Guide to Selling a Palliative Care Practice in California

An overview of the market, valuation insights, and key steps for a successful transition.

The palliative care market is growing, and California is a key part of that expansion. For practice owners, this presents a significant opportunity. If you are considering the future of your practice, understanding the current landscape is the first step. This guide gives you a direct look at the California market, how practices like yours are valued, and what to expect during a sale.

Market Overview

The timing for considering a sale of your palliative care practice has rarely been better. The market is not just stable; it is expanding rapidly. This growth creates a favorable environment for practice owners looking to transition.

A Market in High Demand

Globally, the palliative care market is projected to nearly double by 2030, reaching over $243 billion. This trend is mirrored in the United States. In California, the hospice sector, which is closely related to palliative care, generated over $4.8 billion in revenue in 2023 alone. This financial activity shows a robust and active transaction environment. Sophisticated buyers, including private equity firms, are taking notice and actively seeking to invest in quality practices.

California’s Unique Landscape

California is a mature market for palliative care, with services well-integrated into health plans and hospitals. State-level mandates, like SB 1004 requiring Medi-Cal plans to provide palliative care, solidify its importance. For a seller, this means you are operating in a receptive environment. Buyers understand the value and necessity of your services, reducing the need to “prove” the concept and allowing the conversation to focus on the strength of your specific practice.

Key Considerations

A strong market is a great starting point, but the success of your sale depends on the details of your practice. Buyers in California are sophisticated. They look past the surface and focus on a few critical areas. Your referral network is a major asset. A documented history of consistent referrals from hospitals and physician groups demonstrates stability and is highly attractive.

Financially, the story is shifting. Palliative care was once seen as a loss-leader. Now, with evolving payment models, a clear path to profitability is a primary selling point. Your ability to operate successfully within value-based reimbursement models is especially important.

Finally, be aware of a major regulatory change. The CMS “36-month rule” for hospices can impact timing, requiring a minimum ownership period before a sale. This rule underscores the need for long-term strategic planning. Proactive preparation, sometimes years in advance, is no longer optional. It is the standard.

Market Activity

The California palliative care market is active. We are seeing consistent deal flow driven by clear trends. Understanding these dynamics is key to positioning your practice correctly. Here are three things we are seeing right now.

1. Private Equity is the Primary Buyer. A large majority, roughly three-quarters, of recent transactions in the hospice and palliative care space have involved private equity firms. These buyers have capital and a clear strategy. They are looking for well-run practices to add to their growing platforms. This means you are likely to be negotiating with a very experienced team.
2. Valuations Depend on Operations. The price of a practice can vary significantly. We have seen California practices listed anywhere from $150,000 for a brand new, certified agency to nearly $500,000 for an established practice with a patient census. The key difference is proven operational history, including patient count, staff, and referral sources.
3. Growth Potential is a Key Selling Point. Buyers are not just acquiring your current business. They are buying its future. Practices that can demonstrate potential for expansion, either in a new community or through additional service lines, command more attention and command higher valuations.

The Sale Process

Many owners think selling a practice starts with finding a buyer. In our experience, that is one of the later steps. A successful sale begins with preparation. This involves organizing your financial statements, documenting your operational procedures, and understanding what buyers will request. We help owners prepare for this scrutiny well in advance. Once your practice is ready, we begin a confidential marketing process, presenting the opportunity to a curated list of qualified buyers.

This leads to receiving offers, negotiating terms, and selecting the right partner. The final, critical stage is due diligence. This is where the buyer verifies everything you have presented. It is an intense period of financial and legal review. A smooth due diligence process is the hallmark of a well-prepared sale and is crucial for getting to the closing table without any last-minute surprises.

How Your Practice is Valued

The most common question we hear from owners is, “What is my practice worth?” The answer is a function of two things: your true annual cash flow and a valuation multiple. The starting point is not your tax return’s net income. It is your Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). We calculate this by taking your stated profit and adding back owner-specific expenses, like a vehicle or above-market salary. This gives a true picture of the practice’s profitability.

That Adjusted EBITDA is then multiplied by a number that reflects your practice’s quality and risk. A higher multiple means a higher value. The multiple is not random. It is determined by several factors.

Getting an accurate valuation is the foundation of a successful exit strategy. It ensures you negotiate from a position of strength.

Post-Sale Considerations

The transaction does not end when the papers are signed. Your role, your team’s future, and your financial takeaway are all shaped by decisions made during negotiations. You need to decide what you want your future to look like. Do you want to continue working in a clinical role for a few years? Or are you seeking a clean break? The right buyer for you is one whose plans align with your personal goals.

Protecting your staff and the legacy you have built is also a key part of the process. These terms can be built into a deal. Finally, the way a sale is structured has massive implications for your after-tax proceeds. The difference between a good and a great outcome is often found in the tax strategy planned before the sale, not after. Thinking through these points ensures your transition successfully funds the next chapter of your life.