Occupational therapy practice due diligence

By the time a buyer is under a letter of intent on an occupational therapy practice, the seller’s headline numbers have usually already done their job of generating interest. Due diligence exists to test whether those numbers hold up payer by payer and relationship by relationship, because in this sub-sector the things most likely to break a deal are not visible on a standard financial statement.

Verify the caseload mix payer by payer

Ask for a breakdown of billed revenue by payer category — workers’ compensation, motor-vehicle-accident insurers, long-term disability insurers and private pay — rather than accepting a single caseload total, and cross-check it against accounts-receivable aging by payer, not a summary the seller has prepared. A practice that looks diversified in a one-line summary can turn out to be dominated by a single insurer relationship once you actually break the number down, and that concentration is exactly the kind of risk a buyer needs to price in before agreeing to a purchase price, not after. Also ask how many distinct case managers sit behind each payer category, since a payer category can look diversified on paper while actually running through one or two individual relationships underneath it.

Confirm approved-provider status directly with each payer

This is the single most important verification step specific to this sub-sector. Approved-provider status with a workers’ compensation board or an auto insurer may need to be reconfirmed under new ownership, and it is not guaranteed to simply carry over — with the seller’s consent, contact key payers directly to understand what reconfirmation actually requires and how long it takes, and start that process running in parallel with the rest of diligence rather than waiting until after you have signed a purchase agreement. Finding out after closing that a payer will not recognize the new owner as an approved provider is one of the more damaging outcomes in this sub-sector, because it can cut off a meaningful share of the caseload immediately.

Review client files, consent and insurer file-ownership terms

Request the practice’s privacy and consent documentation and confirm it actually supports transferring client files to a new owner, and check whether any payer agreements impose their own rules about who owns or controls the file itself — this is a separate question from general privacy compliance, and some insurer relationships are more restrictive than a practice’s own internal policy suggests. Get this in writing rather than relying on a verbal assurance that a transfer will go smoothly.

What a referral-concentration finding actually means

If diligence turns up that a large share of file volume flows from one or two case managers, that finding does not automatically kill the deal, but it should change how the deal is structured. Because these relationships are personal and relationship-based rather than contractual, a concentrated referral base is more exposed to redirection after an ownership change than a diversified one — consider structuring part of the purchase price as an earn-out tied to retained referral volume, or negotiating a longer post-closing transition period where the seller is actively involved in re-introducing the buyer to those specific contacts.

Check the report-writing infrastructure, not just the reports

Ask whether reports are produced by dedicated report-writing support and standardized templates, or largely by the owner personally after hours — the answer tells you whether the practice’s insurer-billed volume is actually sustainable without the owner, and whether you are inheriting real infrastructure or a habit only the seller can keep up.

Employment terms for treating therapists

The caseload you are buying is only as durable as the therapists who actually deliver it, so review each treating occupational therapist’s employment or contractor agreement, including any non-solicitation or non-competition terms, and confirm whether those terms are even enforceable if the therapist decides to leave shortly after the sale. Ask how long each treating therapist has been with the practice and whether any of them know a sale is underway — a therapist who learns about the transaction informally, rather than through a planned conversation once the deal is reasonably certain, is more likely to start exploring other options before you close. Where the seller permits it, arrange to speak with key treating therapists directly rather than relying entirely on the seller’s account of how committed everyone is to staying; a signed retention agreement covering the transition period is a far stronger indicator than a verbal assurance, and the gap between the two is exactly where a caseload can start to erode in the months after closing. Confirm each treating therapist’s own provincial college registration is current and unrestricted, since a lapsed or conditional registration discovered after closing can remove billable capacity you priced into the deal.