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Healthcare Credentialing Verification and Merger-Acquisition Due Diligence

Because the trend toward consolidation through mergers and acquisitions is expected to remain strong, we wanted to understand the impact these deals have on a medical staff office (MSO), and more specifically how the combination of two or more privileging and credentialing processes can best be managed. 

To shed some light on this topic, we reached out to Renee Aird Dengler, a senior consultant at Morrisey, A HealthStream Company. Prior to her work at Morrisey, Dengler was director of medical and professional affairs for Advocate Health Care, where she had responsibility for credentialing policy and management of the system’s 12-hospital credentialing verification office (CVO). During her time at the Chicago-area health system, Dengler was deeply involved in the acquisition of six hospitals and the integration of their medical staff offices, which taught her valuable lessons about what to do and what not to do. The topic is complicated enough, regardless of who is merging with whom, or who is acquiring whom. Add to it the complexity of merging databases and reconciling credentialing policies, processes, and people, and you quickly realize a master plan is critical.

Due Diligence: How Are We the Same and How are We Different?

A letter of intent signifies that one party is willing to buy and the other is willing to sell. During this time, contact and communication between the parties is highly regulated by the FTC and other legal and regulatory authorities. While no contact can be made between parties, this is the time that Dengler recommends organizations find out all they can about the potential new partner. An early fact-finding mission will help identify issues that could be potential deal-breakers.

Due Diligence Principles

Due diligence is a way of preventing unnecessary harm to either party involved in a transaction.

  • The care a reasonable person should take before entering into an agreement or a transaction with another party.
  • A comprehensive appraisal of a business undertaken by a prospective buyer to establish its assets and liabilities and evaluate its commercial potential.
  • An investigation or audit of a potential investment to confirm all material facts in regards to a sale.

Negotiate about the Specifics

Due diligence from a legal standpoint can only go so far. But as negotiations progress, both parties are eventually allowed to meet and talk specifics. This is where you learn “the rest of the story.” While the larger transition team is looking for pending lawsuits, debt that has as yet been undisclosed, or other details material to the transaction, the CVO can begin reviewing the following:

  • Medical staff bylaws
  • Medical staff policies and procedures
  • Medical staff department structure
  • Composition and qualifications of the credentialing and medical executive committee
  • Credentialing and privileging standards
  • Systems and software used to manage privileging and credentialing processes

     

Is Everything Documented?

This is also the first opportunity for the CVO transition team to begin looking for things that may not be documented, such as:

  • Exceptions to policies
  • Strengths (and potential weaknesses) of the medical staff office team
  • Meeting structure
  • The culture

The CVO transition team’s primary responsibility during this phase is to identify any real or potential issues that will need to be resolved, and to make the larger transition team aware of any potential problems. Dengler warns “leaving no stone unturned and no question unanswered at this stage is the best way to prevent heartache later in the relationship.”

This post is taken from the Fall 2017 HealthStream Provider Advisor. Download the full issue here.

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