day figures can help you identify areas for improvement while articulating the value of your operation. 
2. Diversify your payer sources. You never want to put all of your eggs in one basket, but, of course, if something is working really well for you, no need to change that. Demonstrating that your team can manage and bill multiple payer sources shows agility, understanding, and competence.
3. Do your research. There are many different types of buyers when it comes to the home care agency market, whether that’s to another family, to an existing corporation that’s managed multiple agencies, a home healthcare company looking to add other service lines, and more. Work with experienced business counsel, like Polsinelli, to properly calculate the value of your agency and to facilitate the deal itself. Or, maybe you’re a part of a franchise entity looking to sell to another franchisee. 
4. Leverage your strategic partnerships. Every home care agency is unique and you have to be able to share with potential buyers about how your business stands out from the others. One of those factors might be unique partnerships you have with hospitals, senior living communities, fiduciaries, geriatric care managers, attorneys, and countless others. 
5. Get your recruitment processes up to snuff. Caregiver turnover is the highest it’s been in five years, according to Activated Insights. If you’re able to design and implement a program that successfully recruits and retains caregivers consistently past that 90-day mark, you can likely win over potential buyers. 
6. Use technology to your strength. One of the first cuts that are made in a non-medical home care agency after an acquisition is excess labor. Before an acquisition happens, you can audit your internal operations and see where technology can help your team spend less time on manual tasks—and spend more time where it counts. 

Get your home care agency in the right place before an acquisition.

If you’re thinking about an acquisition, we hope that these tips helped you get a conversation started with your team—along with an action plan. 

As you expand and add other payer sources, consider using CareTime as your agency management system for exclusive access to Billing While You Sleep, one of our newest features.

We also encourage you to listen to this podcast episode from Steve.