Hospices need to keep some under-the-radar issues in mind when preparing to sell to a larger organization, according to Satavia Hazley Austin, author and educator and former CEO and owner of Star of Texas Hospice.
Hazley Austin has more than two decades of working in end-of-life care, including as founder of Star of Texas Hospice. She came to hospice “accidentally,” she said. While working as an emergency department nurse in Houston, a mentor suggested that she look into hospice. Shortly thereafter, Hazley Austin realized that this was “all she wanted to do.”
Uplift Hospice acquired Star of Texas in March 2005. Financial terms were undisclosed. The two organizations first connected to discuss a potential transaction through a mutual relationship with the M&A advisory firm Agenda Health.
After exiting the space as an owner, she has turned her attention to public education about hospice and the end-of-life, including the publication of her anthology book Journeys of Goodbye. She also founded the Journeys of Goodbye Forum, an event that brings stakeholders in the space together for discussions about end-of-life care and associated topics.
Hospice News sat down with Hazley Austin to discuss her experience as a hospice founder and how she moved her organization through the acquisition process.
You founded a hospice organization, which you ultimately saw through an acquisition. What was that acquisition process like?
I had done a very much smaller acquisition with my assisted living previous years ago, but I ended up leaving that long-term care space and just diving completely into hospice. I did have a point of reference, having worked for other companies that had gone through acquisitions and being on a leadership team that were looking at and assessing companies.
I did have a point of reference, and I would say that that gave me a lot of knowledge on the front end of Star of Texas. My partner and I, from the very beginning, I don’t think it was ever our goal to sell, but we always were under the premise that we were open to listening.
It doesn’t usually happen overnight, and I also knew that you want to make sure from day one you’re always preparing for what’s ahead, and not that you’re preparing your agency to sell. You don’t start a business, I think, to exit it. However, I will say I also was a nurse, so I would liken it to, on [hospital] admission, you’re always looking at a discharge. What would it look like in preparing for the future?
I can tell you that I would probably say within one year we were getting calls, and of course we were in business for nearly a decade. So, when you’re entertaining those calls and just kind of hearing what they have to say, even if it’s a 15-minute call or a 20-minute call, you want to just hear what that looks like.
What would you say to other hospice providers considering a sale?
Have your mind in the mind space of due diligence, and it starts at the very beginning.
A lot of times, especially when you have a clinical background, you’re looking at what you do for the patient. But anyone that’s been through a survey, you know that a lot of what the surveyor is looking for that you do for your patient is what you do via your documentation rather than your bedside manner.
My hope is that as an industry with new technology and what we have coming out with AI, all done in a responsible way, will give us an opportunity to merge the two, where an excellent bedside nurse can also have excellent documentation. I am not saying that it doesn’t exist, but sometimes that’s very hard.
Pay attention to your finances, your financials, the quality of your earnings, the quality of your census.
Not all exits are bad exits. For Star Texas, we had grown to the census that we had always dreamed of. We had an amazing team. Our enterprise value felt good. The team felt good, and it was just one of those things. Like if there ever was a time, now would be a time to entertain the call.
Census is not the whole thing. Our buyer was definitely looking at what type of patients we had. But you can have an incredible census and not have incredible substantiated revenue to go along with it. I’ve seen companies get weeded out that way.
Would you say that preparing a hospice to sell is a long-term process?
The acquisition process was very telling. It is all the things that you do ahead of time. It’s that you’ve been doing over the years that is going to continue to affect your buyer.
When you have someone and they come in and they sign an [letter of intent] saying that they’re interested, there’s a lot that happens after that, and you want to be prepared for that.
It is very time-consuming. It’s a very challenging thing to do when you are a smaller company like we were, where you don’t have a lot of back-office staff. You want to make sure that you have the ability to get the data over to the buyer that they want to see, and we went through huge financial audits with big firms.
How did you demonstrate your organization’s value to the buyer?
It was not just in census, but it was as an enterprise what we looked like as a whole, the retention of the staff that we had, our core team that was in place, the education that we had, the type of census that we had.
We had a very diverse population across the spectrum, in terms of all the levels of care for hospice. That was something that I think we did very well. Our relationships in the community played a role.
I grew up here in Houston. I became a nurse here in Houston, so I went on to travel and do different things in the hospice space for other agencies. When Star of Texas was created, the value of the relationship I would say was there. We had great physicians who were well known.
Fast forward, I would say the exit was great. However, so touching for me, our core team that we put in place is still there and in place and growing and progressing under the leadership of a bigger company, a company that is continuing to grow and continuing to pour into the staff.
We had kind of reached a ceiling, and they’ve been able to come in and do exactly what we would have desired.
What are some things that hospice sellers need to keep in mind as they prepare to exit ownership?
It can take an emotional toll on you. A seller needs to be thinking about what life looks like after hospice. It’s your baby. You’re going to miss it. You know you are going to miss the engagement with people. You’re going to miss your team. So just think ahead about those things.
Absolutely have a good CPA. Have your financials audited in advance. Be your own person to do due diligence. Before you even have an interested buyer or a broker calling you, get a third party to come in and look under the hood.
I would encourage a seller to be looking at length of stay. If it is over significantly, just know that that’s something that they’re going to look at.
Sellers are interviewing the buyer as much as the buyer is interviewing them. An owner isn’t just selling a business. They are looking for a company to take over caring for their baby, and they should go into the process knowing they have every right to vet the buyer just as closely.
With Star of Texas, it came down to the buyer. The mother is a nurse, and her son is involved, which gave them the sense of a close-knit family who would understand the culture they had built at Star of Texas. It was also impressive to them that a nurse would lead the company at the very top.
Uplift Hospice mirrored Star of Texas in a lot of ways, especially in its leadership. They have a young, energized team, with Owen Lowry operating as CEO and bringing a diverse business background. With the mother’s clinical experience as a nurse, they have a business operator and a clinical operator at the helm. That pairing is very close to the heart of Star of Texas and how Satavia thought about her own leadership, and Uplift reflected it.
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