How can I tell if a home care agency depends on one referral source?

Begin by requesting an anonymized client list with the start date, referral source and payer for each person. Then look at the pattern over time rather than a single snapshot. A source that was dominant last year but has faded is a different story from one that is growing. Compare revenue by payer with the referral picture, because the two can diverge.

Next, look beyond the numbers. Ask how each referral relationship started, who at the agency maintains it, and whether it rests on one person who may leave with the seller. Ask whether any referrer has ever paused or reduced work and what happened. If the funder runs formal procurement, find out how the agency holds its place.

Finally, test your own comfort. Speak with a few referrers if the seller will arrange it, and ask what they value. Your accountant can help you model what happens to results if a major source disappears, and the answer may shape the terms you ask for. Compare your findings with the seller’s explanation, and ask for the reasoning behind any difference. A seller who already knows the concentration and speaks plainly about it is easier to work with than one who is surprised.

Key takeaways

• Group clients by referral source and by payer, and compare the two views.
• Find out who holds each relationship and whether it survives the seller’s exit.
• Ask your accountant to test results if the largest source stops.
• Compare what the records show with the seller’s explanation, and note any surprise.