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Considering A Health Care M&A Transaction? 6 Risks You May Overlook

In an industry as heavily regulated as health care, every company needs an edge on compliance. A successful organization will have to identify and wade through layers of legal issues, and when it has, along may come buyout offer. Or perhaps you’re considering buying or merging with another health care organization?

Before you consider your due diligence done, you have to be aware of all the potential issues. Here are 6 outlying issues you may not be taking into account:

Duplication of roles. Most mergers and acquisitions involve some duplication of roles, but in the health care field, you can’t just plan a round of layoffs. Restructuring means ensuring that key patient safety personnel continue to be visible and effective, and that legal compliance doesn’t fall to the wayside.

Emergency planning. Coordinating crisis plans across teams of employees takes advance planning and practice, and if affects crucial issues like staffing during natural disasters and other catastrophes. A larger organization requires at least a full reevaluation of your plans.

Merging your computer systems. Electronic health records and billing systems are complex and subject to privacy regulations. Will the systems communicate, or will you need to bring someone in to teach them how to talk? The big questions are how much cost will be involved and how much cybersecurity risk will result from the merger.

Innovative new technology. New medical devices and personal tech often pay off in the long run, but did you know that using them may temporarily increase the error rate among users? That temporary increase affects real patients.

Patient transport safety. If either organization provides ambulances or other patient transport, you may need to drill down into whether the policies and training need to be reviewed or updated to reflect the addition of the new company.

Contracts with vendors. Each organization’s third-party contracts have been negotiated separately and may be duplicative. Nevertheless, withdrawing from those contracts may not be easy, and a merger or acquisition transfers the transactional risk to the new entity.

Whenever organizations join up to create a new business entity, there are a host of details that must be worked out. In the health care field, the regulatory and litigation risks are even higher. You owe it to yourself to get advice from an attorney experienced in health care law.


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