Home > Fraud and Abuse, Healthcare Business, Physician Practices > Steps 3, 4, 5, 6, and 7 in Doing a Healthcare Deal (Correctly)

Steps 3, 4, 5, 6, and 7 in Doing a Healthcare Deal (Correctly)

Steps 2

Step 3 – Identify the governmental agencies that have authority over the deal

  • Are there any notices or approvals required?
  • What are the licensing requirements?
  • Will a change in control occur?
  • Is a new provider application/number needed?
  • Is a CON needed?  An inspection?
  • What effects will the deal have on any accreditation needed by the parties?
  • What is the timing of agency requirements vs. closing the deal?

Step 4 – Identify the third party payors that will be involved

  • Are the services to be performed as a result of the deal reimbursed by Medicare?
  • Medicaid?
  • Other federal or state programs?
  • Commercial payors?
  • What credentialing/provider applications are needed?
  • Do any payors have special requirements that must be satisfied before closing the deal?

Step 5 – Identify the due diligence requirements

Remember that a healthcare deal starts like any other deal, and the parties must do their basic due diligence about each other

  • Entity organization and ownership
  • Legal authority
  • Financial statements, assets and liabilities, liens
  • Contracts and commitments, leases
  • Employees and benefit plans
  • Taxes
  • Insurance
  • Litigation

Step 6 – Identify the healthcare due diligence requirements

What other items items of due diligence are required by the applicable healthcare laws and regulations?
  • Licenses and requirements applying to transaction
  • Equipment and inventories
  • Cost reports, inspections, regulatory correspondence
  • Quality of care, malpractice claims/insurance
  • Patients records, EHR compatibility, billing software
  • Managed care/provider agreements, liability, assignability
  • Subcontractors/suppliers
  • Stae law requirements
  • Fair market value
  • Commercial reasonablenessFair market value and Commercial Reasonableness — These are the critical underpinnings of every healthcare deal.  What is being given, what is being received, and is it commercially reasonable?Get an opinion from a qualified healthcare valuation expert to support the FMV.

Step 7 – Document the Deal

  • Documentation is a critical step in protecting the parties, achieving the goals of the deal, and meeting compliance requirements.  Stark Exceptions and Anti-Kickback Safe Harbors impose specific requirements on deal documentation.
  • Should the parties enter into a nonbinding letter of intent/memorandum of understanding?
  • Pros – helps the parties determine whether there has been a meeting of the minds prior to devoting substantial time and expense and helps manage expectations and reduce surprises.
  • Cons – can consume an inordinate amount of time prior to due diligence being completed and lock the parties into unrealistic positions.

Paper StackNext time — How to screw up the deal that everyone wants.

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