In healthcare transactions, closing the deal is only half the challenge. The new owner also needs to be credentialed with Medicare, Medicaid, and commercial payers before billing can continue without interruption. The following fictional case study compares two similar Florida healthcare businesses, one that began the credentialing process months before closing and one that waited until after closing, to show how that timing decision affected the transition.
The businesses below are fictional, but the credentialing risks reflect what we see in real transactions, similar to the challenges represented in a recently home health agency sold in Sarasota and Manatee Counties.
Coral Ridge Home Health’s broker and healthcare attorney began the new owner’s Medicare enrollment and payer credentialing applications as soon as the letter of intent was signed. By the time the deal closed, every approval was already in hand.
Sunset Home Health Services closed on schedule, but the new owner’s Medicare enrollment and payer credentialing applications were not submitted until after the transaction closed. Billing under the new ownership structure could not proceed normally until those approvals came through.
| Factor | Business A | Business B |
|---|---|---|
| Billing Interruption | None | Approximately 90 days |
| Cash Flow Impact | Normal | Significant gap requiring a working capital reserve |
| Escrow Requested by Buyer | Standard | Larger holdback to cover potential gap |
| Buyer Confidence at Closing | High | Reduced, reflected in deal terms |
The buyer for Sunset Home Health Services put it directly during negotiations: “If we can’t bill Medicare for three months after closing, we need a much bigger cushion built into this deal.” That single issue led to a larger escrow holdback and a less favorable structure for the seller, even though the sale still closed.
Provider enrollment and payer credentialing can take weeks or months, and most of that process can typically begin well before a deal actually closes. Waiting until after closing to start creates an avoidable cash flow gap that buyers will price into the deal through escrow holdbacks, working capital adjustments, or reduced offers.
As soon as a letter of intent is signed, work with your broker, attorney, and the buyer to begin any required credentialing or enrollment processes in parallel with due diligence. This single step, planning credentialing timelines early, is one of the most overlooked but preventable risks in healthcare exit planning.
Both fictional businesses closed their sales, but one transitioned smoothly while the other faced a costly billing gap and a less favorable deal structure. If you are planning to sell a healthcare business and want to avoid credentialing delays, contact Truforte Business Group to start planning early.
For related insight into referral source risk in home health agencies, see our case study on two home healthcare agencies.
For more real-world (fictional) examples of how deal factors affect outcomes, see: Case Study: Two Home Healthcare Agencies and Referral Source Risk, Case Study: Two Assisted Living Facilities and the Value of Modern Infrastructure, Case Study: Selling a Doctor-Centered vs. Associate-Driven Medical Practice.