The home infusion pharmacy and ambulatory infusion sectors continue to attract strong interest from entrepreneurs, physicians, private equity firms, and existing healthcare providers seeking to diversify into high-growth, highly reimbursable service lines. Over the past several months, Frier Levitt has seen a marked increase in inquiries from clients and prospective operators looking to establish or acquire home infusion pharmacies and ambulatory infusion suites. These individuals have included healthcare providers, such as current retail pharmacy operators and pharmacists, as well as investors, including private equity firms.
Many of these individuals face the same initial decision: Should they build a pharmacy from scratch (i.e., “green start” the pharmacy) or acquire an existing licensed pharmacy? And if they move forward, should they pursue the venture independently or align with a franchise organization such as Vital Care? The right path forward depends on each client’s goals, capabilities, and appetite for risk—but all options come with legal, regulatory, and operational complexities that require experienced guidance.
Below, we explore the key considerations for each path, helping entrepreneurs and healthcare providers make informed decisions
Building vs. Buying a Pharmacy
Building/Green Starting: Pros and Cons
Starting from scratch gives operators maximum control over the location, staff, brand, and service lines. It may also allow them to avoid inheriting potential compliance liabilities associated with an existing business. However, it comes with its own challenges:
- Licensure and Accreditation: Home infusion pharmacies must obtain pharmacy licenses in their home state, as well as in each of the other states in which they hope to operate. Home infusion pharmacies must also secure DEA registration (if controlled substances are involved), and often pursue URAC or ACHC accreditation. Each of these steps requires significant lead time, compliance oversight, and, especially in the case of accreditation, outlay of capital.
- Payor Access: New pharmacies often face headwinds gaining network access with PBMs and major medical insurance plans. Several PBMs have required new pharmacies to have an established dispensing history prior to applying to the network, especially for pharmacies located in Medicare HEAT Zones. Worse yet, restrictive payor networks in both pharmacy and medical networks have made it extremely difficult for new pharmacies to gain access to certain specialty networks or to provide certain therapies, like IVIG.
- Infrastructure Buildout: Physical buildouts must comply with state pharmacy regulations, USP standards (e.g., USP <797>, <800>), and cleanroom specifications, often requiring a design partner with healthcare-specific experience. This can not only require time to complete, but also additional outlay of capital.
Acquisition: Pros and Cons
Acquiring an existing pharmacy can accelerate the timeline to operations and preserve existing contracts, accreditations, and revenue streams—but not without risk:
- Due Diligence Is Critical: Buyers must carefully review the seller’s licensure status, PBM and payor contracts, pending audits or overpayment disputes, nursing arrangements, HIPAA/privacy practices, and employment practices. Overlooking a red flag can result in post-close liability or even licensure revocation.
- Structuring Considerations: Many transactions are structured as stock purchases to avoid triggering full-blown license reapplications and to maintain existing payor contracts. However, even in stock deals, state Boards of Pharmacy may require advance change of ownership (CHOW) notifications or even approvals. Likewise, PBMs and insurance companies will require the new owners to undergo cumbersome recredentialing processes which can be time-sensitive and fraught with risk. Failing to comply can result in license suspension or voided payor contracts.
- Assignment Restrictions: Some payor contracts may also be non-assignable or may terminate automatically upon a change of control. This can be especially troubling if the payor contract contains unique terms that the old owner has been “grandfathered” into.
We routinely assist buyers in negotiating PBM contract continuation, structuring asset vs. equity deals, and preparing the necessary CHOW filings.
Franchising vs. Independent Operation
Another key decision point is whether to affiliate with a franchise platform like Vital Care, which offers a national brand, infrastructure, and support in exchange for franchise fees and partial control.
Benefits of a Franchise Model:
- Network Access: Franchisors may provide access to group purchasing organizations (GPOs), certain PBM and payor contracts, and clinical software that would be difficult for new entrants to obtain on their own.
- Support Services: Many platforms assist with accreditation preparation, staff training, clinical protocols, and billing practices.
- Brand Recognition: Especially in competitive markets, association with a known brand can assist with provider referrals and patient acquisition.
Downsides to Franchising:
- Cost and Restrictions: Franchise fees, ongoing royalties, and required vendor relationships can add cost and limit flexibility. Many times, these franchise fees and royalties can extend to other lines of business, such as ambulatory infusion suites or specialty pharmacy operations.
- Loss of Autonomy: Operators may have less control over their service lines, branding, and strategic decisions.
- Exit Limitations: Franchise agreements may include restrictive covenants, resale limitations, or change of ownership restrictions that impact long-term value.
Legal Counsel Is Essential
Whether building, buying, or franchising, clients considering an entrance into the infusion pharmacy space benefit from early legal engagement. Our firm regularly assists clients in:
- Evaluating and negotiating pharmacy acquisition deals, including conducting CHOW analysis and assessing licensure impact;
- Drafting operating agreements and structuring joint ventures with referring providers, ensuring compliance with the federal anti-kickback statute and state law counterparts;
- Reviewing and negotiating franchise agreements with regional and national franchisors and management companies;
- Advising on payor credentialing, PBM contracting strategy, and audit readiness;
- Preparing management services agreements and nurse staffing arrangements, including compliant subcontracting with nursing agencies or direct employment models; and
- Coordinating with consultants and accreditation bodies to ensure timely launch.
We work hand-in-hand with pharmacy clients, consultants, and clinical staff to help de-risk the process and pave the way for a compliant and scalable business. For those exploring entry into this evolving sector, careful planning and strategic legal support are key to long-term success.
For more information about our healthcare and pharmacy law practice, or to speak with an attorney about your home infusion venture, please contact Frier Levitt.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
