Who is allowed to own what
New York generally limits ownership of medical practices to licensed professionals, so many deals involving outside investors use a management services organization that contracts with a professionally owned practice. How that relationship is structured, including fees and control rights, can draw scrutiny if it effectively hands control of clinical decisions to non-licensees. Similar ownership rules apply to some other licensed professions. Facilities licensed by the state often need approval before a change in ownership or control takes effect. These questions shape the structure of the deal itself, not just its paperwork.
Notices and regulatory steps
New York requires certain healthcare entities to notify the Department of Health of a material transaction a set period before it closes. Medicare and Medicaid enrollment has to be updated after a change of ownership, and depending on how the deal is structured, the buyer may take on responsibility for past billing problems. Federal antitrust notification can apply to larger deals. Payer contracts frequently require consent before they can be assigned, and some deals are structured so that the selling entity keeps its contracts and enrollments in place. Building these steps into the timeline from the start avoids a signed agreement that cannot close on schedule.
Diligence and valuation
In healthcare transactions, diligence focuses heavily on billing and coding practices, referral relationships, licensing, and any pending audits or investigations. The purchase price, and compensation for physicians who stay on afterward, should be consistent with fair market value, because payments that appear to reward referrals can raise federal fraud-and-abuse concerns. Restrictive covenants for physicians are an area where state law and federal policy have both been shifting, so their enforceability should be reviewed rather than assumed. In a first meeting we go through the proposed structure, the parties, and the timeline. We then identify the approvals and diligence items most likely to set the pace of closing.
