What actually changes after an acquirer takes over

The short answer

What actually changes day to day after an acquirer takes over your physical therapy business? It depends mostly on the structure: a partnership where you keep equity usually brings less change than a 100% sale. Paul Martin, Founder and President of Martin Healthcare Advisors, explains what to expect.

What typically changes:

• HR, payroll, and hiring support
• Accounting, with clean monthly financial statements
• Billing and collections, if there is a significant upgrade available (discuss this before closing)
• Operations such as scheduling and charge capture, the most sensitive area to talk through before you join

What typically does not change:

• How you treat patients, especially with strong customer service
• Your people. With more openings than therapists, acquirers want to keep good staff.

Full transcript

What actually changes after an acquirer takes over depends almost entirely on the structure of the transaction. If it's a partnership where you are continuing to own equity in the business, in most cases you're going to see less change. If it's a 100% sale, you're probably going to see more change. That's the first thing to understand.

Either way, you're most likely going to see a change in the areas of the business that were somewhat of a thorn in your side. Typically, an acquirer will take over human resources. They're going to take over payroll, as well as assisting and supporting your hiring process. Accounting is the same. In most cases, an acquirer will take over the accounting and provide you with very well-put-together financial statements on a monthly basis.

As far as billing and collections, in most cases, if there's an opportunity for a significant upgrade, whether it's a 100% sale or a partnership, an acquirer will recommend that change. But remember, the last thing an acquirer wants is delays in your collections, and they have made these changes many times. So that is a discussion you want to have with an acquirer before you close on a transaction.

You could also see some changes in operations. Depending on how streamlined your scheduling processes, your charge capture, and other operational metrics are compared with industry standards, you could see some change in those areas. And if you are a partner moving forward and it adds to the bottom line, you are going to benefit from these changes. But this is an area that tends to be sensitive, because operational changes can impact how you are treating patients. We make 100% sure that you have had these conversations with an acquirer before you become part of their company.

I think the biggest wrong assumption made in this industry is that acquirers will want to change the way you treat patients. In our experience, they typically do not, especially if you have high-level customer service and your therapists are communicating positively with your patients.

The other thing owners worry about is losing their people. This industry has more openings than it has therapists. If you have good people, the acquirer does not want to lose any of them. Where there are duplicate jobs, and there usually are, they tend to find opportunities for your people to take on a slightly different role rather than letting them go.

So, the change is real, but it's mostly in the systems behind the business, not in how you treat patients and not in the people treating them.

Transcript lightly edited for readability.