Home Health Agency Model
Healthcare Financial Model (Free Excel Download)
Plan home-health operations using referrals, visits, reimbursement, caregiver capacity, utilization, wages, payer mix, branch openings, and operating cash flow.
professionals from Deloitte
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About this model
This model helps you plan a home health provider delivering care in patients' homes. It connects referrals, patient visits, service mix, and reimbursement to caregiver staffing, travel, clinical support, and administrative costs.
Use it to assess a new branch, acquisition, or growth plan. Test patient demand, reimbursement, staffing, and service mix to see how they affect profitability, cash flow, and value.
What every model includes
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
What's inside the Home Health Agency Model
- Admissions & census inputs: Year-1 admissions, admission growth rate, average periods of care per admission
- PDGM payment & LUPA: case-mix-adjusted full 30-day rate, Medicare rate update, LUPA visit threshold, average LUPA visits, per-visit fee schedule and its escalation, LUPA share and its annual increase
- Visit intensity & discipline mix: visits per full case-mix period, five discipline mix weights (SN/PT/OT/HHA/MSW), five loaded cost-per-visit rates, wage growth
- Staffing & capex: visits per clinical FTE, field-device capex per net-new FTE, EMR platform capex %, useful life, base PP&E, base clinical FTE
- Cost structure: back-office FTE ratio and wage, compliance/QA FTE and wage, corporate FTE and wage, benefits load, accreditation & survey fees, marketing, G&A, liability insurance
- Tax: corporate tax rate on EBIT
- Working capital: Medicare billing lag (days), base claims receivable
- Valuation: WACC, terminal growth, net debt, shares outstanding
How the Home Health Agency Financial Model Works
This home health agency financial model projects a Medicare-certified provider delivering skilled nursing, therapy, home health aide and social work visits in patients' homes. It connects referral admissions to 30-day periods of care, prices them under PDGM with a LUPA visit threshold, builds clinical labor from visit volume, and carries the resulting cash flow through to an unlevered valuation.
What Drives Volume and the 30-Day Payment Unit
The operating engine starts with referral admissions, modeled as a direct annual flow rather than a census roll-forward because home health census turns over within every 30-day period.
- Each admission converts into an average number of periods of care, so admissions multiplied by periods per admission produces total periods.
- Those periods are the payment unit under the Patient-Driven Groupings Model, meaning revenue is earned per case-mix-adjusted 30-day period rather than per visit.
- This structure makes the model sensitive to how quickly admissions grow and how many periods each admission generates, which together set the scale of the entire business.
The LUPA Cliff and Blended Revenue per Period
A defining mechanic is the Low Utilization Payment Adjustment. If visits delivered in a period fall below a case-mix-specific threshold, the whole period reprices at a low per-visit fee schedule instead of the full case-mix rate.
- The model keeps full-rate and LUPA revenue as separate visible rows, then blends them by the LUPA share. That share rises as growth pushes into lower-density territory, where longer drive times compress visits per period.
- A full-rate-equivalent KPI row shows the blended rate pulling away from the full rate, and the gap is carried explicitly as the dollar cost of LUPA compression.
Visit-Based Clinical Labor and the Cost Stack
Cost of care is built bottom-up from visits, not as a percent of revenue. Total visits split by period type, because full case-mix periods deliver the modeled visit intensity while LUPA periods deliver only the low LUPA count.
- Visits then split across five disciplines at fully-loaded, wage-escalated cost per visit covering mileage and benefits. This is the dominant cost line.
- Above it sits an opex stack: back-office FTE scaling with volume, fixed compliance and corporate FTE, accreditation fees, marketing, G&A and liability insurance, leading to EBITDA and net income.
Cash Flow, Working Capital and Valuation
Because home health billing has a real lag between the close of a period and final claim payment, working capital is modeled as the Medicare claims receivable rather than a percent of revenue growth.
- That receivable grows as the agency scales, creating a visible cash call, though a light capex base can keep unlevered free cash flow positive.
- Free cash flow follows NOPAT plus depreciation, less capex and the change in the receivable, discounted at WACC.
- A Gordon-growth terminal value produces enterprise value, and after net debt, equity value and value per share, summarized on a one-page dashboard.
Formatted to IB standards
Named theme colors repaint the whole workbook in one click, on top of an investment-banking structure with clear input, output, and cross-sheet reference styling - brand-ready, institutional-grade, and fully auditable.
Created by ex-finance professionals
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Frequently asked
What is a home health agency financial model?+
A home health agency financial model captures the seven-year operating economics and intrinsic value of a Medicare-certified home health agency - skilled nursing, PT, OT, HHA and medical social work delivered in the patient's home on referral from hospitals, SNFs and community physicians. It rolls referral admissions into 30-day periods of care, prices each period under Medicare's Patient-Driven Groupings Model including the LUPA (Low Utilization Payment Adjustment) visit-threshold cliff, derives clinical labor bottom-up from visit volume, and discounts an unlevered free-cash-flow stream to enterprise value, equity value and value per share.
What is the LUPA cliff and why does it matter?+
LUPA stands for Low Utilization Payment Adjustment. Medicare normally pays home health agencies a case-mix-adjusted rate for a full 30-day period of care, but if the visits actually delivered in that period fall below a case-mix-specific threshold, the whole period is repriced at a low flat per-visit fee schedule instead - a cliff, not a gradual haircut. The model keeps both revenue paths as separate visible rows and blends them by the modeled LUPA share, so the dollar cost of falling below the threshold is explicit rather than buried inside a single average rate.
Why does LUPA share rise over the seven-year horizon?+
Because it is modeled as the direct consequence of the agency's growth strategy rather than an unexplained trend. Admission growth is funded by expanding into new, lower-density and rural service territory, and longer drive times between patients in that territory compress how many visits a clinician can complete inside a 30-day period. As more periods fall under the visit threshold, LUPA share climbs from 9.0% in Year 1 to 19.2% by Year 7, pulling blended revenue per period below the full-rate-equivalent line by a widening dollar gap.
Why does EBITDA margin ease instead of expand as the agency scales?+
Because two real cost pressures narrowly outrun the operating leverage in this model. Wage inflation compounds against a blended revenue rate that is itself compressing as LUPA share rises, and while back-office, compliance/QA and corporate FTE are held fixed or scaled modestly so the fixed-cost base does deleverage, it is not enough to offset the other two effects. EBITDA margin eases from 9.2% in Year 1 to 7.3% by Year 7 - an honest result rather than a smoothed-over growth story.
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