What Due Diligence Can Teach Any Practice

Author: Wiks Moffat, CHC, Principal and EVP, Sales

Jun 30, 2022 | Governance

Recently, healthcare has been one of the most torrid industries for acquisitions and capital investment. Here at HCN we have been busy providing regulatory compliance due diligence to private equity firms, super groups, hospital systems, and ACOs looking to acquire or invest in healthcare businesses, as well as healthcare practices preparing for acquisition.

There is a lot to be learned by both sides of a purchase. On one hand investors want to make sure they know what they are buying including any risks or regulatory compliance exposures. On the other hand, practices want to make sure they are well organized and prepared for a clean acquisition and that they are getting a fair price reflective of the value of their business. The regulatory due diligence process illuminates hidden risks of fines or sanctions while also making transparent the accuracy of billing process and full revenue capture. Everyone benefits from this clarity.

But what if you aren’t ready to sell? Pre-diligence!

We have found that even for healthcare businesses who are not contemplating a sale, a pre-diligence exercise can reap unexpected benefits. When we do a regulatory compliance pre-diligence checkup for our clients there is always something valuable to be learned, such as high-risk areas that may need immediate attention and/or potential missed revenue opportunities.

In the acquisition due diligence process we typically look for things that can affect the purchase price like billing and coding inaccuracies and risks of penalties, fines, or exclusions. The same goes for pre-diligence. Regardless of whether you are looking to be acquired, knowing that your billing and coding program is gathering all the revenues you deserve for services delivered is invaluable. And unexposed risks quickly turn in penalties if they are not uncovered.

In pre-diligence we also look at the overall culture of compliance within a healthcare business. Are the policies and procedures, handbooks, training programs, and safety protocols up to standards? If not, we can work with a practice to bring them up to speed.  A healthy compliance environment is a critical element of any company. Doing pre-diligence on your healthcare business as if you were going to sell it is a great way to assure corporate health and business sustainability.