Regulatory attention heating up in the hospice industry could be impacting buyers’ decisions/how buyers move forward with mergers and acquisitions in the space.
The nuances involved in the regulatory environment around hospice can be difficult to navigate for private equity and venture capital investors that are new to the industry. A rise in federal enforcement activity during the next year is adding more fuel to the regulatory fires in hospice transactions.
A lack of buyer familiarity with the complex myriad of regulatory and payment parameters in hospice can pose risks to how M&A transactions unfold, according to Erin Burns, senior associate at health care law firm Husch Blackwell.
“Hospice transactions are more complicated than just your average business deal,” Burns said in a recent Husch Blackwell podcast. “On the corporate side of things, they can sometimes be 10 steps ahead and have not given thought to the regulatory considerations, which can put some time constraints on your deal and could impact timing of closing and other things.”
Regulators’ gaze on hospice has sharpened in recent years. Hospice organizations are under increasing legal and regulatory scrutiny related to medical necessity complaints under the False Claims Act and the closely related anti-kickback statute. A leading cause of fraud involves hospices billing Medicare for services for which patients were not eligible, according to a 2021 report from Bass, Berry, & Sims.
Some hospices have...
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