Thinking about selling your firm? 5 ways to prepare

It's still a seller's market, but potential sellers need to make the right moves to attract buyers

Feb 13, 2019 @ 12:05 pm

By Scott Slater

Without a doubt, 2018 was a big year for M&A in the independent wealth management industry, and robust activity is expected to continue this year.

Fidelity recently gathered nearly 40 leaders from across the industry at our fourth annual M&A Leaders Forum to talk about just that — M&A trends and outlook for the months ahead. There was a consensus that it's still a seller's market, but that potential sellers need to prepare and make the right moves to attract buyers.

What's more, recent market volatility may affect valuations and the balance between buyer and seller, so there is an increasing sense of urgency to prepare to engage.

So what should firms that are considering a sale be thinking and doing? Here are five key things:

1. Define your culture and evaluate the right-fit buyer. Both buyers and sellers are paying more attention to post-deal integration now than ever before, so a good cultural fit is important. But before you can find the right match, take time to look internally to identify, then showcase, your firm's key values. What defines who you are and how you operate? Articulate specifically what you want to preserve or emphasize in the new organization. Then, identify a range of ways that you could achieve those top priorities, and share those upfront with potential partners.

One of the benefits of a seller's market is the tremendous range of buyer business models that exist and continue to emerge, but too often sellers do insufficient due diligence at this stage. Develop a process to evaluate the right-fit buyer, such as utilizing a brief but consistent checklist of your priorities, and discuss hypothetical client service and operating cases to get a sense of what is truly important to a buyer.

2. Think through your ideal outcome. Firm owners who are thinking about selling need to clearly define what outcome they want, now and several years down the road. Historically, selling primarily meant succession and retirement, but as the industry becomes more complex and capital-intensive, the most attractive and visible transactions are focused increasingly on addressing organic growth, technology, compliance and the operating needs of an improved platform.

You're likely emotionally invested in your business, so define what you truly want to get out of the deal, apart from the financials. How will you integrate? What role do you want to play in the firm once it's acquired — and for how long? And are you prepared to change how you and your firm operate today to make this a successful partnership? Yes, it's a seller's market, but it's still important to be prepared to express how you and your team will contribute to improved performance of the potential buyer's business, particularly how you will contribute to performance and growth.

3. Involve the next generation. It is equally important to get everyone, especially your next generation of talent, on the same page early on. Leaders at our forum stressed the importance of knowing "who is the future" and "having all key stakeholders involved in due diligence" leading up to a deal. And many of the most active acquirers regard M&A as a talent acquisition strategy. Increasingly, a smooth integration that capitalizes on a scalable platform and service model is the goal, and aligning expectations at the onset can help you achieve that.

4. Be ready to compete for talent. The market for talent is increasingly competitive, so it's important to remain focused on retaining your key advisers and highlighting what makes your firm and its future attractive — especially in a time of possible change. During the forum, we heard that post-deal, "ultimately, people will stay because they like your environment." Make sure you're listening to advisers about career and operating concerns and how the sale can improve the culture. It can be easy to get caught up in preparing for a sale, but don't lose sight of retaining and engaging a strong talent base.

5. Maintain organic growth. Leaders in our session also shared that firms demonstrating at least some level of organic growth are more attractive to buyers. Continue to focus on growth and creating a culture of business development as you prepare for a potential sale — and expect and plan for market volatility.

When it comes down to it, every firm needs to think about each of these factors regardless of whether they're ready to sell in the short term. They should also consider engaging experienced third parties, such as wealth management-oriented investment bankers and transition consultants, to help identify issues and options that they may otherwise overlook.

Firms that understand and take control of the process, involve all parties from the start and evaluate their breadth of options will be better prepared to find their best-fit buyer when the time is right.

Scott Slater is vice president of practice management and consulting for Fidelity Clearing & Custody Solutions.

https://www.investmentnews.com/article/20190213/BLOG09/190219973/thinking-about-selling-your-firm-5-ways-to-prepare%20?NLID=daily&NL_issueDate=20190227&utm_source=Daily-20190227&utm_medium=email&utm_campaign=investmentnews&utm_visit=696981&itx[email]=e06b4e645e2af5a8cdf41fd61c641308af802c6a87fcccd9edb043e1408493a3%40investmentnews

Lives, and life savings, pulled apart by Alzheimer's

June 11, 2016

By Crocker Stephenson of the Journal Sentinel

Like their lives back then, Steve and Peg Schultz's plan was simple, one they could lay out with a pencil on the back of an envelope: They would work hard. Save their money. Retire at 55. Then freedom.

"We thought we'd travel for maybe 10 years, while our knees could still handle it," Steve Schultz said. "Then we'd settle down, with a place in Florida and one up here, kind of like my folks did. We did not see this monster coming."

That monster was — is — Alzheimer's disease. Steve, 68, and Peg, 67, hardly knew a thing about it. It wasn't part of the plan.

So in 2007, when Steve noticed the phrase "what-cha-call-it" creeping with ever more frequency into Peg's sentences, the idea that a dementia of some kind was dismantling her vocabulary simply did not occur to him.

"I need to make sure you understand," he said, "that the woman I love was the most intelligent person I've ever known."

Peg sits on a chair near the window of her room in the Memory Care Assisted Living unit of the Lutheran Home in Wauwatosa. Steve, seated on the edge of her single-size bed, takes her hand. Steve has covered the walls with photographs of people Peg no longer recognizes.

Medicare does not cover Peg's care at the Lutheran Home. Peg's care this year will cost Steve about $65,000. Out-of-pocket.

Peg and Steve worked hard. They saved their money. He'll need to dip into their retirement savings, but he'll be able to pay for Peg's care.

But that wasn't the plan.

•••

More than 5 million Americans now have Alzheimer's disease, the most common form of elderly dementia, and the prevalence of Alzheimer's among baby boomersis expected to explode by midcentury.

The Alzheimer's Association projects that 10 million baby boomers will develop the disease.

While studies and media stories that explore the emotional toll the disease extracts from family and friends are all but legion, the financial toll, which can also be devastating, is less understood.

And so, in December, the Alzheimer's Association interviewed more than 3,500 people across the nation and asked them about the costs of caring for family members or friends with Alzheimer's disease or other dementia.

A report on the survey concluded that, on average, care contributors spent $5,155 a year of their own money to take care of a relative or a friend with dementia.

Amounts varied from less than $1,000 to more than $100,000.

Spouses and partners spent the most — on average, more than $12,000 a year. Adult children spent an average of $4,800, though a significant percentage — 16% — spent $10,000 or more.

These expenses, respondents said, jeopardized their own financial security and squeezed household budgets:

■ Two in five had to cut back on savings. One in five dipped into retirement savings.

■ One in five cut back on going to the doctor. One in 10 cut back on buying medicine for themselves. One in 10 cut back on their children's educational expenses.

■ Respondents said that to meet expenses, they sold vehicles, furniture, jewelry, collectibles, even homes.

■ The cost of contributing to the care for someone with dementia literally took food out of the mouths of caregivers. They were more than 25% more likely to report that they ate less or didn't have enough money to eat properly.

■ Income shrank even as expenses grew. Respondents reported working fewer hours or taking early retirement to support someone with dementia. Income losses averaged about $15,000.

■ Some respondents said they met increased expenses by increasing the hours they worked, or took second jobs, postponed retirement or went back to work.

•••

Peg Schultz had worked for the Social Security Administration. Steve also worked for the administration, then for the National Labor Relations Board.

He's perfectly comfortable with the Byzantine regulations that govern Medicare, Medicaid, state administration of assistance programs, and the whims of private insurers.

Not so for most of those surveyed by the Alzheimer's Association:

■ Some 28% of those surveyed believed — incorrectly — that Medicare pays for nursing home care and another 37% didn't know if it did or not.

It doesn't. Custodial care in nursing homes is not covered.

■ Some 36% believed — incorrectly — that Medicaid was long-term care insurance and 25% didn't know.

While Medicaid does help people with limited incomes pay for some long-term care and medical costs, "in most instances, individuals must have depleted nearly all of their assets to be eligible," the report says.

■ About 30% of those surveyed believed their insurance covered long-term care.

"But national statistics," the report said, "indicate that only about 3% of U.S. adults and about 10% of adults older than 55 have long-term care insurance."

Couples find themselves doing things utterly alien to their sense of love and marriage, including getting divorced, to protect their assets.

"Medicaid does not recognize the modern family," says Carol Wessels, an attorney specializing in elder law. "It's devastating in so many ways."

Carol's own mother, Velma Wessels, died last year, at the age of 89, after living with Alzheimer's for 15 years.

Her father, Russell, died in 2008 of a bladder condition that would have been highly treatable had he addressed it in its early stages.

"He let his health go while he was caring for her," Wessels said.

Wessels had been practicing elder law for 20 years when she began to care for her mother.

"But I didn't realize what was going on — didn't have a clue — what it was like to go through Alzheimer's," she said.

Steve Schultz figures he'll weather the financial strain of Peg's illness. It wasn't the plan, but it's their reality.

Still.

"I'd rather be homeless and penniless if I could have her back," he said. "Money doesn't matter."

The Southeastern Chapter of the Alzheimer's Association offers classes covering legal and financial planning. For more information, call (414) 479-8800. Or call the association's 24/7 helpline (800) 272-3900.

Crocker Stephenson covers public health. He has won many regional and national awards for his stories concerning infant mortality, child welfare, poverty, urban life and welfare reform.

@crocker_mjs  cstephenson@journalsentinel.com  414-224-2539

http://archive.jsonline.com/news/health/lives-and-life-savings-pulled-apart-by-alzheimers-b99741437z1-382574781.html

Jimmo Implementation Update: Where is CMS?

The Settlement Agreement in Jimmo v. Sebelius, No. 5:11-CV-17 (D. VT), was approved by a federal district court in January 2013. The Centers for Medicare & Medicaid Services (CMS) was required to confirm that Medicare coverage is determined by a beneficiary’s need for skilled care and is not based on a beneficiary’s potential for improvement. Relevant chapters of the Medicare Benefit Policy Manual now clearly state that coverage “does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care. Skilled care may be necessary to improve a patient’s condition, to maintain a patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”
Unfortunately, over six years since the Settlement’s approval, the Center for Medicare Advocacy still regularly hears from beneficiaries facing erroneous “Improvement Standard” denials in home health, skilled nursing facility, and outpatient therapy settings.
For example, a beneficiary’s daughter recently contacted the Center about the termination of her father’s skilled care at a nursing home. She wrote the Center about her experience, saying, “I told them about Jimmo and information on The Center [f]or Medicare Advocacy website. No one knew anything about Jimmo . . . I filed the fast appeal on February 4 and won on February 6.” However, soon after, she was told again that her father’s therapy was being terminated because he had plateaued. She noted, “[o]nce again I inform them of Jimmo. Nobody knows anything about it again! We lost the second fast appeal on February 22 . . . It is bad enough what this injury has done to my Dad, but to have a therapist come to him and say "if you don't show improvement by Friday, you will get kicked off of Medicare" has been devastating to Dad.”
The ongoing lack of knowledge about the Jimmo Settlement among providers, contractors, and adjudicators is unacceptable but also not surprising. The Center’s 2018 national survey of providers showed that 40% of respondents had not heard about the Settlement and that 30% were not aware that Medicare coverage does not depend on a beneficiary’s potential for improvement. The Center conducted the survey after the federal judge in Jimmo v. Sebelius ordered a Corrective Action Plan in February 2017, requiring the publication of a new Jimmo webpage on CMS.gov and additional training for Medicare decision-makers.
In the face of continuing problems surrounding the implementation of the Jimmo Settlement, Center attorneys met with CMS officials in May 2018. The Center emphasized the need for improved implementation in home health, skilled nursing facilities, and outpatient therapy. The officials expressed a desire to work with the Center to provide additional education to decision-makers (although later discussions clarified that this only extended to outpatient therapy). As requested, the Center submitted language to CMS for educational materials the Center believed were to be released in August 2018. However, the Center is not aware of, and has not been informed of, any actions to improve Jimmo implementation since that May, 2018 meeting.
Despite the problems surrounding Jimmo implementation, the Center encourages Medicare beneficiaries and their families to continue appealing unfair “Improvement Standard” denials. Although beneficiaries and their families should not be in a position of having to educate providers, contractors, and adjudicators about Medicare policy, the current state of Jimmo implementation demonstrates that this is necessary. As a result, the Center advises beneficiaries and their families to continue citing to the Jimmo Settlement and related materials when challenging denials based on an erroneous “Improvement Standard.”

• For additional information about the Jimmo Settlement Agreement and helpful resources, please see the Center for Medicare Advocacy’s Improvement Standard and Jimmo News webpage, available at https://www.medicareadvocacy.org/medicare-info/improvement-standard/.

See also: the official CMS statement about Jimmo –  https://www.cms.gov/center/special-topic/jimmo-center.html

Improve and Expand Medicare: End the Use of Outpatient Observation Status - A Billing Issue that Restricts Needed Care

Recently, the Center for Medicare Advocacy laid out our Medicare Platform for the New Congress. One of the core considerations to improve Medicare for all beneficiaries, now and in the future, is the need to end ongoing barriers to care. One of the most common barriers about which the Center receives inquiries is the continued overuse of “observation status” in hospitals. “Observation” or “outpatient” status is a billing code which prevents beneficiaries from accessing post-hospital skilled nursing facility care. In fact, as detailed below, a recent Inspector General report highlights payments to skilled nursing facilities for patients who were not billed as hospital “inpatients,” even though they might actually have been in the hospital for multiple days.

Inspector General Report: Medicare Overpaid Skilled Nursing Facilities When Patients Did Not Have Qualifying Inpatient Hospital Stays
In a new audit, CMS Improperly Paid Millions of Dollars for Skilled Nursing Facility Services When the Medicare 3-Day Inpatient Hospital Stay Requirement Was Not Met, the HHS Office of Inspector General (OIG) reports that Medicare inappropriately pays skilled nursing facilities (SNFs) for Part A stays for residents who did not have qualifying three-day inpatient stays in the hospital.[1] The report ignores the fact that many of these Medicare beneficiaries are hospitalized for three or more days and receiving the same care as inpatients but are called outpatients.[2] The 2019 report returns the OIG’s attention solely to billing.
Between September 2000 and January 2005, the HHS Office of Inspector General (OIG) issued 27 audit reports finding that Medicare overpaid SNFs for Part A stays when beneficiaries had not been hospitalized as inpatients for at least three consecutive days.[3] In fact, most of the residents had been hospitalized for three or more days, but some or all of the time was called outpatient or observation status.
As the Center for Medicare Advocacy (the Center) has discussed over the years,[4] observation status  results in patients’ not qualifying for Part A coverage of their subsequent SNF stays, even though the care these patients received in the hospital is exactly the same as that received by inpatients. A recent call to the Center, for example, involved a 91-year old woman who was hospitalized for six midnights (four in observation, followed by two considered inpatient) but whose SNF stay was not covered because of her failure to have a 3-day “inpatient” stay.
In December 2016, OIG issued a report evaluating Medicare’s new time-based policy for determining patients’ inpatient or outpatient status.[5] Looking at data from Fiscal Years 2013 and 2014, OIG found that hospitals increased their use of outpatient/observation status, contrary to the expectation that the two-midnight rule would reduce the number of long outpatient hospital stays. OIG expressed concern that “beneficiaries with similar post-hospital care needs have different access to and cost sharing for SNF services depending on whether they were hospital outpatients or inpatients.”[6] OIG suggested that the Centers for Medicare & Medicaid Services (CMS) “analyze the potential impacts of counting time spent as an outpatient toward the 3-midnight requirement to qualify for SNF services, which would provide equitable access to SNF services for Medicare beneficiaries regardless of whether they are inpatients or outpatients.”[7] No change in federal policy occurred.
Now, in its February 2019 report, OIG has returned to its sole focus on overpayments to SNFs for beneficiaries not having a qualifying hospital inpatient stay. OIG reviewed a stratified random sample of 100 claims for SNF care in Calendar Years 2013 through 2015 totaling $779,419 for beneficiaries who, according to the Medicare National Claims History file, did not have a 3-day inpatient hospital stay. OIG found that CMS improperly paid 65 of 99 claims (one claim was excluded) totaling $481,034. From the sample, it estimates that CMS improperly paid $84,202,593 for SNF stays during the three year period. One of the report’s two examples of overpayment is a patient hospitalized for four midnights, two as observation and two as inpatient. The OIG audit does not discuss the impact of observation status on beneficiaries who need post-hospital care in a SNF (and who were in a hospital for three days or more).
In the 2019 audit, OIG calls on CMS to ensure that the Common Working File (CWF) Edit “is enabled and operating properly to identify SNF claims ineligible for Medicare reimbursement.”[8] CMS agrees with the recommendation and writes that it enabled the CWF, effective April 2018.[9] (The CWF is “the Medicare Part A and Part B beneficiary benefits coordination and pre-payment claims validation system.”[10] Based on geographic location, each Medicare beneficiary is assigned to one of nine CWF Hosts, which “uses the CWF software and determines the beneficiary's eligibility and entitlement status and uses that information to decide what action should be taken on the claim.”[11])
However, CMS did not concur with the OIG recommendation (among others) to require a coordinated notification process among hospitals, SNFs, and beneficiaries, including a requirement that hospitals provide written notification to beneficiaries who go to a SNF stating whether they had a qualifying inpatient stay.[12] CMS cited the Medicare Outpatient Observation Notice (MOON) as sufficient hospital notice of a patient’s status and the Skilled Nursing Facility Advanced Beneficiary Notice of Noncoverage (SNFABN) for optional use for technical denials of Medicare coverage.
One positive point for beneficiaries in the OIG report is the implication that patients in observation status may be eligible for discharge planning by the hospital, as required by 42 C.F.R. §482.43. CMS states, “Discharge planning requirements are set out in the hospital Conditions of Participation, which generally do not differentiate between patients based on source of payment.”[13]The Center for Medicare Advocacy recognizes that observation status is a Medicare billing issue, which determines whether the hospital will bill Part A (for inpatient care) or Part B (for outpatient/observation care) for a patient’s stay. As the OIG recognized in 2016, observation status does not affect the care that Medicare beneficiaries receive in the hospital or beneficiaries’ need for post-hospital care in a SNF.
Bipartisan legislation will soon be reintroduced in Congress to count all time in the hospital, whether called inpatient or outpatient, for purposes of satisfying the qualifying hospital stay requirement. Legislation such as this is long overdue to reduce the harm observation status inflicts on vulnerable older and disabled Medicare beneficiaries.
________________________
[1] Office of Inspector General, CMS Improperly Paid Millions of Dollars for Skilled Nursing Facility Services When the Medicare 3-Day Inpatient Hospital Stay Requirement Was Not Met, Appendix B, A-05-16-00043 (Feb. 2019), https://www.oig.hhs.gov/oas/reports/region5/51600043.pdf.
[2]See the Center’s writings on observation at https://www.medicareadvocacy.org/?s=observation&op.x=0&op.y=0.
[3] Office of Inspector General, CMS Improperly Paid Millions of Dollars for Skilled Nursing Facility Services When the Medicare 3-Day Inpatient Hospital Stay Requirement Was Not Met, Appendix B, A-05-16-00043 (Feb. 2019), https://www.oig.hhs.gov/oas/reports/region5/51600043.pdf.
[4] See the Center’s writings on observation at https://www.medicareadvocacy.org/?s=observation&op.x=0&op.y=0.
[5] OIG, Vulnerabilities Remain under Medicare’s 2-Midnight Hospital Policy, OEI-02-15-00020 (Dec. 2016), https://oig.hhs.gov/oei/reports/oei-02-15-00020.pdf.
[6] Id. 17.
[7] Id.
[8] Id. 10.
[9] Id. 11, 24 (Appendix F, CMS Comments).
[10] CMS, Medicare Claims Processing Manual, Chapter 27, §10, https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c27.pdf.
[11] Id.
[12] Id. 11, 24.
[13] Id. 24.

The Affordable Care Act Federal Upper Limits Have Been Updated

View in browser | Distributed by Center for Medicaid and CHIP Services (CMCS) The updated Affordable Care Act Federal upper limits (FUL) calculated in accordance with the Medicaid Covered Outpatient Drug final rule with comment are now available on the Medicaid.gov website at https://www.medicaid.gov/medicaid/prescription-drugs/pharmacy-pricing/index.html. States will have up to 30 days from the March 1, 2019 effective date to implement these updated FULs.   For further information on the FUL program, please see the Federal Upper Limits page at https://www.medicaid.gov/medicaid/prescription-drugs/federal-upper-limits/index.html.

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Stay connected with Medicaid.gov and CMS:

Healthy Smiles Start With Early Education

February 28, 2019AuthorWellCare Health PlansCategories

Attitudes and habits established at an early age are critical in maintaining good health throughout life.  This is true for many things, like introducing healthy foods, fun exercise and good dental hygiene habits.

According to the American Dental Association, children’s teeth are at risk for decay as soon as they appear, usually when the child is six months old. However, they are also very import for the baby’s development and health-impacting the way to jaw grows, how a baby forms words and eats. Poor oral care, however, can lead to infection, disease, and other teeth and health problems.

Start cleaning a baby’s teeth early. This will not only help to keep them healthy, but will get the child used to having people work on his or her teeth and minimize anxiety about the dentist. It is also helpful to schedule regular dentist visits no later than a child’s first birthday.

Steps to follow as your child ages:

• Once your baby starts to get teeth, clean their mouth at least twice a day.
• When your child is 1 to 2 years old, switch to a soft baby toothbrush with water. Add a small dab of toothpaste the size of a grain of rice.
• Brush your baby’s teeth at least twice a day. You also should start using floss in between your baby’s teeth.
• For children 3 to 6 years of age, use a pea-sized amount of fluoride toothpaste.
• Brush teeth thoroughly twice per day (morning and night) or as directed by a dentist or physician.
• Supervise children’s brushing and remind them not to swallow the toothpaste.

In February, WellCare community representatives presented several programs to help educate children and their parents on the importance of brushing their teeth, flossing, eating the right foods and avoiding certain foods.

The Missouri Care team shared its “Show Me Smiles” program at head starts, schools, child care facilities, churches, and other civic groups throughout the state. Associates are joined by “Mr. Choppers,” a stuffed dinosaur with “real” teeth the children can take turns brushing and flossing. At the end of each “Show Me Smiles” presentation, every child receives a dental “goodie” bag that contains a new toothbrush, floss, toothpaste, a coloring book and other assorted goodies.

In Arizona, the Care1st Avondale Resource Center, a one-stop hub of social and human services, offers the First Teeth First program for eligible children between birth to 5 years old and expectant mothers at no cost. The program is available through Maricopa County’s Office of Oral Health and funded by First Things First, a voter-initiated, statewide organization that provides funding to community-based organizations that support early childhood education and health. The initiative offers participants basic oral screenings, education and referrals.

At the WellCare of New York Welcome Room in Washington Heights, dentists from HealthFlex and community providers highlighted the importance to all preventative care, including dental hygiene. Plus HealthFlex provided free dental screenings.

https://blog.wellcare.com/2019/02/28/healthy-smiles-start-with-early-education/