Bayada to Transfer Ownership to New Foundation, Forgoing Sale
One of the top ten largest U.S. home health companies is giving away its business to a newly created charity organization in what might be the first succession plan of its kind for the home health care industry.
Founder and President of Pennsylvania-based Bayada Home Health Care, J. Mark Baiada, has decided his “Lasting Legacy Plan” will be turning the business he founded in 1975 into one that serves the public interest. The landmark decision is a highly unusual move for such a profitable, privately-held company, which reportedly earns $1.1 billion in annual revenue. Instead of selling the business, Bayada Home Health Care will be privately owned by a non-profit foundation company.
“We’ve evaluated everything and spent time going through every ownership structure,” David Baiada, the company’s current chief operating officer and son of founder Mark Baiada, told HHCN. “At the end of the day, when you’re thinking about 100-year sustainability, the intergenerational transfer between owners often comes down to money. The reality is that we are focusing on mission before money and a long-term commitment to our patients and employees. The best way to maintain that commitment across generations is to set up a mechanism where the business can’t be sold.”
Above all, the new ownership structure lends itself to ensuring that the company will remain focused on its mission, based in family-owned values and likely to remain operational for the next 100 years, the Baiada family believes.
“Since our founding in 1975, I have owned Bayada 100%,” Baiada said in a statement. “After years of study, thought and prayer, my family and I decided that this innovative succession approach gives us the best chance to perpetuate our mission and protect the company from ever being sold. Our dream is to touch millions of people worldwide and provide home health services with compassion, excellence and reliability for 100 years or more, long after we are gone.”
Mark Baiada plans to step down as president on August 17, 2017**, his 70th birthday. He will assume the role of chairman of the board of the foundation, which has yet to be created.
Bayada Home Health Care operates more than 300 offices in 22 states and employees more than 23,000 home health professionals. The provider offers home health, adult nursing, assistive care, pediatrics, hospice and habilitation care services.
Mission Over Money
The decision potentially leaves a lot of money on the table for Baiada, who has chosen to forgo a succession plan to pass the business to one of his children or sell to another entity. Upon stepping down, Mark Baiada’s son, David Baiada, who currently serves as chief operating officer of home health, hospice and quality for the company, will be named Bayada’s president. Mark Baiada will oversee the transition of the ownership to the new foundation and continue to advise the company.
“In earnest we have been working on this for 10 years,” David Baiada told Home Health Care News. “We’ve spent a lot of time trying to be thoughtful about our long-term vision and our values—what we call The Bayada Way. The decisions we’ve made have been to create an ownership and governance structure that creates the highest likelihood that we will be able to make that come true.”
The non-profit foundation will become the Bayada’s majority owner over the next three to five years. Eventually, the charitable foundation will own roughly 80% of the business, and family and employees will own the remaining 20%.
“You’d be surprised how difficult it is for a man to give away a $1 billion business,” Mark Baiada told HHCN. “[We are] going through the process of engaging the IRS to establish a private charity and then transferring the shares to that [entity].”
The move will ensure that Bayada’s mission—The Bayada Way—remains as the top priority of the company instead of profits. The mission seeks to serve clients at home and support charitable initiatives, including financial assistance for its own employees in the face of catastrophic life events or circumstances.
Bayada has come a long way since its inception over 30 years ago, and has continued to expand not only in the United States but abroad with a $10 million investment into a home health provider in India in 2014. Bayada has recently entered into partnerships and joint ventures with major health networks in New Jersey and Philadelphia.
“For decades, I have turned down countless offers to sell Bayada,” Baiada said. “If we sold the company, the new owner’s primary purpose would be to make money, which is not our primary purpose. Bayada’s primary purpose is to care for our clients and honor, respect and support our people.”
The company will continue to hammer out details of the transition throughout this year and into 2017.
Written by Amy Baxter
**Editor’s Note: This article has been updated from a previous version that noted J. Mark Baiada’s step-down date was August 17, 2016. Baiada will step down in 2017.