Bass, Berry & Sims attorneys Davis Mello and Marc Rigsby outlined how to structure investments in physician practice management (PPM) platforms to avoid regulatory pitfalls in an article for Venture Capital Journal. In the article, the authors examine healthcare-specific issues that drive deal structure and diligencing negotiating compliance in early-stage investments.
Regarding healthcare-specific issues driving deal structure, Davis and Marc discuss corporate practice of medicine (CPOM) rules, fee-splitting restrictions, anti-kick statutes, and self-referral prohibitions. The authors caution PPM platforms to “account for the evolving legislative landscapes in states where they intend to operate” to stay compliant with management services organization (MSO)-professional corporation (PC) rules.
In discussing the diligencing and negotiating compliance in early-state investments, Davis and Marc provided key questions PPM investors should address related to pre-term sheet diligence to identify structural risk early.
In conclusion, the attorneys emphasized that early and systematic attention to regulatory compliance considerations is essential for venture-backed PPM platforms given the potential impact of regulatory missteps to enterprise value.
The full article, “How to structure investments in PPM platforms to avoid regulatory pitfalls,” was published by Venture Capital Journal on December 22 and is available online.