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Bayada Home Health transfer to nonprofit will start next spring

Mark Baiada said he expects to start donating Bayada Home Health Care to a new nonprofit in April.

Bayada Home Health Care CEO Mark Baiada in his Moorestown, N.J., office.
Bayada Home Health Care CEO Mark Baiada in his Moorestown, N.J., office.Read moreED HILLE / staff photographer

Giving away a health-care business with operations in 22 states and five foreign countries is not easy.

That's what J. Mark Baiada has found since June 2016, when he announced his intention to turn Bayada Home Health Care into a nonprofit to protect it from a sale and ensure that its mission endures.

The process will start in April and is expected to take 18 months to two years because it is a complicated process, Baiada said Wednesday.

"I'm going to be systematically donating portions of Bayada over time, as much as we can handle, because you have to discharge the patients, admit them to the new organization, make sure you have all the regulations and licensures in place," said Baiada, who will step down as chief executive of Bayada on Thursday,  when he turns 70. He will remain as chairman.

His son, David, 40, will take over as CEO.

Taxes are the second reason Baiada can't do it all at once.

If Baiada, who owns 100 percent of Bayada, were to donate the company all at once, he would be required to pay taxes on $150 million of receivables, he said. Paying those taxes all at once would "crush the business," David Baiada said.

"You can't just give away the receivables," Baiada said. "They want the tax. That's the irony of the whole thing. I want to give the thing away, and I have to pay a tax to do it. It's kind of weird, but that's the way it is. I got over the surprise of all that already. Now, I'm just dealing with the practical reality of it."

The next step in the process is getting the IRS to approve the tax-exempt status of the new Bayada, which was incorporated in Delaware in May. That is expected to take five to six months.

Baiada has already donated Bayada's operation in Hawaii to a tax-exempt organization. "It was our trial," Baiada said.

The Hawaiian operation, whose first Form 990 tax return covered 2015, constitutes a tiny fraction of the Bayada's $1.2 billion in total annual revenue.

Baiada said his plan to give the company to charity has met with some skepticism, but he dismissed that.

"It's like the Warren Buffett-Bill Gates thing, I just want to give it away. I don't really need the money," he said.

As chairman,  Baiada said, he will have a particular focus: "I'm really interested in adding an educational component to the work we do."