Healthcare mergers and acquisitions transactions are subject to a range of federal and state regulations designed to prevent providers from gaining an unfair advantage over the government or patients. These regulations include the False Claims Act, Anti-Kickback Statute, Physicians Self-Referral Law, Exclusion Authorities, and Civil Monetary Penalties Law. Violations of these regulations can result in significant fines and civil and criminal charges.
Due diligence in healthcare M&A transactions must include a review of physician contracts and financial relationships, an evaluation of claims and billing systems for compliance with federal regulations, and an assessment of state restrictions on physician employment. In addition, healthcare M&A transactions must comply with antitrust laws, privacy and data security regulations, and licensure and certification requirements.
The Federal Trade Commission (FTC) and the Department of Justice (DOJ) closely scrutinize healthcare M&A transactions involving consolidation or affiliation. In 2017, the DOJ denied the merger between Aetna Inc. and Humana Inc. due to competition concerns. The DOJ generally favors vertical mergers when parties are willing to divest potential antitrust risks.
Post-transaction integration in healthcare M&A requires changes to ensure compliance with regulations, facilitate the integration of facilities, and create long-term synergy. These changes include updating policies and procedures, reorganizing the management structure, and integrating technology systems.
Healthcare Mergers & Acquisitions Execution
When executing healthcare M&A transactions, it is crucial to consider potential antitrust risks, as well as privacy and data security laws. The FTC and DOJ closely examine consolidation and affiliation transactions. The DOJ may require divestitures to address potential competition concerns.
To ensure compliance with federal regulations such as the False Claims Act, Anti-Kickback Statute, and Stark Law, as well as state-specific corporate practice of medicine laws, thorough due diligence, is necessary. This includes analyzing physician contracts and financial ties, claims and billing systems, and compliance with licensure and certification requirements.
In conclusion, healthcare M&A transactions are subject to a complex web of federal and state regulations. Companies must conduct comprehensive due diligence and make post-transaction adjustments to ensure compliance and enable the integration for long-term success.
 False Claims Act [31 U.S.C. § § 3729-3733]
 Anti-Kickback Statute [42 U.S.C. § 1320a-7b(b)]
 Physician Self-Referral Law [42 U.S.C. § 1395nn]
 Exclusion Statute [42 U.S.C. § 1320a-7]
 Painless Parker v. Board of Dental Examiners, 216 Cal. 285, 14 P.2d 67 (1932
 U.S v Aetna Inc, https://www.justice.gov/opa/press-release/file/930356/download
 29 U.S. Code § 2102 – Notice required before plant closings and mass layoffs
 29 U.S. Code § 2104(a)
 29 U.S. Code § 2102(a)3
 Duff & Phelps, Healthcare Services Sector Update Dec. 2017