Bass, Berry & Sims attorneys Krista Cooper and Craig Stewart authored an article that was published by ABA Health eSource, part of the American Bar Association’s (ABA) Health Law Section, which offered considerations for health systems acquiring physician practices.
Krista and Craig examined the current healthcare business environment and its impact on the favorability of health system acquisitions of physician practices. While the business goals attendant to these transactions are attractive, it is essential for acquiring healthcare systems to mitigate risk by ensuring their physician practice targets will allow the systems to maintain an acceptable risk profile.
Given the specific structures of these acquisitions, key areas of risk for which due diligence should be especially thorough include billing and coding practices, as well as malpractice and other litigation history.
“As the industry continues to operate in a period of uncertainty about the direction of the healthcare regulatory environment, counsel for an acquiring health system would be well served by reviewing the scope of the diligence they conduct when the health system proposes to acquire physician practices and filling in any gaps,” Krista and Craig recommended. “While some historic liabilities of acquisition targets are not likely to become a material risk to an acquiring health system, given the nature and structure of practice acquisitions, health systems and their counsel should continue to thoughtfully and thoroughly review arrangements they may acquire, continuously monitor coding practices, and always maintain an effective compliance program.”
The full article, “Considerations for Health Systems Acquiring Physician Practices,” was published by the ABA Health eSource on February 13 and is available online (subscription required).