How to Sell A Nurse Registry

What is A Nurse Registry?

A nurse registry is a specific type of healthcare company that provides healthcare (or companion care) for patients in their home.  The regulatory body of Florida nurse registries – the  Agency for Healthcare Administration (AHCA) – defines nurse registries as “An agency that offers healthcare related contracts for registered nurses, licensed practical nurses, certified nursing assistants, home health aides, companions, or homemakers who are paid by fees as independent contractors.” Essentially, nurse registries are referral sources that ‘match’ the patient (who is technically the caregiver’s employer) with an eligible independent contractor (the caregiver).

Differences Between Nurse Registry and Home Health Agency

  • In order to properly value a South Florida nurse registry for sale, one must understand the differences between a nurse registry and a home health agency.
  • Home health agencies are healthcare providers who provide a much broader and more skilled set of healthcare services for patients in their home.
  • Unlike nurse registries, home health agencies (HHAs) initially go through an exhaustive and costly licensing process in order to become Medicare certified.
  • Nurse registry patients are all private pay or have private insurance.
  • Whereas home health agencies are required to provide supervisory visits by an RN (Registered Nurse), nurse registries have no such requirement.
  • Moreover, nurse registries have no legal obligation to maintain patient records whereas HHAs must make their patient records and charts available periodically for inspection in order to maintain their Medicare certification.
  • Financially, nurse registries have a major advantage in that they do not pay payroll taxes, insurance, or worker’s compensation on their caregivers.
  • Remember, HHAs pay their caregivers as regular W2 employees and nurse registries pay their caregivers strictly as 1099 independent contractors.
  • This a very significant difference in the cost structures between nurse registries and home health agencies.

Business Model of Nurse Registries

The business model of a nurse registry is usually pretty straightforward with limited overhead. The nurse registry keeps a percentage of the sales (billed directly to the patient or private insurance) after paying the caregiver/independent contractor.  Administrative costs such as scheduling and billing are necessary, but the nurse registry has minimal insurance costs with no payroll taxes.  Marketing costs vary as do costs in procuring a sufficient roster of reliable caregivers (paid as independent contractors). The most important aspect of the business model is the nurse registry’s ability to procure patient referrals from the patients themselves or though referral sources such as estate attorneys, hospital administrators, or nursing home administrators.

Valuing Nurse Registries

Valuing a nurse registry involves first determining the annual adjusted owner benefit (or true economic profits derived by the owner from the business) and then applying a multiple to the owner benefit. The typical multiple is between 2-4x the owner benefit, with a higher range given to nurse registries with a strong historical growth rate, a range of referral sources that are not too dependent on the seller, sufficiently reliable staff, and a competent administrative structure in place. Nurse registries have very little physical assets and of course carry no inventory, so the intangible assets (or goodwill) of the business is the sole determining factor in the valuation.

Determine Seller’s Role

In order to best determine the best value for a nurse registry, it is necessary to really zero in on the seller’s own role in the business. If the seller himself or herself has personal relationships with a significant number of patient referral sources, then the value of the nurse registry is diminished. A buyer will rightly fear the loss of those patient referral sources when the seller is no longer affiliated with the business. On the other hand, if most of a nurse registry’s referrals are due to its own excellent reputation of patient satisfaction and reliability, and that alone is what drives patient referrals, then the nurse registry’s valuation will be greatly enhanced.

Marketers May Play Key Role

Alternatively, many nurse registries employ marketers who may develop personal relationships with patient referral sources. Such marketers may also be RNs who play a supervisory role in the patients’ care. Frequently, marketers for nurse registries cultivate key relationships with large patient referral sources over many years. In the event of a sale, the buyer will want to ensure that those marketers (and hence the patient referral sources) will remain with the business after the sale.

Develop Plan for Smooth Transition

If the seller of a nurse registry plays a key role in the business via its relationships with patient referral sources, then the seller must develop a smooth transition plan for the seller’s exit after the sale. A common way to structure a smooth transition plan involves the seller staying with the business in an advisory or consultancy role after the sale. The seller and buyer may then jointly speak to the key referral sources, and explain the hand-over in a way that provides the referral sources with the maximum amount of peace of mind. In reality, so long as the level of patient care and the customer service remains the same after the sale, the patient referral sources should be satisfied.

Structure of Nurse Registry Sale

Nurse registries are frequently purchased via a structural format known as a ‘stock purchase’ deal.  As opposed to the far more common ‘asset purchase deals’, stock purchase deals involve the buyer purchasing the shares of stock from the seller’s corporate entity. In an asset purchase deal, the buyer forms their own corporate entity and only buys the assets of the seller’s corporate entity (not the corporate entity itself).

Advantage of ‘Stock Purchase’ Format for Nurse Registries

If the buyer wishes to use an asset purchase format for a nurse registry, the buyer must receive approval for a new nurse registry license under their new corporate entity. This is a laborious, time-consuming, and costly process. If the buyer uses a stock purchase format when purchasing a nurse registry, then they may simply submit a ‘CHOW’ (Change of Ownership) application with AHCA. This may only be accomplished if the buyer is purchasing and retaining the seller’s corporate entity (via a stock purchase deal), and is thus only changing the name of the owner of the corporate entity.

Nurse registries play a valuable role in providing patients necessary home healthcare and companion care services throughout South Florida.  This unique niche in the home healthcare industry is a worthwhile investment for many astute business buyers.

Give Martin at Five Star Business Brokers of Palm Beach County a call today at 561-827-1181 for a FREE evaluation of your business.