The market for hospice care in Wisconsin is strong, driven by favorable demographics and high utilization rates. For practice owners, this presents a significant opportunity. However, turning that opportunity into a successful sale requires careful planning, from navigating state-specific regulations to achieving a strong valuation. This guide provides a clear overview of the key factors you need to consider.
Market Overview
If you own a hospice practice in Wisconsin, you are operating in a healthy and expanding market. The demand for quality end-of-life care is rising, creating a favorable environment for practice owners considering a sale. Buyers are actively looking for well-run agencies in states with strong fundamentals like Wisconsin.
Here are a few key dynamics shaping the market today:
- Strong Local Growth. The broader home care market in Wisconsin, which includes hospice, is projected to reach $1.4 billion by 2025. This growth signals a stable and increasing demand for your services.
- High Patient Utilization. Wisconsin sees higher hospice utilization than the national average. Over 54% of Medicare decedents in the state received hospice care, showing a deep community acceptance and need.
- National Consolidation Trend. Across the U.S., there is a clear trend of non-profit hospices being acquired by for-profit entities, including private equity firms. This trend is increasing competition and driving up valuations for attractive practices.
Key Considerations
Beyond market health, a successful sale depends on the details of your practice. Buyers will scrutinize your operational and regulatory standing. A clean compliance record with both federal rules (42 CFR Part 418) and Wisconsin state codes (DHS 131) is non-negotiable. In Wisconsin, your license is non-transferable, so navigating the Change of Ownership (CHOW) process with the Department of Health Services correctly is a critical step. Having a stable, qualified clinical team and recognized accreditations from bodies like ACHC or CHAP will also significantly strengthen your position and make the entire transition process smoother for a potential buyer. Preparing these elements ahead of time is not just good practice. It is fundamental to a successful exit.
Market Activity
The national hospice market is a hotbed of merger and acquisition (M&A) activity. Large healthcare companies and private equity investors are expanding their footprints through strategic acquisitions. While Wisconsin has seen a lower volume of publicly reported change of ownership transactions, this does not indicate a lack of interest. It often means buyers are looking for the right opportunities in a less saturated market.
This intense national interest is driven by major players, signaling a healthy and competitive buyer landscape.
- Optum completed its major merger with Amedisys.
- Compassus entered a significant joint venture with Providence.
- Agape Care Group acquired hospice locations from Crossroads Hospice.
This activity shows that sophisticated buyers value the hospice space. An experienced advisor can connect you to this national buyer pool, not just the obvious local players.
The Sale Process
Selling your practice is a structured process, not a single event. It begins long before a buyer is involved. The first step is preparation, where you organize your financial and operational documents to tell a clear, compelling story. This leads to a formal valuation to establish a credible asking price. From there, we run a confidential marketing process to identify and vet potential buyers without disrupting your staff or patients. The most intensive phase is often due diligence, where the buyer inspects every aspect of your business. This is where deals most often encounter trouble. Proper preparation can prevent surprises here. The process concludes with negotiation of final terms and a smooth closing.
How Your Practice is Valued
A buyer won’t value your hospice on revenue alone. They focus on profitability, specifically a metric called Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This figure represents your practice’s true cash flow by adding back owner-specific and one-time expenses to your net income. This adjusted profit is then multiplied by a number (a “multiple”) to determine the total value. While your EBITDA is based on numbers, the multiple is based on your story and risk profile. Understanding these factors is the first step toward maximizing your sale price.
| Factor | Lower Multiple | Higher Multiple |
|---|---|---|
| Referral Sources | Concentrated in 1-2 systems | Diverse and stable network |
| Staffing | High turnover, owner dependent | Low turnover, stable clinical team |
| Compliance | Basic adherence | Flawless survey history, accredited |
| Growth | Stagnant patient census | Consistent, documented growth |
A comprehensive valuation is the foundation of a successful practice transition strategy.
Planning for Life After the Sale
The transaction is not the end of the story. Planning for what comes next is a critical part of a successful exit strategy. For many owners, this means ensuring their staff is taken care of and that the legacy of care they built continues. It also involves structuring the deal to meet your personal financial goals. Do you want mostly cash at closing, or are you interested in an “earn-out” to share in future success? Would you consider rolling over a portion of your equity to partner with the new owner for a potential second, larger payout later? The structure of your sale has massive implications for your taxes and your future. Thinking through these options early is one of the most important things you can do.
The right exit approach depends on your personal and financial objectives.
Frequently Asked Questions
What makes the Wisconsin hospice care market attractive for sellers?
The Wisconsin hospice care market is strong due to favorable demographics, high utilization rates over 54% of Medicare decedents receive hospice care, and projected growth in the home care market to $1.4 billion by 2025. There is also a national trend of acquisitions increasing valuations, creating opportunities for sellers.
What are the key regulatory considerations when selling a hospice practice in Wisconsin?
In Wisconsin, the hospice license is non-transferable. Sellers need to navigate the Change of Ownership (CHOW) process with the Department of Health Services carefully. Compliance with federal rules (42 CFR Part 418) and Wisconsin state codes (DHS 131) is mandatory. Accreditations from bodies like ACHC or CHAP and a clean compliance record are crucial.
How is the value of a hospice practice in Wisconsin determined?
Value is determined primarily by Adjusted EBITDA, reflecting true cash flow by removing owner-specific and one-time expenses. The adjusted EBITDA is multiplied by a ‘multiple’ based on factors like referral source diversity, staffing stability, compliance history, and growth trajectory, influencing the final sale price.
What does the typical sale process for a hospice practice involve?
The sale process includes preparation of financial and operational documents, a formal valuation, confidential marketing to identify buyers, due diligence where the buyer thoroughly reviews the business, negotiation of terms, and closing. Preparation helps prevent issues during due diligence.
What should owners consider for life after selling their hospice practice?
Owners should plan for staff continuity and legacy of care, decide the financial structure of the deal (e.g., cash at closing, earn-outs, or equity rollover), and consider tax implications. Early planning allows owners to align the sale with their personal and financial goals for a successful exit.
