A Facility’s License in the Transaction Process

One of the major concerns among operators planning to buy a skilled nursing facility or assisted living facility are regarding the facility’s operating license and what happens to it during the transaction process between current and future owner.


Obtaining a Proper Facility License is the Single Most Important Step


Operators who buy healthcare properties should be aware that facility licenses, provider numbers, and certifications cannot be transferred from past owners. Instead, they should seek new licenses and provider numbers from the governing agency that oversees such matters.


Experienced operators know that licensing is an integral part of buying a facility and keeping documents up to date should be a priority.  The slightest miscalculation may result in timely and expensive setbacks that can last months. The licensing process should be started immediately because it can take a great deal of time to complete. However, doing so early will keep the doors of your facility open and avoid the disruption of cash flow.


Brokerages understand that licensing agencies operate at a different pace than the time that it takes for a deal to close. There are several methods that industry professionals use to continue operating under the current license while the transaction is being closed.


Most states can obtain a license through the Department of Health. In the state of California, there two departments; the Department of Health can assist operators in investing in skilled nursing facilities while those looking to buy assisted living facilities can contact the Department of Social Services.


Utilize Consultants to Save Time


Two important documents are used by seniors housing brokerages and other consulting groups to maximize productivity and minimize loss while transferring assets.


The interim lease agreement is the first document of importance that allows the seller to retain control of the business while the buyer is certified to own the real estate. According to regulations, the seller’s valid licenses and provider numbers can remain open for Medicare and Medicaid.


The next important document is the operations transfer agreement otherwise referred to as the OTA. This document covers the daily operations of a facility and transfers the responsibilities over from the seller to a buyer once a transaction is closed. This shift in responsibility will occur before a license and provider numbers are given to the buyer.


The process of selling an asset is much easier and economically beneficial if these two documents are used as opposed to waiting for a new license to be issued before escrow closes on a facility.


The Stahler Group Always Has Your Best Interest in Mind


A license is one of the most valuable components of assisted living facilities and skilled nursing facilities. The Stahler Group has flawlessly handled numerous transactions by designing a licensing package that will provide a very smooth transition for new investors.


Avoid costly setbacks by selecting The Stahler Group at Marcus and Millichap to take the lead as your skilled nursing investment brokerage.