The Centers for Medicare & Medicaid Services (CMS) recently proposed a new rule for home- and community-based services (HCBS) that would make major changes to the way home care workers are compensated under Medicaid. What's most significant about the proposed changes is the requirement that at least 80% of the Medicaid payments for personal care, homemaker, and home health aide services must be directed toward the wages for caregivers.

A question we frequently get asked these days from potential sellers of healthcare businesses is, "Considering the current market and economy, will my valuation take a hit?" The reality is that this is a yes and no answer. The overall healthcare M+A market has been a bit slower as of late compared to the feverish activity of around 24 months ago, and while valuations may have plateaued or dipped in one healthcare vertical, they may be stronger in another. 

The M+A industry regularly reminds us that it’s tough to sell any business, including healthcare companies. Published data from the likes of exit planning experts, investment banks, and trade associations suggest that somewhere between only 10-30% of businesses complete transactions.

Why such a dismal success rate? The typical reasons are logical enough: sellers are not emotionally ready to leave their “baby”; poor financials mean there are few interested and qualified buyers; the seller’s local service/product is not scalable; and/or their company is facing unknown risk in an evolving marketplace.

The process of selling your healthcare business or attracting investors is often referred to as “selling your baby,” reflecting the very personal nature of this important business transaction. While each transaction is unique, we have identified 20 attributes that determine the probability of successfully completing a transaction.

Once you've decided to sell your healthcare company, one of the biggest decisions you may need to make is which type of buyer you will choose. If your company attracts a variety of buyers, you're likely to have a choice between private equity (i.e., financial buyer), search fund, and/or strategic buyer. All generally have the same goals in mind, but approach deals in different ways. 

Double-digit multiples are often the buzz around healthcare conference room floors. "I just heard someone got a 15x for their business!" a business owner will exclaim — a multiple far exceeding the industry norm of 4-8x. Is such an astonishing multiple merely an urban legend or is it possible for a middle-market healthcare business owner to achieve double-digit multiples?

I was fortunate to attend the ViVE Conference in Nashville earlier this week. If you are not familiar with ViVE, which launched in 2022, it merges the leadership of College of Healthcare Information Management Executives (CHIME) and the HLTH digital marketplace.

Over the past several years, we've seen a rapid rise in the number of new healthcare revenue cycle management (RCM) companies, existing companies launching RCM divisions, and transactions involving RCM companies. All three developments are tied to the greater demand for RCM services.

Today I want to talk to you about quality of earnings (QofE or QoE). I want to focus on this single concept because it's become one of the reasons — if not the leading reason — why healthcare transactions go sideways.

The home medical equipment (HME) industry was long dominated by legacy manufacturers with a high barrier of entry. But over the past few years, we've begun to see cracks in the decades-old status quo emerge. 

So you're thinking about selling your healthcare business. Aside from starting your company, this might be the most important step you'll take in your career. The majority of healthcare sellers will be involved in an M+A transaction once, so there is only one chance to get it right. 

Getting it right typically involves working with the right healthcare advisor/broker. This person can help you find prospective buyers, identify the right buyer for you, and successfully navigate the waters of the transaction — which will likely be choppy at times — from beginning to end. 

To help you make a sound choice of a healthcare M+A advisor, here are some questions to ask yourself as you interview prospects.

It's January, so many of you may be reading this article for guidance on your 2023 M+A plans. Right about now, your internal dialogue may sound like, "I want to retire soon but the economy seems unstable, so why would I sell before it corrects?" Indeed, economic and industry indicators are mixed, almost like an economic whodunnit mystery with fingers pointing around the circle of suspects, all awaiting Sherlock to tell us when to initiate an exit. But if you step back from the scene of the crime, you will notice the partygoers are all buyers and sellers who share the same intention: to complete M+A transactions.