Exiting Your Healthcare Organization: Recognizing the Signs It’s Time to Sell

When you’re considering selling a healthcare organization, timing is key. Sell too soon, and you may miss opportunities to address key factors that could undermine the organization’s valuation. Wait too long and your current struggles can weigh down performance, making it harder to attract buyers at a competitive price.

Timing is further hindered by today’s M&A environment. Deal volumes and values remained low in the first quarter of 2025, particularly for hospitals and health systems. In this environment, it’s crucial for leaders to recognize the early signs that it’s time to sell.

Here’s what to look for when you’re considering a sale.

Identifying Potential Signals to Sell

Your decision to sell must be rooted in data. Consider using real-time data to make the right business decision.

Track Financial Performance

Performance metrics, including how each metric is trending over time, should play a pivotal role in your decision-making.

Key metrics include:

• EBITDA
• Revenue trends, including gross revenue, revenue growth rate
• Payer mix
• Reimbursement rate
• Average cost per discharge
• Expenditures, including labor costs, supply costs and capital expenditures
• Operating margin
• Days cash on hand
• Days sales outstanding

Track financial performance across service lines to identify those that may be underperforming, and make sense to sell.

Assess Alignment Between Leadership and Staff

Talent metrics should shape your decision to sell. A productive, engaged workforce may help organizations overcome negative financial trends, while lagging talent metrics may indicate that it’s time to divest.

Key metrics include:

• Turnover rate (including among staff and leadership)
• Vacancy rate
• Recruitment costs
• Time-to-fill for key roles
• Employee engagement/satisfaction ratings
• Agency and contract talent usage rates
• Absenteeism rates

Identify Operational Challenges

Leverage data to measure your performance and determine if selling may be the best option.

Key metrics include:

• Bed occupancy rates
• Average length of stay
• Patient throughput
• Readmission rate
• Patient satisfaction
• Supply chain efficiency ratings
• Age of core IT infrastructure
• IT downtime
• Percentage of revenue spent on IT

Finding Your Tipping Point

After reviewing the key metrics you selected, create forecasts to determine how current trends could shape the future of the organization. Ask yourself the following questions:

• Do you have the cash runway you need to improve revenue cycle management or address other financial challenges?
• Do you have the talent or expertise you need to address operational challenges?
• Do you have the assets to invest in new technologies?

The answers will help you map out a path forward and decide whether addressing organizational issues or divesting from some or all of the business is best.

Laying the Foundation for Success

The decision to sell is a collaborative effort — one that should involve stakeholders within the organization as well as external support. Discussions with leaders across the organization can help identify current strengths and weaknesses in the market and position it to attract the right buyer.

These conversations can also help identify sources of risk, factors that could undermine your valuation, make it more difficult to attract buyers or even block a transaction. Taking steps to manage risk — for example, diversifying revenue streams in the years leading up to a sale, or upgrading IT infrastructure to reduce the risk of a data breach — can help you maximize your success in the market.

How Eide Bailly Can Help

The decision to sell is rarely an easy one, and we’re here to support you every step of the way. We can help you address weaknesses across the health system, whether your goal is to improve outcomes under the current ownership structure or prepare for a transaction.