As an owner of a Hospice or Geriatric practice in Tennessee, you’ve built a business that provides crucial care. When considering a sale, the current market presents a unique window of opportunity. Navigating this landscape to achieve your personal and financial goals requires a clear understanding of market dynamics, valuation, and the sale process itself. This guide will walk you through the key areas you need to consider.
Curious about what your practice might be worth in today’s market?
Market Overview
The market for selling your Hospice and Geriatric practice in Tennessee is exceptionally strong. This is not based on opinion. It is based on clear demographic trends. The states senior population is set to grow by 30% by 2040, reaching over 2.1 million people. This fuels a powerful and sustained demand for the exact services you provide. For practice owners, this translates into significant buyer interest.
However, demand is only part of the story. Buyers are looking for well-run practices that have navigated common industry challenges.
Key Tennessee Market Drivers
| Market Factor | Implication for Your Practice |
|---|---|
| Rising Senior Population | Creates a large, growing, and predictable patient base for buyers. |
| Increased Chronic Disease | Drives need for specialized geriatric and palliative care models. |
| Caregiver Shortages | Makes practices with stable, experienced staff highly attractive. |
| Aging in Place Trend | Boosts demand for in-home hospice and geriatric services. |
Key Considerations
A strong market is a great starting point. But a buyer will look closely at the inner workings of your practice. Before you sell, it is important to review a few key areas. Your reliance on specific referral sources is one. A diverse network of referrers is more stable and attractive than depending on a single hospital system. Similarly, your staffing model matters. A practice that can operate without being 100% dependent on the owner is seen as less risky and more valuable. Finally, ensuring your billing and compliance records are clean and organized is not just good practice. It is a critical step that makes the due diligence process smoother for everyone involved.
Market Activity
The demand in Tennessee has attracted a range of sophisticated buyers, from large regional healthcare systems to private equity groups specializing in post-acute care. This activity creates a competitive environment, which is good news for sellers. You are not just looking for one offer. You are looking for the right offer from the right partner.
Here is what we are seeing in the market today.
- Strategic Consolidation. Larger providers are acquiring smaller practices to expand their geographic footprint and service lines in Tennessee. They are looking for established operations they can integrate efficiently.
- Private Equity Investment. Financial buyers are interested in practices with strong cash flow and a solid management team. They often offer partnership models that allow owners to take some chips off the table while staying involved in the practice’s growth.
- Focus on Quality. Buyers are paying premium prices for practices with strong clinical reputations, high patient satisfaction scores, and clean compliance histories. They are buying your track record.
Sale Process
Selling your practice is not like selling a house. It is a strategic process designed to protect confidentiality and maximize value. It begins long before the first conversation with a buyer. The first step is getting your financial and operational documents in order. This is followed by a comprehensive valuation to set a realistic and defensible asking price.
Once prepared, we identify and confidentially approach a curated list of potential buyers. This creates a competitive environment without alerting your staff or community. After initial offers are received, we move to negotiations and selecting the best partner. The final stage is due diligence, where the buyer verifies all the information about your practice. This is often the most intensive part of the sale, and where good preparation pays off.
Valuation
Understanding what your practice is truly worth is the foundation of a successful sale. It is not about a simple rule of thumb. Sophisticated buyers use a specific method to determine value, and you should too.
Finding Your True Earnings
First, we look past the net income on your tax return. We calculate your “Adjusted EBITDA.” Think of this as your practice’s true annual cash flow. We start with your reported profit and add back expenses like your personal car lease, excess salary, and any one-time costs. This number is almost always higher than your reported profit, and it’s what buyers are most interested in.
Applying a Market Multiple
Next, we apply a “multiple” to your Adjusted EBITDA. This multiple is determined by the market and reflects the quality and risk of your earnings. Factors that increase your multiple include having multiple providers, diverse referral sources, and a strong growth history. A practice with $1M in Adjusted EBITDA might get a multiple of 5.5x to 7.5x or more in the current market.
This process of normalization and market analysis reveals a value that often surprises practice owners.
Post-Sale Considerations
The day you sign the closing documents is not the end of the journey. It is the beginning of a new chapter for you, your staff, and your practice. Planning for what comes next is a critical part of a successful sale. You will need to decide what role, if any, you want to have in the practice after the sale. Many owners stay on for a transition period of one to three years.
How you receive your payment is also flexible. A portion may be paid as an “earnout,” which you receive for hitting performance targets after the sale. Or you might “rollover” some of your equity, retaining ownership in the larger new company. This preserves your connection to the practice and offers a chance at a second payday when the larger entity is eventually sold.
Finally, a good deal includes protections for your team and the culture you built. The right partner will value your staff and want to maintain the legacy of care you established in the community.
Frequently Asked Questions
What is driving the strong market demand for selling Hospice & Geriatric practices in Tennessee?
The strong demand is driven by Tennessee’s senior population set to grow by 30% by 2040, creating a large and predictable patient base. Increased chronic diseases, caregiver shortages, and a trend towards aging in place further fuel the need for specialized hospice and geriatric care services.
What should I review in my practice before selling to make it more attractive to buyers?
Before selling, review your referral sources to ensure a diverse network rather than reliance on a single hospital system. Also, ensure your staffing model allows the practice to operate without full dependence on the owner, and keep your billing and compliance records clean and organized to smooth the due diligence process.
What types of buyers are currently active in the Tennessee Hospice and Geriatric practice market?
Buyers include large regional healthcare systems seeking strategic consolidation to expand footprint, private equity groups interested in strong cash flow and solid management teams, and buyers focusing on quality practices with strong clinical reputations and clean compliance histories.
How is the value of my Hospice or Geriatric practice determined in Tennessee?
The valuation is based on your practice’s Adjusted EBITDA, which reflects true annual cash flow after adding back personal and one-time expenses. A market multiple, typically between 5.5x to 7.5x or more, is then applied to this figure based on factors like multiple providers, diverse referrals, and growth history to arrive at a market value.
What should I consider about my role and payment after selling my practice?
Post-sale, you may choose to stay involved for a transition period of one to three years. Payment can be flexible, including earnouts tied to performance or rolling over equity to retain ownership in the larger company. Also, ensure the deal protects your staff and preserves the culture and legacy of your practice.