What to look for when buying a medical business?

When you are looking to purchase a medical business or sell one the buyer needs to understand your business.  Typically the more the buyer understands the business, the better assessment they can make and the smoother the transaction will go.   



Here is a typical checklist for that:

SAMPLE DUE DILIGENCE CHECKLIST FOR  MEDICAL BUSINESS ACQUISITION

Background of the Medical Business

1.  Review of Corporate Records – Articles of Incorporation, Operating Agreements, Bylaws, Shareholder Roster, Board Meeting Minutes, Shareholder Agreements,
2.  Organizational structures, departments and employees,

 i.  Organizational Chart

ii.  List of all Employees, with compensation, benefits, and accrued vacation

3.  Financial Statements, audited financial statements going back at least 3 years;

NOTE:  Copies of All bank statements will help the buyer understand and confirm that the numbers are real.

4.  List of hard assets – furniture, fixtures, and equipment,

5.  Copy of all Key contracts, including

a)  Employment Contracts

b) Management Contracts

c) Equipment leases

d)  Vendor Agreements

e)  Maintenance Agreements

f) Software Agreements

g) Payor Contracts (price lists removed)

h)  Support services (billing, computers, and personnel)

NOTE:  Review check register for prior 6 months to confirm all contracts are accounted for.

NOTE:   Confirm that copies of contracts are fully executed

6.  Payor mix
7.  Copy of Check Register for prior 6 months
8.  Real Estate portfolio – list of properties owned and leased
9.  Copy of all insurance policies
10.  Malpractice history and claims history on all licensed professionals going back 10 years
11.  Regulatory Filings,

12.  Copy of license, permits, and certifications of the Medical Business

NOTE:  Also include a copy of all correspondence for the prior 5 years from the licensing/permitting/certification agency

13.  Review of debt instruments/bond covenants,
14.  Current insurance and malpractice history of the Medical Business
15.  Threatened or pending litigation
16.  Staff qualifications
17.  Copies of letters from CMS, OIG, and other government agencies for the prior 5 years

18. All liens, mortgages, bonds, and UCC Lien filings.

 

Here is an informative video seminar on How Mergers and Acquisitions are Done in Healthcare.

Hosted by the South Florida Hospital News and Healthcare Reporter. 

For Personalized Attention Of Legal Counsel

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