As a buyer you will need to work with experienced medical practice buy and sell lawyer in order to understand a full range of legal, financial, and practical issues that affect the sale. These issues, which require due diligence, include:
- Healthcare Compliance: The buyers of a medical practice need to know what healthcare laws regulations apply to their business. There are many federal and state laws that regulate how business referrals work, how bills can be submitted to private insurers and public health care programs, healthcare privacy laws such as HIPAA, and many other issues. A skilled healthcare lawyer explains the impact of Stark Law, the Anti-Kickback Statute, the False Claims Act, and other federal and state laws and regulations. The medical purchase healthcare lawyer will review with the seller and/or the seller’s attorney the seller’s current compliance plan, any current or likely compliance complaints, and other compliance red flags that need to be addressed. If the compliance issues aren’t addressed before the sale, the physicians who buy the practice may find that they are liable for any open compliance issues.
- Patient notification: There are specific rules that apply to sales such as how and when to notify patients about the sale. Patients should also be informed about their right to access and control their medical records in the event of a sale. Typically, an authorization that also meets HIPAA standards) is required to transfer medical records from one medical practice to another practice. Both the seller and buyer normally want the letter to comply with the legal requirements while also helping the patient to choose the new doctors over other doctors. This type of letter must be carefully drafted so as not to unduly pressure the patient.
- Medical records: Who owns the medical records after the sale and how long those records should be kept – should be part of the agreement of sale.
- Billing and coding: Due diligence requires an understanding how the medical practice enters its bills and billing codes and how those bills are submitted. Bills that are improperly submitted may result in a complaint that the medical practice is violating the federal False Claims Act or a state false claims law. The health care purchase attorney should also review which insurance carriers and medical programs the medical practice works with, how quickly and how much of the bills those insurance carriers and programs pay and any issues that have been raised in the past or currently regarding payment. If the medical practice changes ownership, then Medicare, Medicaid, and other payors will need to be properly notified of the change.
- License requirements: Due diligence requires reviewing the current medical licensure needs of the medical practice and the current status of those licenses.
- The financial records and tax statements: This includes any judgements, liens, or claims. It also includes withholding taxes that may be due, unpaid vacation pay, the status of any worker’s compensation and unemployment compensation accounts, business and medical insurance, and many other financial issues.
- Current working relationships: The working relationship with the staff such as nurses, technicians, receptionists, and others. Just as with patient records, there may be a legal duty (and often a practical requirement) that staff be properly informed of any sale. Employees and contractors should understand what to expect when the medical practice changes ownership hands.
There are many other due diligence matters an experienced health care buy and sell lawyer will review. These include:
- Any managed service organization agreements. There are corporate practice of medicine issues that should be examined – such as whether the MSO can act as a medical director. Generally, this is not allowed in California.
- All open contracts with administrators, supplies, vendors, and third-parties
- All open litigation the medical practice that is selling their business is involved with
- Any open lease or rental agreements
- All open contracts with employees and independent contractors
Not every contract is assignable. Experienced medical practice lawyers will review the existing contracts.
CONTACT PRACTICE ADVISORS
Now that you have read some basic tips and things to consider you are ready to start your practice. After you have found a place that meets your needs you will still need to make on offer, secure financing, sign the practice sale agreement and lease, and complete the purchase. As you can see a lot of important factors go into this decision. Make sure you are being properly advised. Practice Advisors 360 is the nation’s leading dental advisory company. Contact us today at (844) 360-8360 or visit us online at practiceadvisors360.com