An M&A due diligence review is crucial for buyers to ensure a smooth acquisition of a medical practice. It covers standard procedures like a coding audit, operational review, and a review of potential compliance risks. Compass Healthcare Consulting specializes in the regulatory and operational components of the due diligence process. We have supported hundreds of medical practice transactions, including initial platform investments and add-on practice sites.
A due diligence audit offers insights into a medical practice’s financial and operational risk profile. It provides an assessment of future potential revenue and regulatory risks that may need immediate attention while honing in on areas for practice onboarding. By reviewing coding, billing, and clinical documentation; operational regulatory compliance; and patient and worker safety procedures, investors are informed to make a smooth transition post-deal.
Why Is a Due Diligence Audit Necessary?
A due diligence review of coding, billing, and clinical documentation provides a comprehensive understanding of the target practice’s current billing practices to support sound revenue projections.
Specifically, an effective due diligence audit will provide a comparison between the target practice’s coding, billing, and documentation habits and the policies of the investor-owned practice. This is essential information when negotiating the value of a practice and assessing risk.
This process includes a review of compliance with coding and billing regulations and the operational landscape relative to key patient and worker safety requirements.
Coding, Billing, and Clinical Documentation Review
Our team of experienced coding and billing professionals supports every step of the chart audit process to uncover risk issues and revenue opportunities, including:
- Assistance with effective sampling
- Remote retrieval of all claims and records to minimize inconvenience for the target practice
- Review of risk and opportunity in light of the known future coding and billing policies after the transaction
- A practical and understandable report with a revenue impact analysis, complete regulatory references, and interpretation of coding gray areas
As an investor, understanding these elements is essential to ensure a successful transition.
Operational Compliance
Reviewing operational regulatory compliance is a vital part of a due diligence audit because it helps you understand the practice’s adherence to regulations including OSHA and other patient and worker safety elements.
Operational issues pose significant inherent risks, affecting both regulatory and reputational exposure. Ensuring that the practice meets all applicable standards, and identifying immediate areas for improvement, helps protect against future fines, penalties, and reputational damage to the platform’s overall brand. The result is the confidence you need that your investment is secure and that the practice operates within industry regulations.
Asset Inventory
Reviewing the inventory of fixed assets as part of the due diligence process is important for assessing equipment that may need replacing.
Determining the fair market value (FMV) of all existing equipment helps ensure compliance with applicable regulations, particularly when patient referrals to other business units will occur post-deal. This evaluation also aids in anticipating future expenses and ensures that the practice’s operational infrastructure meets your standards and expectations.
Partnering with Compass Healthcare Consulting
Choosing Compass Healthcare Consulting for your coding, billing, and compliance diligence when investing in a medical practice offers several advantages. Our extensive experience in medical practice operations, revenue cycle, and the related aspects of the diligence process equips us to help you make informed decisions.
Our real-world experience in practice operations and due diligence enables us to offer valuable insights to investors and medical practice executives. This allows you to navigate the complexities of mergers and acquisitions with expert guidance and support.
