Operators who have never bought or sold bed licenses (“Beds”) without including the real estate as part of the transaction, have often struggled to understand the timeline it takes to complete the transaction.  Most real estate owners and operators have become accustom to the common practice of acquiring a facility when the real estate, operations and operating rights to the bed licenses are all included in the transaction. Depending on the state, this kind of change of ownership (CHOW), will often exclude any kind of Certificate of Need (CON), or governmental review. Or, if a review is necessary, it is often expedited.Certificate of Need CON Bed Licenses Licensed BedsIf an operator proceeds with either acquiring or selling Beds, without including any real estate as part of the transaction, the timeline to transfer the Beds varies greatly by state. In states where Beds can be exchanged amongst operators, the most common timeline for final approval is described below from start to finish (every state is different, however, this timeline is most common):
  • 45 days to discuss the initial terms of the transaction. Sometimes this is verbal, but more often than not, it is put in writing in a Letter of Intent (LOI) to purchase the bed licenses.
  • 45 days to execute a Purchase Agreement. This is typically where buyer and seller representations and warranties, covenants, conditions to closing and indemnifications are added. Leave this to the lawyers.
  • 45 days to file the CON application. If the transaction is in a CON state, the buyer and seller will need to work together to complete the CON application. Both buyer and seller will need to communicate a clear plan of what will happen to the selling facility post-sale, as well as detailing the plans the buyers has for the Beds. Sometimes a state will only have certain windows of time in which applications can be filed. Other states allow operators to file whenever they are ready and the application is complete.
  • 90-365 days for CON review and decision. During this period, the state will often come back to the operators asking for further clarification on specific parts of the application. Once the application has no further questions, it will be scheduled to be reviewed by the CON board. There, the board will issue an approval or denial of the Bed relocation.
  • 30 days to file an appeal. Some states will allow a window to file an appeal based on the CON decision rendered. If there are no appeals, the Beds are permitted to be relocated, and the buyer and seller can close on the Beds.
  • If the application is appealed, the appeal process varies greatly by state. Some states will hear the appeal in the next month’s board meeting, while other states will delay the hearing. These cases can vary anywhere between 30-365 days.
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The timeline described above is an average timeline. It make take operators up to one year or more before the Beds are permitted to be relocated from one facility to another existing or new construction facility. If the decision is appealed, it can be delayed for up to two years or more.The buyer and seller can control the timeline up until the application is filed. They can also be very responsive if the state has questions on the application. In states where this is a typical timeline, some operators have been successful in receiving approval in as little as 4-5 months. In some instances, it has taken over two years for some operators to receive approval.