We have put together some great information this month to help you grow and solidify the future of your agency. As always, our commitment is to provide educational content surrounding the fundamentals of the business life cycle including building value, planning for an eventual exit, and recent Merger and Acquisitions and trends effecting the home health industry.
Three Tips to Build Value For Your Agency
1. Diversify Your Payer Mix: This is a no-brainer yet the vast majority of home health agencies have less than 2 payer types. You do not have to look back too far to recognize the importance of having a diverse payer mix. Just imagine the effect an across the board Medicaid rate reduction will have on an agency whose primary payer is 85% Medicaid that only provides respite care.
If you are primarily a Medicaid agency and not already growing your private pay and third party insurance census you need to implement a plan. As a start, we recommend meeting and fostering relationships with all area hospital case managers including getting to know the on site hospital agents for Gentiva, Amedysis and other large area Medicare certified home health providers….many of whom do not provide the needed respite care your agency may offer. They will become a great resource to building a larger Private Pay business.
2. Update Technology: This item typically requires some capital investment but in the long term the updated technology will end up saving you money and building value for your agency. One item we recommend is migrating to an advanced Home Health software platform that will enhance patients care as well as your bottom line.
We have included a link to some of the top vendors so you can determine the best fit for your agency. Click here to visit the site.
3. Re-Visit your Job Description– If you can go on a two week vacation, without worrying about the daily operations of your agency stop reading. If not, you need to develop a plan that allows you to focus on growing your agency and delegating some of your current daily functions to employees or a new hire. It will not be easy, but you have to release some control and trust you have hired the right people to complete the functions needed to operate the business.
Set a goal of three to five months to complete the transition…you will have to train some of your key employees to perform the task and report results back to you. They may even come up with a better way to complete some of the task. At the end of five months take that two week vacation…this will be a great incentive and test to see how well you implemented your plan.
Exit Planning Strategies Part 1
Planning the exit from your business is essential and many experts agree it is one of the first elements you should have already considered prior to starting the business.
Today we will discuss one element of an exit plan which is Succession Planning. Typically this will be the “playbook” upon the exit of the owner. Many times the exit of an owner is sudden and unplanned such as ill health or death. When a sudden exit occurs there may be a family member working in the business that will take over and sometimes it is a family member not working in the business, and more importantly there is usually not a plan in place for the family or employees to follow.
As a first step, you need to develop a plan and determine who is the best fit to provide the needed leadership to continue the growth of the agency upon your exit, whether it is a planned exit or a sudden exit.
One critical item to consider during the planning phase is to purchase “key person” insurance and have the beneficiary be the agency. In the event of the death of an Owner, this will allow the agency to use the proceeds to purchase the ownership from a surviving beneficiary.
For more information or if you have any specific questions, Click Here and fill out the Complimentary Consultation form indicating an interest in Exit Planning.
Home Health Mergers and Acquisition Activity
The biggest news this year is the completed transaction between Kindred Health Care and Gentiva. The transaction has made Kindred at Home the largest, geographically diverse Hospice and Home Health provider in the United States. Gentiva’s selling price was $1.8 billion. Here is a quote from the Kindred CEO Paul Diaz following the announcement:
|# For Sale
|Under 1 million
|1 million to 2.5 million
|2.5 million to 5 million
|5 million to 7.5 million
|7.5 million to 10 million
|10 million to 15 million
|15 million to 20 million
|20 million and up
|# For Sale
As illustrated, there is plenty of opportunity for growth through acquisition throughout the Country for agencies with excess or access to capital. The team at United can assist you with the development of an acquisition strategy.
If you have an interest in learning more about the sales process, and your agency is generating gross revenues in excess of $3 million, United can guarantee the sale of your agency.
Please Click Here and fill out the Complimentary Consultation form indicating your interest in selling or buying.