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Considerations When Buying an In-Home Health Care Company

Home health care is one of the fastest growing industries in California. The Centers for Disease Control and Prevention (CDC) estimates that there are nearly 12,000 home health agencies nationwide. If you are considering purchasing a home health agency, it is crucial that you know how to protect your legal rights and financial interests. Here, our Fremont lawyer for buying a business highlights key considerations to know when buying an in-home health care company in California

Important Issues to Review When Buying an In-Home Health Care Agency in California

Health care is a large, highly regulated industry. There are many unique considerations that you need to be aware of if you are purchasing a home health care business. Here are some key things to keep in mind when assessing an in-home health care company in California:

  • Accreditation: Review the agency’s current accreditation status and verify whether it’s up to date. Accreditation is essential for reimbursement from Medicare and Medicaid, and it’s a key factor in the agency’s overall credibility. The most common accreditation organizations for home health agencies are The Joint Commission, CHAP, and ACHC.
  • Employees: In-home health care companies are only as strong as their human capital. Staff matters. Evaluate the current employees and their qualifications. Verify that all staff members are licensed and certified, and, if applicable, review any employment contracts.
  • Medicare eligibility: Under federal law (42 CFR § 424.550), a home health care agency that has enrolled in Medicare within the last 36 months generally cannot be transferred/sold. If it is sold, the company may be barred from Medicare. This could effectively destroy the business, but there are some exceptions to the federal rule. A business lawyer can help you evaluate any specific situation.
  • Franchise relationship: Many home health care companies in California are franchise businesses. If you are considering purchasing a home health company and becoming a franchisee, you need to understand the benefits and drawbacks that come from the franchise relationship. The franchise agreement should be reviewed by a lawyer.
  • Buy-Sale Agreements:  A well drafted agreement to purchase or sell the business is critical, to minimize the risks of liability.  It should be drafted or reviewed by an attorney.

Of course, all the other issues that you would need to consider when buying a business still apply. For example, it is imperative that you take a careful look at a home health care company’s balances—all assets and all liabilities—before finalizing any purchase agreement.

Comprehensive Due Diligence is a Must When Buying a Bay Area Business

When buying a business in the Bay Area, it is imperative that you conduct thorough due diligence to avoid potential pitfalls. Among other things, due diligence should include a review of legal, financial, and operational aspects of the business. An in-home health agency is no exception to the rule. As this is a complex industry, comprehensive due diligence is especially important. You do not have to figure everything out alone. Buyers should be prepared to work with an experienced business lawyer.

Get Help from a California Business Lawyer for In-Home Health Care Companies

Lynnette Ariathurai is a top business lawyer with deep experience working with home health companies. If you have questions about buying an in-home health business in California, we can help. Contact us now for a confidential consultation. Our firm works with home health companies in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, San Jose, Santa Clara, and throughout the region.