An Essential Guide to CHOW Financing

Change of Ownership (CHOW) transactions are a common part of the business lifecycle in healthcare—whether it’s the acquisition of a skilled nursing facility, the transfer of a hospice license, or the sale of a behavioral health agency. But navigating the financing side of these transitions can be complex. That’s where CHOW financing comes in: a specialized funding solution designed to ensure smooth ownership transitions without disrupting operations or patient care.

In this guide, we’ll break down what CHOW financing is, why it matters, how it works, and what businesses should look for in a financing partner.

What Is CHOW Financing?

CHOW financing refers to the funding used during a Change of Ownership in the healthcare sector. These transactions can involve a range of ownership structures, from outright purchases to management transitions or provider number transfers.

Unlike typical M&A financing, CHOW deals often come with regulatory approvals, licensing requirements, and Medicare/Medicaid payment delays—which makes the capital structure and timing more complex. CHOW financing helps bridge the gap between the deal close and full operational or reimbursement integration.

Why CHOW Financing Is Critical

Healthcare providers undergoing ownership transitions face a unique set of challenges:

• Licensure and certification approvals can delay revenue under the new owner.

• Accounts receivable may be locked under the prior owner’s provider number.

• Operating capital is still needed to cover payroll, staffing, supplies, and patient care—even before incoming payments are secured.

CHOW financing helps keep the lights on, staff paid, and operations running during this critical transition window.

How CHOW Financing Works

While structures may vary by lender, CHOW financing typically includes:

1. Bridge Capital or Working Capital Loans

Short-term funding to cover operating costs during the ownership transition—especially helpful before provider numbers are reactivated under the new owner.

2. Accounts Receivable Financing

In cases where A/R remains under the prior ownership, specialty lenders can purchase or advance against those receivables to unlock liquidity for the incoming operator.

3. Real Estate or Asset-Based Lending

If the facility or business includes hard assets (real estate, equipment), CHOW financing may be structured around those assets to reduce reliance on cash flow or credit history.

Ideal Businesses for CHOW Financing

CHOW financing is commonly used by:

• Skilled nursing facilities (SNFs)

• Assisted living and memory care centers

• Home health and hospice providers

• Behavioral health clinics

• Physician groups or surgical centers

It’s especially relevant for operators taking over distressed or turnaround assets, or for private equity-backed roll-ups in fragmented healthcare markets.

Top Benefits of CHOW Financing

1. Continuity of Care: Prevents service disruption during ownership changes.

2. Faster Operational Start: Provides immediate capital even before Medicaid or Medicare payments resume.

3. Customized Structures: Tailored to the unique regulatory and cash flow needs of healthcare transitions.

4. Credit Flexibility: Approvals can be based on assets and revenue potential, not just traditional credit metrics.

5. Support Beyond the Deal: Lenders often stay involved to provide growth capital post-transition.

What to Look for in a CHOW Financing Partner

The right lender can make or break the transition. Here’s what to prioritize:

• Healthcare Industry Expertise: They should understand licensing, CMS processes, and receivables timelines.

• Speed and Flexibility: CHOW timelines are tight—choose a lender who can move fast and adapt to deal nuances.

• Experience with Complex Structures: Especially if A/R is split between owners or real estate is part of the deal.

• Compliance Support: Guidance through regulatory and billing hurdles is a major plus.

Conclusion

Change of Ownership transactions don’t have to be disruptive or capital-constrained. With the right CHOW financing partner, healthcare operators can complete smooth transitions, preserve continuity of care, and unlock new opportunities for growth.

Whether you’re acquiring a facility, selling to a new operator, or managing a turnaround, CHOW financing ensures you have the capital, confidence, and continuity to succeed.