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6 steps to take now to position your agency for a strong sale
by Bradley Smith & David Broussard

2024 is shaping up to be an active year for home health transactions. A mix of headwinds and tailwinds will likely fuel more merger and acquisition (M&A) activity than we saw last year, but prices paid for home health agencies may still be weighed down by various industry, national and global challenges. There is some good news, however, for owners planning to sell or considering selling their agencies this coming year, and there are concrete steps owners can take to help drive up buyer interest
and prices.

State of the Industry

We’re still feeling the effects of a largely disappointing 2023. While there were some significant transactions within home health, overall M&A activity declined, as did valuations and the prices paid for agencies. Home health struggled with internal and external challenges. Staffing recruitment and retention remained difficult, with the cost of payroll rising. Reimbursement cuts coupled with high interest rates, inflation and the growth of Medicare Advantage plans further strained bottom lines.

But there are reasons for optimism. Major financial issues like high interest rates, the high price of borrowing and rampant inflation are easing. Finding qualified staff is becoming easier, and compensation levels appear to be stabilizing. The demand for home health services should grow, with contributing factors including an aging population and consumer preference for more personalized care.

From a transactions perspective, an underwhelming 2023 paired with the current stronger financial markets means buyers are accumulating cash. More cash on hand tends to translate to more transactions. Buyers are looking to take advantage of depressed valuations to further consolidate markets, but they are also looking for good home health agencies to acquire that can instantly strengthen their portfolios.

Improving the Position of Your Home Health Agency

If you’re interested in selling, what can you do to better position your home health company for a sale and at a higher price? Here are some key steps to take.

1. Partner with an M&A advisor.

Taking this first step will help with all the other steps discussed below. An M&A advisor will perform several tasks essential for a transaction that will be considered successful by both parties (not just the buyer). The advisor will complete an initial assessment of the agency and its operations, painting a clearer picture of the business’s strengths and weaknesses. With this information, the advisor will help identify the best opportunities for improvement that can help attract more interested buyers willing to pay a higher price.

This information will also enable the advisor to establish the valuation range and provide guidance on changes that can increase the valuation and/or help secure a price reflective of the higher end of the valuation range.

Finally, the advisor will walk a home health agency owner through the steps required to begin preparing for a sale and the steps that will need to be completed to effectively bring a business to market.

2. Assess your payer mix.

In 2021, Medicare Advantage covered nearly half of all Medicare beneficiaries (47%), KFF reported. The number and share of Medicare Advantage enrollees has since increased up to about 51% of all eligible beneficiaries.

This isn’t good news for home health due to the reimbursement difference between traditional Medicare and Medicare Advantage (MA) beneficiaries. As the percentage of an agency’s clients enrolled in MA increases, the businesses’ financial performance suffers. If your agency is heavy with MA clients, a concentrated effort to add Medicare clients (and possibly reduce the number of Medicare Advantage clients) will be necessary for increasing the valuation range and purchase price.

3. Empower your marketing & sales team.

Achieving that payer shift will likely require the efforts of your marketing and/or sales teams. They should be educated on why certain clients are more financially desirable than others and given the resources and support to attempt to add these higher-value clients. This effort could include client education about the pros and cons of Medicare Advantage, with a focus on why clients should stick with or switch back to traditional Medicare.

For the latter, it’s important to know that there are two Medicare open enrollment periods annually during which beneficiaries can make such a switch. As KFF notes, one runs from Oct. 15 to Dec. 7. For clients who make the switch back to traditional Medicare during this period, the change will take effect on Jan. 1 of the following year. The second period runs from Jan. 1 to March 31, with new coverage starting the first of the first month after the plan receives
the request.

4. Be transparent with your referral sources.

If you’re running a successful home health agency, you’ve likely built up a good referral source base—individuals and organizations that want to help you because you have provided good services and support to referred clients. These referral sources should want you to succeed, so you should tell them what you need to succeed. This includes referrals for individuals with traditional Medicare rather than Medicare Advantage specifically because of the reimbursement difference. Good referral sources will be sympathetic to your situation as they have likely also experienced challenges with reimbursement.

5. Strengthen your administrative team.

If you’re thinking about selling your home health agency, this is a time to invest in your administration and leadership. Find people who understand and have experience with the Medicare home health space; people who understand the need for efficiency while adhering to disciplines of home health; and people who can comfortably wear multiple hats. The right personnel should deliver a strong return on investment, allowing you to execute improvement opportunities and address shortcomings, all while enhancing your agency’s appeal to prospective buyers.

6. Target technology for improvement.

Buyers are increasingly looking for businesses that are effectively leveraging technology to improve their operations. Evaluate your current technology systems and determine whether they are the optimal solutions. Also, evaluate your manual processes and look to see whether there are technologies you can integrate that will enable you to further streamline operations and reduce staffing needs and workloads, among other benefits.

There’s Probably a Buyer for Your Home Health Agency

Buyers are looking to buy. If you’re looking to sell your home health agency, there will likely be interest. How much interest? That will largely depend on your current operations and what you do to improve them in the weeks and months leading up to when the business goes on the market.

You can do very little and still find a buyer happy to capitalize on a deal. Or you can work with your M&A advisor to execute the best practices for improving home health operations. These efforts should lead to the outsized valuations that drive up buyer interest and ultimately increase your payout.

Bradley M. Smith, ATP, CMAA, is a former durable medical equipment company owner and is managing director with the international health care mergers and acquisitions firm VERTESS. He is a member of HomeCare’s Editoral Advisory Board.  You can reach him directly at (817) 793-3773 or Visit

David Broussard first started working in his family’s home health agency and spent 20+ years in pharmaceutical sales before becoming managing director at VERTESS. You can reach him directly at or call (817) 881-1493.