Home health · Checklist · Pre-LOI
The Healthcare Acquisition Checklist: Follow the Payer, Then the Paper
Most of this list is for your CPA and healthcare counsel. Asking for it before the LOI is how you find out early whether the deal is worth their time.
By Mark Hirsch, Founder, TrueQoE · Managing Member, Strategic Lever LLC.
A healthcare earnings figure rests on three things the P&L doesn't show on its face: who pays, whether the payments come with the business, and what the care costs to deliver without the current owner. Request these records before you sign anything that gives the seller exclusivity.
How to read the tags. “First Pass reports this” marks the only items a TrueQoE First Pass covers: tying each year to its stated totals, labelling each adjustment by its evidence, and listing missing records. Every other tag names who should check the item. Those items are guidance, not First Pass outputs.
Which financial records should a healthcare seller provide first?
Short answer: The P&Ls, balance sheets and tax returns for every year the price relies on, and the add-back schedule. Those are what a First Pass works from.
- Annual P&Ls and balance sheets for each year the price relies onEach year should agree with its own stated totals.First Pass reports this
- The seller's add-back schedule, line by lineEach add-back gets an evidence label and is pinned to its source line.First Pass reports this
- Business tax returns for the same yearsDifferences from the P&L need an explanation.Your CPA
- Monthly P&Ls, and the accounting methodBilled and collected revenue land in different months; the method decides which one you're reading.Your CPA
What should you request about payers and reimbursement?
Short answer: Revenue by payer and by referral source, the contracts and rates behind it, and anything that has changed since the period the price relies on.
- Revenue by payer (Medicare, Medicaid and managed-care plans, commercial, private pay) by yearConcentration in one payer carries that payer's rate decisions with it.Your CPA
- Revenue or admissions by referral sourceOne hospital or physician group can matter as much as one payer.You · Your CPA
- Payer contracts, rate schedules and any program add-onsCheck which rates are in the trailing twelve months and which are in force now.Your CPA · Your attorney
- Which enrollments, contracts and licenses transfer, and which need new enrollment or consentMedicare's home health change-of-ownership rule can decide the structure.Your attorney
How do you check billing, collections and write-offs?
Short answer: Ask for the path from a billed visit to cash: denials, rebilling, write-offs, and anything a payer has taken back.
- Billed, collected, denied and written-off amounts by payer and yearThe gap is where revenue claims soften.Your CPA
- Accounts receivable aging by payerOld receivables may never be collected.Your CPA
- Open audits, recoupment demands and claims under reviewMoney already counted as revenue can be taken back.Your CPA · Your attorney
- Support for any recoupment or denial year added back as one-timeLabelled by the evidence in your upload.First Pass reports this
What should you check about clinicians, staffing and the owner's role?
Short answer: Price the care without the owner in a clinical or administrator role, and without agency staff unless the seller can show the vacancies are filled.
- Staffing agency invoices by year, and the roles they coveredA premium called temporary is the cost of care unless the vacancies are filled.You · Your CPA
- Support for any staffing-agency or owner-pay add-backEach is labelled Documented, Needs support or Undocumented.First Pass reports this
- Who holds the administrator, clinical director and other licensed rolesIf it's the owner, the role needs a market-rate replacement the regulators accept.You · Your attorney
- Clinician roster, tenure and turnoverWho delivers the visits you're buying.You
- Anyone paid as a contractor, and what they doClassification affects cost and risk.Your CPA · Your attorney
What compliance and insurance records belong on the list?
Short answer: These rarely show up as a line on the P&L. Request them anyway, and hand them to the advisors who read them.
- State licenses, accreditation and recent survey resultsWhether the business can operate, and under whose name.Your attorney
- Any arrangements with referral sources: medical directorships, marketing, leasesHealthcare referral arrangements need counsel's review.Your attorney
- Professional liability insurance and claims historyClaims history affects what coverage will cost you.Your insurance advisor
- Anything the First Pass lists as missingSend the list to the broker as your next request.First Pass reports this
Notice how few items carry the First Pass tag. That's the honest shape of a healthcare deal: the earnings evidence is one part of the work, and the payer and regulatory questions are another. Doing the first part early tells you whether to pay for the second.