Sellers Prepare: Health Care Due Diligence

Originally published in Law360, New York (May 18, 2012, 4:38 PM ET)

Health care transactions present unique due diligence challenges. The buyer must evaluate the seller’s compliance policies and procedures, arrangements with referral sources, patient and payor data, clinical data and compliance with federal and state licensure, certification and reimbursement regulations. The seller will be more attractive to the buyer if due diligence is well-organized, clearly identified and complete.

The seller should provide an organizational chart of its entire affiliate structure. The organizational chart should identify all owners, subsidiaries and joint venture partners, as well as the management team. The seller should identify which affiliates or owners are physicians and all other referral sources within its organization. The seller should deliver all agreements with physicians and other referral sources; any joint venture, partnership or other agreements involving ownership; purchase and sale agreements, subscription agreements and options of all types; all contracts, agreements or arrangements with affiliates; and all employment and consulting agreements.

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