Nursing Home Financial Due Diligence Checklist

Please thoroughly address each item on this checklist, [Your Company Name] can effectively assess the financial and operational aspects of a potential nursing home acquisition or partnership.

• Review the last three to five years of financial statements.

• Look for trends in revenue, expenses, profitability, and cash flow stability.

• Ensure that an audit has been performed on the financial statements.

• Review the audit findings for any discrepancies or issues that were raised.

• Analyze the age, turnover, and collectability of accounts receivable.

• Consider the impact of Medicare, Medicaid, and private payers on cash flow.

• Examine the structure of resident fees and service contracts.

• Assess staffing levels, wage rates, and benefits.

• Compare these costs to industry standards and consider its implications.

• Review expenses to identify any areas of inefficiency or cost reduction.

• Pay particular attention to utility costs, and maintenance expenses.

• Ensure that we are in compliance with all financial reporting requirements.

• Inspect the condition and age of physical assets.

• Analyze all debt instruments, leases, and other financing arrangements.

• Review tax returns and assess any potential tax liabilities.

• Assess the market position of the nursing home.

• Review demographic trends and local competition.

• Ensure that there are no outstanding legal issues.

• Check for any pending litigation or regulatory actions.

• Prepare a detailed plan for integrating the financial systems.

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