Buying a Healthcare Business? Top Warning Signs and Concerns: Issues with Changing Ownership

This blog is the first part of a multi-part series addressing the top warning signs and concerns when buying and selling a health care facility. 

When buying or selling a licensed health care facility, the Agency for Health Care Administration (AHCA) requires that you submit a Change of Ownership (CHOW) application. You can read more blogs about the CHOW process by clicking here or clicking here. These are some of the most common problems our clients have with CHOW applications.

License Renewal Prior to Changing Ownership

When considering a Change of Ownership, you must keep in mind the license expiration date. Expiration of a license prior to the approval of the Change of Ownership application, when no renewal application has been submitted, may result in the denial of a Change of Ownership application. The seller must maintain a current, unexpired license by filing a renewal application prior to the expiration of the current license. You cannot renew or change ownership of an expired license. An expired license is an expired license!

Disqualifying Offenses by Buyers and Sellers

Disqualifying offenses can negatively affect the CHOW process. Both buyers and sellers of health care facilities may be disqualified from ownership. For a CHOW application, AHCA requires current level 2 background checks from both the seller(s) and the buyer(s). 

As the current owner and prospective seller of a health care facility, if you receive a disqualifying offense, AHCA may require you to relinquish your ownership stake in the facility. If you receive a disqualification, AHCA may deny a CHOW application. 

As the prospective owner and buyer of the health care facility, if your background check shows a disqualifying offense, negotiations and the sale may come to a halt altogether. AHCA can deny a CHOW application until you receive an exemption from disqualification. Because of the time required to obtain an exemption, it may be difficult to re-enter negotiations for the sale/purchase of the health care facility. 

Inheriting a Roster of Employees?

When you buy a health care facility, it is common practice to inherit the roster of current employees to maintain business operations for a smooth transition. However, it is vital to ensure that you obtain new, current level 2 background checks for all employees. Although these employees must have submitted background checks to AHCA when they began employment, there may be new criminal charges or other disqualifying offenses on their record. If that is the case, it is important to know that all employees with disqualifying offenses (who have not yet received exemptions for those offenses) must cease employment until receiving an exemption. If you, as a health care facility owner, employ persons with disqualifying offenses in their record, your facility may receive an administrative complaint.

Seek Experienced Lawyers to Guide You Through the CHOW Process

Our team of legal experts have assisted business owners with the tedious and complicated process of drafting the necessary legal documents to prepare a Change of Ownership application. We are experienced in working with AHCA requirements, preparing the necessary documents, and meeting the timelines required. We will guide you throughout each step of this process and provide comprehensive advice along the way.