Confidential · Acquisition diligence
Acquisitions
Pre-close chart intelligence for skilled nursing acquisitions. Look up any target by CCN or name, then underwrite documentation-backed revenue quality, audit exposure, survey probability, and valuation before funds are wired.
The diligence gap
Financials show the story management wants. Charts show the one CMS will audit.
Buyers underwrite census, rate, and labor — then inherit documentation risk that never appeared in the CIM. Earned-but-unbilled PDPM opportunity and weak chart language both sit in physician notes, nursing notes, therapy, and the MAR.
| Question | Public / model layer | Chart layer (BAA) |
|---|---|---|
| Who is this facility? | Live CMS Care Compare + cost-report profile via Facility Lookup | — |
| What could go wrong? | Acquisition Risk Engine — seven domains, disclosed weights | — |
| Is revenue quality real? | Leak % / CMI gap / valuation upside in the SNF Risk Workbook | Cited opportunities already supported on file |
| What can go wrong post-close? | Survey/audit probability · Monte Carlo DSCR tails | Compliance Shield / audit exposure from weak documentation |
| What is it worth? | EBITDAR multiples ± risk ± documentation premium (Sheet 15) | Realization rate of chart-supported upside |
Public data · Live CMS
Facility lookup
Search any skilled nursing facility by CMS Certification Number or name and receive the facility’s public Medicare profile — ratings, census, ownership, staffing, enforcement history, fine exposure, and cost-report financials — assembled live from CMS Care Compare and the SNF Cost Report public use file. Public data only; no facility records, no PHI. Use this as the first screen on every acquisition target.
Acquisition package
What diligence receives
A chart-backed package your IC can defend — plus the same 15-sheet risk workbook used for lenders, calibrated to buyer questions (upside, audit risk, survey odds, and EV).
| Output | Definition | Status label |
|---|---|---|
| CMS target screen | Live public profile from Facility Lookup — stars, staffing, ownership, enforcement, cost-report anchors. | Public data |
| Acquisition Risk Engine | Seven-domain composite (regulatory, staffing, census, market, financial, documentation MODELED, ownership) with disclosed weights and red flags. | Model v1.0 |
| Opportunity estimate | Supported diagnoses or services present in notes but missing or under-documented relative to billed capture — sample $ and annualized facility estimate with confidence range. | Modeled → Verified after sample QC |
| Audit exposure estimate | Documentation that is weak or contradictory relative to what was billed — same bases as opportunity, kept separate. | Modeled → Verified after sample QC |
| Survey / audit probability | 12-month probabilities for standard survey, complaint survey, and Medicare medical review — transparent risk points from Sheets 05 / 06 / 12. | Workbook Sheet 14 |
| Valuation range | Low / base / high EV and equity on reported EBITDAR and with documentation upside; REIT/NNN rent coverage view. | Workbook Sheet 15 |
| Evidence package | Findings cited to note type, date, and author string. Nothing invented for the model. | Evidence only |
Illustrative underwrite
Demo facility — Example Care Center of Springfield
Same demo facility loaded in the workbook. Numbers are modeled for illustration — not a live target — and show how public signals, chart opportunity, and valuation sit in one acquisition read.
| Lens | Reading |
|---|---|
| Facility | 120 beds · IL · ~82% occupancy · 3-star overall · no Immediate Jeopardy · agency labor ~18% |
| Financials | TOR $14.5M · EBITDAR $2.27M · EBITDA $1.55M · DSCR 1.58x · LTD $5.1M |
| Documentation | Opportunity Score 68 · Doc Risk Score 42 · ~$620k annualized hidden revenue (~4.4% leak) · CMI gap −0.11 |
| Survey / audit (12 mo) | ~39 risk points · standard survey ~46% (ELEVATED) · any survey/audit ~64% |
| Monte Carlo | Mean DSCR ~1.52x · P(DSCR < 1.20x) ~11% · P(DSCR < 1.00x) ~4% |
| EV (base) | ~$17.0M reported EBITDAR · ~$19.6M with doc upside · equity ~$14.5M · EV/bed ~$163k |
| REIT / lease view | EBITDAR / Rent ~3.15x · implied rent at 1.4x ~$1.62M · NNN property value ~$9.6M at 7.5% cap |
Differentiator for the deal: a 4.4% chart-supported revenue leak with only moderate audit risk is exactly the value lever acquisitions underwriting should price — not ignore. Full narrative: valuation · Monte Carlo · survey/audit.
Process
Acquisition diligence sequence
Every engagement follows the same mandatory sequence. Deviations are documented before delivery.
| Step | Action | Artifact |
|---|---|---|
| 1. Target screen | Pull CMS Facility Lookup profile (CCN or name). Log ownership, stars, staffing, enforcement, cost-report anchors. | Public Target Screen |
| 2. Intake | Confirm BAA. Log facility, EMR, date range, sample size, project ID, deal stage. | Project Intake Log |
| 3. Extraction | Pull only what already exists on the chart; map to standard template. | Standardized Data File |
| 4. Dual Review | Clinical review + coding/revenue review. Count only documented opportunities. | Annotated Findings Log |
| 5. Quantification | Sample gap dollars and annualized estimate with confidence range. Opportunity $ separate from Audit Exposure $. | Gap Calculation Sheet |
| 6. Risk & value | Composite scores, survey/audit probability, Monte Carlo, and EBITDAR valuation with documentation upside. | Sheets 07 · 13 · 14 · 15 |
| 7. Packaging | Translate findings into an IC-ready acquisition memo with evidence package. | Final Report + Evidence Package |
| 8. QC & Delivery | Second review for methodology adherence. Deliver report + source evidence. | Signed-off Deliverable |
Report template carries Report ID, generation date, and
Methodology v1.1 — see Disclosures on every page.
Guardrails
Commercial and compliance posture
| Rule | Practice |
|---|---|
| Flat-fee only | No contingency on recovered revenue. Acquisition work is scoped and priced before chart access. |
| BAA before PHI | No chart export until a Business Associate Agreement is executed. |
| Evidence-only | Only ICD-10-CM and PDPM opportunities already supported on file. Clinicians validate; nothing upcoded for the deck. |
| Modeled vs Verified | Public screens and workbook illustrations are labeled. Verified figures require a sample under BAA. |
Related
Further reading
| Page | Use |
|---|---|
| Acquisition Risk Engine | Seven-domain modeled risk screen — live CMS + deal terms + market read. |
| PE Acquisition brief | Short narrative brief for PE / strategic buyers. |
| Lender Intelligence | Full workbook documentation — CMI, Monte Carlo, survey/audit, valuation. |
| Facility Lookup | Standalone CMS CCN / name tool. |
| Disclosures | Legal furniture and methodology stamps. |