Your Primer to Healthcare Mergers and Acquisitions

7 Things To Consider Before Hiring More (Or Any) Employees

May 13, 2014

by Tom Schramski

By Tom Schramski, PhD

Volume 1 Issue 8, May 13, 2014

A business is a dynamic entity that typically thrives with some growth.  Expansion can be fueled by many factors, but we instinctively look to human resources as the answer: we believe we need more employees to accommodate the growth.

Not necessarily.  Today’s businesses are not just factories where it is a matter of adding another assembly line or shift to produce more products.  They require more agility than ever before, whether in healthcare or any other marketplace.

I suggest seven things to consider before you post your next online help wanted listing:

  • The nature of your growth – Does it appear to be a short-term phenomenon or is it likely to be sustained?  Is it occurring in only one area of your operations or is it more pervasive?  The answers to these and other questions will help you to better understand what is the best approach.
  • Your objectives – One business owner may want to create a relatively small homecare company while another aspires to build a multi-state behavioral healthcare organization.  There are business objectives and there are also personal objectives.  What toll will your decision to expand have on your personal life?
  • Evaluating internal resources – Many successful businesses grow through a reconfiguration of existing resources with existing employee input before adding new employees.  This assessment also reaps the benefit of the goodwill you show to your existing workers by seeking their perspective.
  • Decreased profits and cash flow – Typically, adding employees will negatively impact margins in the short run until cash flow catches up.  Staffing up a new group home for people with disabilities might require $50 - $100,000 or more of cash before you receive a single dime of reimbursement.
  • The capacity of your infrastructure – When you increase your employee base, there is often a chain reaction through the financial, HR, IT, and operational areas of your organization.  Are you cognizant of how adding new employees will affect you vis-a-vis State/Federal regulations?
  • Deceleration – Your business may have service cycles (e.g. more or fewer resources required during holidays) or you may be unsure of how a new product line will grow (or not).  What would you do if sales for your new special needs DME product line dropped 50% six months after a successful launch?
  • The contractor alternative – Is it possible that the selected use of independent contractors instead of employees could help you expand until there is a better understanding about how your growth will mature?

This last consideration is receiving increased attention in all marketplaces, especially service-oriented areas of healthcare and human services.  Some of this scrutiny is fueled by healthcare reform and the pressures of managed care, but a significant number of executives also see the use of contractors as a way to better focus their limited resources while increasing the professionalization of the service provider role.

Tom Schramski

Tom Schramski PhD, CM&AA


Tom was the Founder and Managing Partner of VERTESS. He was a Certified Merger & Acquisition Advisor (CM&AA), consultant, and Licensed Psychologist with over 35 years of very successful national experience in the healthcare marketplace, including co-founding and building a $25 million behavioral health/disabilities services company. Tom represented sellers and investors across the healthcare spectrum and was recognized for his executive leadership in the 2005 Entrepreneur of the Year issue of Inc. Tom passed away in December 2018.

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