Buying a Facility With Medicaid Residents? Read This Before You Close
I’ve seen this happen over and over again — good people buy an assisted living facility, thinking they’re ready to hit the ground running.
They see the books, they see the resident list, they see the revenue…
But no one tells them about what happens to the Medicaid after the deal closes.
And by the time they find out, they’re already stuck.
🚨 Here’s What You Need to Know:
When you buy a facility — and go through the official CHOW process (Change of Ownership) — the Medicaid number from the previous owner is canceled.
That number belongs to them, not the building.
And once the CHOW is processed, you lose the ability to bill for Medicaid residents — even if they’re still in the building and receiving care.
💸 The Big Problem No One Talks About
Here’s where things get risky:
Many new buyers are never told this will happen.
They assume:
- The Medicaid billing just keeps going
- The number gets “transferred”
- The revenue continues flowing
But the reality is:
- You can’t bill until you’ve completed your own Medicaid enrollment
- You must contract with each Medicaid plan individually
- This process can take up to 5 months
That’s five months of providing care to Medicaid residents… without any reimbursement.
🧾 Yes, You Can Bill Retroactively — But You Have to Survive First
Now here’s the good news:
Once your Medicaid number is active and you’ve signed your plan contracts, you can bill retroactively — as long as you followed the proper steps and didn’t miss deadlines.
But that doesn’t help if you don’t have the cash flow to make it through those 3 to 5 months.
Many buyers go in blind, thinking the seller’s revenue will continue seamlessly.
They don’t realize they’ll have to pay payroll, vendors, utilities, and more without those Medicaid payments coming in — at least not right away.
😬 I’ve Seen This Go Bad Fast
I’ve seen new owners:
- Struggle to cover costs
- Delay staff pay
- Lose morale
- And in worst cases — have to sell or walk away before they ever saw a Medicaid dollar
Why?
Because no one told them this was coming — or they relied on consultants who didn’t explain the Medicaid reality.
✅ What You Can Do (Before It’s Too Late)
If you’re buying a facility with Medicaid residents, here’s what I strongly recommend:
- Don’t just trust the seller’s consultant — get your own guidance
- Have at least 3 to 5 months of cash reserves on hand
- Start your Medicaid number application immediately
- Make sure you’re prepared to contract with each Medicaid plan
- Work with someone who knows the system — and can push it forward
💬 Final Thought
Buying a facility is a huge opportunity — but only if you go in prepared.
The CHOW process alone is overwhelming, and Medicaid adds a whole new layer most buyers never see coming.
If you’re thinking about buying — or already under contract — now’s the time to talk.
At ALF Boss, we’ve helped dozens of new owners get through the CHOW, Medicaid enrollment, and plan credentialing faster and cleaner — so you don’t lose sleep (or cash flow) in the process.
Let us help you avoid the surprise — and set your new ownership up for success.