VGM & ASSOCIATESHealthcare MSO

A Comprehensive Compliance Program: Protecting and Validating Your Business

Published in Member Communities on March 25, 2021

Wayne Van Halem

By: Wayne van Halem, President, The van Halem Group

Back in 2018, we discussed the cost-benefit analysis of being proactive vs. reactive when it comes to compliance and risk. We talked about how government entities like the Department of Justice (DOJ) and the Office of Inspector General (OIG) were now assessing companies' compliance programs in the event there is a compliance issue in order to determine the most appropriate course of action to take against the company. Companies that did what reasonably could have been done to avoid the compliance issue would be subject to less severe actions, including entering into a corporate integrity agreement. Meanwhile, companies whose efforts were minimal or negligible would be subject to more severe actions, including civil monetary penalties.

A lot has changed since 2018. Consolidation in the DMEPOS industry remains an ongoing trend. One thing is certain though, the entities looking to acquire DME suppliers, particularly larger entities or private-equity firms, are not interested in bringing on unnecessary risk, or if they do, they are making sure they are protected. We perform a large number of due diligence audits for a variety of entities, and our compliance assessment and claim reports have quickly become one of the first and most important aspects of the due diligence process.

Our compliance assessment and claim reports have quickly become one of the important aspects of the due diligence process.

If our team begins digging into a supplier's claims on behalf of our client and undercover significant issues, there are two things that could potentially happen. The first is that the buyer loses interest and walks away from the deal. Depending on the severity of the issues identified, it is not completely uncommon for this to happen. The second is that the company is devalued significantly because of the risk now associated with the transaction, and the buyer implements protective measures, including a requalification process for patients or escrow accounts to use against future audits or recoupments. Neither of these are positive for the DME supplier, whether they are looking to sell or seeking funding for growth.

Supplier didn't have a comprehensive compliance program

In instances where we uncover these issues, we often also find that the supplier did not have a comprehensive compliance program, had not previously been performing risk assessments or internal audits of any significance, and generally were taken off guard by the results of the review. So, while the purpose of having a comprehensive compliance program remains to protect the business as well the government, it is becoming increasingly clear that it is also an integral part of the valuation of your business.

The government says having a compliance program is a condition of participation. In June 2020, the DOJ updated their 2017 published report, "Evaluation of Corporate Compliance Programs," by identifying three main areas of focus when evaluating a company's compliance program:

Three Areas to Consider When Evaluating a Compliance Program

  1. Is the corporation’s compliance program well-designed?

  2. Is the program being applied earnestly and in good faith? (Is it adequately resourced and empowered to function effectively?)

  3. Does the corporation’s compliance program work in practice?

There should be no surprises

It is an important exercise, even if you have no intentions to sell your business, to perform a due diligence review on your organization. In the event there is an audit by an external agency or you do go through a due diligence audit, there should be no surprises. Spending the time and effort upfront on these activities makes sure that your business will be valued fairly and positively. Doing so earlier on allows you the opportunity to make adjustments and improvements so you are better prepared when and if you are ready to consider other options. Not to mention it makes your business more attractive to customers, business partners, and helps secure future business and investors.

Compliance plays a significant role in the reputation of your brand and business, but also provides certainty and confidence to shareholders and leadership. You want to do what you can to protect the value of your business, regardless of your intentions with it down the road, and having an appropriate compliance program with risk management is key. Contact us for more information on our compliance and claim due diligence services.

VGM Playbook: Forecasting 2021This article was originally featured in the VGM Playbook: 2021  Forecasting. Download your copy of the playbook.


comments powered by Disqus

Get Connected

Stay up-to-date on the latest resources and news provided by VGM & Associates.

Sign Up for Email

From Our Experts

Why Are Respiratory Clinical Outcomes Becoming So Important? thumbnail Why Are Respiratory Clinical Outcomes Becoming So Important? Outcomes has been a buzzword in the industry for several years. But why are outcomes in the home respiratory care space becoming so important? The Importance of Training Techs in the Complex Rehab Industry thumbnail The Importance of Training Techs in the Complex Rehab Industry Worker shortages are prevalent in every sector of the economy; the complex rehab technology (CRT) industry is no exception. ATPs as well as repair technicians are in short supply. But what is being done to help address both of these needs? Training is one of the answers. Oxygen Talk with Ronda Buhrmester - All Things NCD Memos and PHE Waivers thumbnail Oxygen Talk with Ronda Buhrmester - All Things NCD Memos and PHE Waivers We chat with Ronda Buhrmester, Senior Director of Payer Relations and Reimbursement at VGM Government Relations about the changes coming to the oxygen equipment medical policy and how the renewed PHE continues to impact waivers. A Deep Dive into the “Competitive Bidding - A Decade Focused on the Wrong Prize the Case for Medicare Investment in DME in 2021” Study thumbnail A Deep Dive into the “Competitive Bidding - A Decade Focused on the Wrong Prize the Case for Medicare Investment in DME in 2021” Study In today's episode of Industry Matters we talk with Brian Leitten, CEO of Leitten Consulting, John Gallagher, VP VGM Government Relations, and Mark Higley, VP VGM Regulatory Affairs about an updated study, “Competitive Bidding - A Decade Focused on the Wrong Prize the Case for Medicare Investment in DME in 2021." VGM's Jim Walsh Retires as General Counsel thumbnail VGM's Jim Walsh Retires as General Counsel VGM Group, Inc., announced today its general counsel, Jim Walsh, has retired as of December 31, 2021. Walsh will remain involved with VGM as an advisor to the senior leadership team and chairman of the board of directors. Branding Matters. A Lot. To Your Customers and Your Bottom Line thumbnail Branding Matters. A Lot. To Your Customers and Your Bottom Line Your company's brand is the most valuable business asset you own. Branding is the single most important thing you can do to positively affect your revenue. As you begin planning for 2022, give these two things a little love, and your business will grow significantly. Branding Matters. A Lot. To Your Customers and Your Bottom Line thumbnail Branding Matters. A Lot. To Your Customers and Your Bottom Line Your company's brand is the most valuable business asset you own. Branding is the single most important thing you can do to positively affect your revenue. As you begin planning for 2022, give these two things a little love, and your business will grow significantly. Branding Matters. A Lot. To Your Customers and Your Bottom Line thumbnail Branding Matters. A Lot. To Your Customers and Your Bottom Line Your company's brand is the most valuable business asset you own. Branding is the single most important thing you can do to positively affect your revenue. As you begin planning for 2022, give these two things a little love, and your business will grow significantly.

Give your business an advantage over the competition.

Become a Member