At a Glance: Key Differences
| Factor | Home Health | Home Care |
|---|---|---|
| Typical Multiple | 3.5x - 7.0x+ EBITDA | 2.0x - 4.0x SDE |
| Primary Payer | Medicare/Medicaid | Private Pay/Medicaid |
| Services | Skilled nursing, therapy, medical | Personal care, companionship, ADLs |
| Regulatory Burden | High - CMS certification required | Moderate - State licensing |
| Buyer Pool | PE firms, hospital systems, large platforms | Individual buyers, small PE, franchises |
| Due Diligence | Extensive - 90-180 days | Moderate - 45-90 days |
| Reimbursement Risk | Higher - Policy changes impact value | Lower - Private pay more stable |
Medicare Home Health
Valuation Drivers
- Medicare census and episode volume
- PDGM performance (case mix, LUPA rates)
- Star ratings and quality metrics
- Geographic coverage and referral relationships
What Increases Value
- 4+ star CMS rating
- Low LUPA rates (<10%)
- Strong hospital/SNF relationships
- Value-based care contracts
Risk Factors
- Survey deficiencies or compliance issues
- Medicare reimbursement policy changes
- ADR/audit exposure
- Staffing shortages (RNs, therapists)
Private Duty Home Care
Valuation Drivers
- Private pay vs. Medicaid mix
- Client retention and average hours per client
- Caregiver retention rates
- Owner involvement level
What Increases Value
- High private pay percentage (60%+)
- Low owner involvement (<20 hrs/week)
- Documented systems and SOPs
- Strong online reviews and reputation
Risk Factors
- High owner dependency
- Client concentration (>10% from one client)
- High caregiver turnover (>50%)
- Single referral source dependency
What About Hybrid Agencies?
Agencies offering both Medicare home health and private-duty home care services can command premium valuations when properly structured. Buyers value the diversification and cross-selling opportunities.
Advantages
- Revenue diversification
- Cross-referral opportunities
- Broader buyer appeal
Considerations
- More complex due diligence
- May be valued as separate entities
- Requires clean financial separation