As we begin 2024, it’s a good time to reflect on the valuable insights we gained from the previous year. Last year I attended the 2023 Joint Annual Compliance and Internal Audit Conference, held by the Healthcare Financial Management Association (HFMA) MA-RI Chapter and the New England Internal Auditors (NEHIA) in Mystic Marriott in Groton, CT. The conference provided a great opportunity to learn about key healthcare compliance and audit topics from a diverse group of healthcare leaders within the industry.
One presentation, “Post Acquisition Integration: The Real Focus and Challenge for Compliance,” was especially engaging and relevant as experts forecast a busy year for healthcare M&A.
During the session, participants had a chance to hear from two speakers, Dhara Satija, the HFMA MA-RI Compliance Committee Co-Chair and Director of Life Sciences and Healthcare Consulting at Paul Hastings LLP, and Patti Ariel, Interim Chief Compliance Officer at WMC Health Network. Their presentation highlighted recent regulatory compliance expectations and Mergers and Acquisitions (M&A) guidance, current industry healthcare transaction trends, compliance due diligence basics, and integration fundamentals.
Below are the key takeaways from this session:
- The session started with a refresher on the Office of Inspector General’s (OIG) ‘seven elements’ and the Department of Justice’s (DOJ) ‘hallmarks’ of an effective compliance program. The expectation from both the DOJ and OIG is that companies build compliance programs reflecting these seven elements, including tailoring them to their company’s specific risk profile. A company’s approach to Merger and Acquisitions is an expected element of an effective compliance program, as it is an opportunity to prevent and detect wrongdoing prior to an integration.
- Recent DOJ guidance specific to M&A was then highlighted. On October 4, 2023, Deputy Attorney General Lisa Monaco introduced a new M&A Safe Harbor Policy under the DOJ. This policy was part of her discussion emphasizing heightened enforcement against national security-related corporate crimes and the DOJ’s push to encourage more robust compliance endeavors. The DOJ plans to offer safe harbor to acquiring firms that uncover and report criminal activities while undergoing the M&A process. This initiative aims to encourage more voluntary self-disclosures, fostering transparency and accountability. Specifically, in the context of M&A activities, companies must (1) “disclose misconduct discovered at the acquired entity [to DOJ] within six months from the date of closing” and (2) “fully remediate the misconduct” within one year from the date of closing to qualify for the Safe Harbor.
- Current industry trends were discussed, focusing on the prevalence of private equity deals, which totaled over $1 trillion across more than 8,000 deals in the last decade. Additionally, healthcare service deal volumes showed resilience through May 2023. However, deal values experienced a more significant decline. That being said, Megadeals, defined as deals valued at $5 billion or greater, encompassed over 50% of the announced deal value in the 12 months ending May 15, 2023.
- Emphasis was placed on the significance of performing due diligence in M&A, outlining key benefits. Thoroughly assessing and evaluating the risks and opportunities associated with a particular business or investment helps with understanding a company’s risk profile, identifying areas of concern, informing valuations and negotiations, aiding in post-integration, protecting reputation, and minimizing business disruptions and financial penalties.
- The presenters also emphasized the fundamentals of a successful integration, aiming to maximize cooperation while minimizing disruptions. This includes establishing effective governance, aligning cultures, maintaining consistent communication, monitoring both progress and risks, understanding requirements, and prioritizing integration activities.
- The discussion continued to explore the role of compliance in the M&A process, underlining its importance in playing a multifaceted role within an organization’s integration framework. Compliance should act as a guiding force, navigating the relationship between risk, business strategy, and needs. Performing continuous compliance monitoring, audits, investigations, and risk assessments will help identify areas for improvement or increased efficiency. It will also provide vital information that equips both Management and the Board with essential insights to effectively prioritize and carry out post-acquisition duties.
- Patti and Dhara ended the session by discussing best practices for implementing and integrating compliance activities, while also highlighting common pitfalls to avoid.
- The HFMA website has the full presentation along with all the other conferences materials here.
Please save the date for the Joint HFMA/NEHIA 2024 Compliance & Internal Audit Conference: Summary – HFMA / NEHIA Joint Program: 2024 Compliance & Internal Audit Conference (cvent.com)
The New England Healthcare Internal Auditors (NEHIA) and the Healthcare Financial Management Association (HFMA) MA-RI Chapter are excited to again host a 3-day educational conference bringing expert presenters from healthcare compliance, privacy, security, and of course, internal auditing. Each presentation is an opportunity for presenters to share their knowledge with all levels of conference attendees and for conference attendees to listen and learn best practices from some of the industry’s best experts. In addition to providing low cost, high quality educational sessions, NEHIA and HFMA MA-RI will work diligently to connect conference members with each other to create a strong community of healthcare professionals in New England.
Wed., December 4 – 7:15 AM to 5:00 PM
Thurs., December 5 – 7:30 AM to 6:30 PM
Fri., December 6 – 7:30 AM to 1:00 PM