Health care companies in the United States function within an intricate regulatory scheme which can pose significant risks in health care transactions. Counsel to health care companies (and their lenders and equity sponsors) must be prepared for potential transaction traps to avoid significant exposure.

In addition to the typical pitfalls and traps of corporate deals, health care transactions give rise to further risks related to compliance with the specific laws and regulations that govern this complex industry. Health care businesses in the United States function within an intricate regulatory scheme, the requirements of which are brought to the fore when contemplating a transaction. The role of these issues is of increasing importance as the United States experiences a notable increase in health care provider merger and acquisition (M&A) activity, which some have attributed to the passage of health care reform legislation and related alignment initiatives. Failure to fully comprehend the scope of these matters in health care business transactions is a recipe for potential deal disaster.

The following represent but five of the many pitfalls counsel and business leaders may encounter in health care transactions.