With healthcare M&A activity predicted to be strong in 2020, it is critical for acquirers to maintain focus on a basic element of due diligence – coding and compliance – to ensure they get what they pay for.
The impact of problems in this area that are not fully understood, particularly those that might draw the attention of regulators (Centers for Medicare and Medicaid Services, Office of Investigative General, etc.), can be so unpredictable that it becomes quite difficult to adjust the sale price to offset the risk as a deal moves towards closing.
As a result, the acquirer may consider conducting due diligence as it pertains to provider coding patterns and compliance program adherence before investing in a quality of earnings assessment.
Naturally, there are a number of elements in a coding and compliance review, but here are five key areas that our team at LBMC spotlights when working on deals involving healthcare providers: