When preparing your business for sale, we recommend involving a clinical consultant for a pre-sale clinical review. Their assessment will equip you with vital information on your clinical compliance and practices. This information will allow you to correct deficiencies with charts, improve your coding procedures, reduce reimbursement risk, and identify where there may be breeches with healthcare laws. You will want to know your operational liabilities before a buyer discovers them during their clinical due diligence. You may even improve your reimbursements through the correction of any identified deficiencies and enhance coding procedures

In this article, we will discuss the role of a clinical consultant, how to best utilize them through a sale process, and what to expect in a clinical due diligence process.

The Role of the Clinical Team in M&A

Clinical Due Diligence is a key component of a buyer’s assessment of your company, which consists of a meticulous review of the clinical operations and administration. Common areas of assessment include patient charts and billing practices. As the seller, you want to ensure your clinical documentation is in compliance, billing is being done properly (i.e. reimbursement coding and collections), and clinical operations are being conducted at the highest standard. The involvement of a clinical consultant early in the process will assist in mitigating the risk of any potential exposure during an M&A process.

There are three main areas assessed during clinical due diligence:

  • Clinical documentation— Clinical due diligence consists of a comprehensive audit of various patient documents (i.e. Authorization Forms and Charts, to name a few) for accuracy, completeness, timeliness, and compliance with industry regulatory requirements. The accuracy of clinical documentation is a cornerstone of a successful M&A transaction. If there are ratings, rankings, or accreditations used in your healthcare segment, this would be reviewed, as well, to determine how you match-up to other similar companies. Complete, accurate documentation supports your company's status as a well-run healthcare business with effective policies, procedures, and integrity in clinical reporting. 
  • Patient billing— The review of your patient billing practices determines how well your healthcare business produces accurate billing that meets regulatory requirements. This preemptive scrutiny reduces the likelihood of unforeseen issues arising during a buyer's due diligence, particularly coding errors, among the primary concerns may lead to a reduction in the current value of the business. By addressing these issues proactively, the company can present itself as a financially well-managed entity. 
  • Government regulatory compliance – Many and varied regulatory requirements address clinical documentation and billing. For example, there are compliance requirements for protecting confidential patient healthcare information (HIPAA of 1996) and patient safety (Patient Safety and Quality Improvement Act of 2002), to name two. Ensuring compliance helps avoid potential legal scrutiny, which could lower the cash consideration at close.  

Clinical Chart Reviews for Accurate Reporting and Reimbursement

Clinical errors can be one of the primary issues that jeopardize a transaction. Ensuring you have a proper clinical code of conduct should be done before embarking on a sale process. A pre-sale clinical review involves sampling of patient charts for accuracy to the patient's medical record and how that information is labeled for reimbursement. 

There are two main advantages to bringing in a clinical consultant prior to officially starting an M&A process. In some cases, reviewing charts can improve reimbursements by finding coding errors and making corrections that more accurately reflect patient intake and ongoing care. Another advantage is that your business will have time to correct any coding errors before a buyer discovers them during their clinical due diligence. 

An experienced clinical consultant will review your billing procedures from the perspective of whether the services are being billed properly. In most cases, a clinical consultant can find errors in the coding which lead to better reimbursement per patient. From a legal perspective, it is vital to ensure that all charts are in compliance. Numerous fraud and abuse laws cover topics like improper billing to private payors and government insurance providers. Buyers have a keen eye for any illegal or fraudulent practices in healthcare, so a pre-sale clinical review, verifying the company's integrity and practices, creates confidence in the eyes of a buyer.

Clinical Operations Review for a Smooth Sale Process

Ensuring clinical operations are at the highest standards involves a comprehensive and systematic approach. A clinical consultant will begin with an internal chart audit to evaluate the current state of clinical operations. This is followed by:

  • Determine compliance with relevant regulations and standards, such as HIPAA, CMS guidelines, and accreditation requirements
  • Evaluation of metrics concerning quality of care and patient safety
  • Regulatory audits and determination of accreditation status
  • Review of clinical staff credentials and training, determining if both are up to date
  • Review of standard operating procedures (SOPs) and efficiency of clinical workflows, identifying areas of improvement
  • Examination of data management practices
  • Review of the revenue cycle management to ascertain the accuracy of billing, coding, and reimbursement

Engaging a clinical consultant who is an expert in healthcare M&A gives your business a third-party verification of accuracy and integrity. The comprehensiveness of a clinical operations review can be arduous without a clinical consultant. Ideally, you can continue operating your business without being overly distracted, while the M&A Healthcare Advisors team assists in the preparation of sale materials and managing the deal team including the clinical consultant. 

Clinical Due Diligence in Healthcare M&A Transactions

Selling a healthcare business is complex, no matter the size of the business. A clinical consultant plays a crucial role in ensuring the accuracy and completeness of clinical documentation and the efficiency of clinical operations within a company. Their work involves meticulously reviewing clinical operations and patient charts to identify and correct reporting errors or omissions. This may improve reimbursements by accurately reflecting delivered patient care services, enhancing the organization's financial health, and ensuring compliance with industry and regulatory standards.

Clinical documentation accuracy is essential to a successful transaction. Employing the services of an expert clinical consultant means your business will be prepared to meet buyer requirements and can significantly reduce the time it takes to complete the deal by ensuring the patient care is in order.

M&A Healthcare Advisors specializes in the sell-side representation of lower-middle market healthcare companies. Contact us online to set up a time to discuss your M&A goals, hear more about our preferred clinical consultant referrals, and discuss how our experts can help you achieve your desired outcome through experienced transactional guidance.

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