Healthcare M&A Attorney for Practice Purchases and Sales
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A healthcare transaction can turn on the purchase agreement, the target's contracts and the regulatory steps needed to operate after closing. Acquisition Stars helps buyers and sellers with the M&A work and coordinates with independent healthcare regulatory counsel on regulatory questions. Attorney Alex Lubyansky leads the firm's M&A engagements.
Plan the transaction around the practice
The first step is to understand what is being acquired or sold: the operating entity, selected assets, contracts, equipment and other interests. The parties can then identify what must be reviewed, which approvals or notices may apply, and how unresolved questions affect the proposed closing date.
For a buyer, diligence helps connect the price and purchase terms to the information available about the target. For a seller, preparing the documents and identifying issues early can make the negotiation more focused. The appropriate scope depends on the practice and the proposed deal.
Coordinate regulatory review with the deal
Physician financial relationships
Compensation and other financial arrangements deserve review when a transaction involves physician referrals. CMS explains the physician self-referral law, including its restrictions on certain Medicare referrals and applicable exceptions. Regulatory counsel can assess the actual arrangements and the consequences for deal documents and transition planning. See our guide to Stark Law and anti-kickback diligence.
Start by identifying the physicians, entities and financial relationships involved. Gather the relevant agreements, amendments and records showing what services were provided and how compensation was paid. Counsel can compare the written terms with the arrangement in practice and identify which facts are still needed. An employment agreement, lease or management agreement should be evaluated on its own terms rather than assumed to satisfy a rule because of its title.
If the transaction will change a physician's role or compensation, describe the proposed post-closing arrangement to regulatory counsel while the purchase terms are being developed. The review can inform the agreement and transition checklist. Keep an unresolved question on the deal team's issue list with an owner and a next step, so the parties can decide what must be resolved before closing and what work will continue afterward.
Review contracts and closing dependencies
Build a list of material contracts, including leases, payer agreements and management arrangements. Examine their terms for notice, consent and assignment requirements, and ask the relevant parties or counsel to resolve uncertain provisions. The resulting list can inform the agreement, the closing checklist and the transition plan.
Licensing, enrollment and other requirements depend on the jurisdiction, provider and transaction. Regulatory counsel can identify the applicable agencies and the steps to address before or after closing. A closing schedule should reflect those findings instead of assuming every approval follows the same timetable.
Identify the license holder and proposed change
List the licenses associated with each relevant entity and location, then ask counsel to compare the proposed transaction with the governing ownership and application rules. For example, Minnesota Statutes section 245A.043 specifies that licenses issued under that chapter are valid for the identified holder and premises and cannot be transferred or assigned. It also describes changes in ownership requiring a new application, subject to its provisions and exceptions. Other licenses and states may have different rules.
For each license, record the responsible agency, the proposed transaction, the information the agency needs and who will contact it. Ask regulatory counsel which steps depend on the final deal structure and which can begin during diligence. This creates a practical record for the purchase agreement and closing schedule without assuming that a business entity's continued existence resolves every licensing question.
Put the findings into the purchase agreement
Diligence informs the negotiation of representations, covenants, closing conditions and remedies. For example, if a material contract requires consent, the parties can address responsibility for requesting it and the consequences if it is unavailable. Known issues can be addressed in the documents based on the parties' negotiation and advice.
Acquisition Stars handles the M&A side of the transaction and works with independent healthcare regulatory counsel on regulatory analysis. We explain who would handle your matter before any introduction, and you decide whether to proceed.
Prepare for the transition
A closing checklist brings together signed documents, required consents, notifications and the responsibilities each party has agreed to perform. The transition plan should identify who will follow up on outstanding items and how the parties will communicate about them. The plan should be tailored after the relevant legal and operational questions have been reviewed.
Build a diligence request around the transaction
Start with the organization and its agreements
Ask for the organizational records, ownership information and a list of the entities involved in the proposed deal. Compare those materials with the structure described in the letter of intent. For an asset purchase, identify which assets and contracts the buyer expects to acquire. For an equity purchase, identify the interests being sold and the entity that will remain in place. The document request should be tailored to the facts rather than treated as a substitute for reviewing the actual business.
Request the material agreements that support operations, including leases, payer contracts, vendor agreements and arrangements with clinicians. Review the parties, term, termination rights and any provisions addressing assignment, notice or consent. An issue list can record the relevant contract, the provision, the person responsible for follow-up and its effect on the proposed closing schedule. That list gives the deal team a way to track open questions as documents are negotiated.
Separate known issues from open questions
A diligence finding can affect several parts of a transaction. A missing document may call for a request to the seller; an identified issue may require advice from regulatory counsel; a contract dependency may affect a closing condition. Record what the team has actually received and what remains unanswered. Avoid presenting an incomplete review as a conclusion that the target has no exposure.
For a seller, assembling records and identifying the people who can answer questions can help the parties work through requests. For a buyer, prioritizing material questions can help focus the agreement negotiation. Counsel should consider confidentiality and the permitted handling of sensitive information before records are shared.
Identify the enrollment decision before setting a closing date
Confirm the provider and the transaction
List each enrolled provider or supplier involved in the transaction and identify the legal entity, ownership and proposed change. Then ask healthcare regulatory counsel and the applicable Medicare Administrative Contractor which enrollment process and reporting requirements apply. A stock transfer, an asset transaction and a merger may raise different questions; the specific facts and governing requirements matter.
Under 42 CFR 489.18, a transfer of corporate stock alone is not a change of ownership under that section, although separate reporting requirements may apply. For a qualifying change of ownership under section 489.18, the provider agreement is generally assigned to the new owner. The regulation describes the effect of assignment and the applicable terms. CMS guidance explains that a new owner may reject assignment and the facility then seeks participation as an initial applicant. The team should examine that choice and its consequences with regulatory counsel, including potential obligations and the ability to receive payment.
Schedule filings and resolve uncertainty
Put the applicable filings, responsible parties and anticipated review steps on the closing checklist. CMS enrollment guidance identifies reporting requirements for covered providers and suppliers; counsel should confirm the relevant event and deadline for the particular provider. A general description of a deal as a stock or asset purchase does not answer every enrollment question.
Medicaid participation calls for its own analysis. CMS provides state-facing Medicaid provider resources; the team should also consult the relevant state program and regulatory counsel about the provider and transaction. Keep payer contract issues on the same timeline so that a legal closing date is considered alongside the operational steps needed afterward.
Review sensitive information before it changes hands
Limit the diligence request to what the team needs
Healthcare diligence can involve records about patients and employees as well as commercial information. Work with counsel to decide what information is needed for each question, who may receive it and what safeguards should apply. Where a question can be answered through a summary or a redacted document, discuss that approach with counsel before requesting detailed records. The applicable rules and the parties' agreements determine what may be disclosed.
HHS explains which entities and business associates are subject to HIPAA. Its business associate guidance describes relevant agreements and responsibilities. Regulatory counsel can assess whether a particular arrangement or transfer of information triggers those requirements and whether existing documents need changes.
Carry open privacy work into the transition plan
Ask for the target's documented risk analysis and information about known incidents, investigations and remediation. Review the scope and date of the materials with regulatory counsel, and identify questions that remain open. HHS guidance on risk analysis explains the assessment of risks to electronic protected health information. The existence of a document alone does not establish compliance; the content and circumstances need review.
If the parties plan changes to systems or service providers, list the decisions and responsibilities that will need attention during the transition. Consider how information will be accessed, what arrangements govern service providers and who will follow up on unresolved diligence findings. Document the plan in a form the parties can use alongside the purchase agreement and closing checklist.
Frequently asked questions
How does Medicare enrollment affect a healthcare acquisition?
The answer depends on the provider type and transaction. A corporate stock transfer alone is not a change of ownership under 42 CFR 489.18, though enrollment reporting or other requirements may apply. For a qualifying change of ownership under that section, the existing agreement is generally assigned unless the new owner rejects assignment. Ask healthcare regulatory counsel and the Medicare Administrative Contractor to confirm the filings, timing and billing implications for the transaction.
What should a buyer review for HIPAA?
Review how the target protects health information, its documented security risk analysis, relevant business associate agreements and any reported incidents. Healthcare regulatory counsel can assess applicable requirements and help plan diligence and transition steps.
Can a management company buy a medical practice?
The answer depends on the state, the licensed profession and the proposed structure. Healthcare regulatory counsel should review ownership, control and management arrangements under the applicable rules before the parties commit to a structure.
Who handles healthcare regulatory questions?
Acquisition Stars works with independent healthcare regulatory counsel on regulatory questions. We explain who would handle your matter before an introduction, and you decide whether to proceed.
Discuss your healthcare transaction
Share the proposed transaction and the questions you need to resolve. Acquisition Stars will assess the M&A engagement and discuss coordination with healthcare regulatory counsel.