When acquiring a healthcare business, it’s crucial to carefully check how doctors and providers are paid, regardless of whether the transaction is a stock or asset purchase. As Nelson Mullins attorney Bob Wade explains in a July 2024 Compliance Today article, conducting due diligence on the front-end can ensure there are no financial surprises lurking post-transaction.

"If thorough due diligence by well-qualified legal counsel is not performed as part of a healthcare transaction, the acquiring entity may assume significant liability either for the seller’s past actions or its own actions if it continues noncompliant arrangements post-transaction. Obviously, there is a cost to the due diligence process in terms of time and money. However, performing due diligence can help acquiring entities avoid substantial financial harm due to the significant fines and penalties under the CMP, Stark Law, AKS, and FCA."

Wade outlined some of the key risks, such as running afoul the Civil Monetary Penalties Law (CMP), Physician Self-Referral Law (Stark Law), Anti-Kickback Statute (AKS), and potentially the False Claims Act (FCA). To help avoid these costly outcomes, he also offered insight on what should go into the due diligence process, measures for compliance program effectiveness and considerations for different financial arrangements.

Read the full article here.