Clinical Due Diligence

C4 Consulting can assist your business with clinical due diligence through our consulting services.

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Clinical Due Diligence Consulting Services

Behavioral health due diligence is a critical process, in all behavioral health business operations and not just in mergers and acquisitions. It involves a thorough examination of the company’s financials, operations, compliance, and clinical performance to assess value, quality of care, operational performance, and risks, and determine a fair purchase price. The due diligence process helps buyers make informed decisions, reduces potential liabilities, and ensures that they offer an assessed and informed transaction that equitably and precisely accounts for the business’s growth opportunity and that values the current state of the business.

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Understanding Clinical Due Diligence

  • Validate and analyze financial performance.
  • Analyze revenue cycle management, perform lift analysis and utilization review, and summarize the key financial metrics
  • Provide detailed reports on financial performance, company trends, and benchmarking comparisons.
  • Assess risk factors unique to behavioral health such as care plan compliance and outcomes.
  • Review clinical documentation, compliance achievements, regulatory requirements, and response to adverse events. 
  • Assess how performance improvement, quality assurance, and clinical outcomes integrate to evidence the value of the business and demonstrate consumer experiences. 
  • Allows for organizational health metrics correlate to financial performance, demonstrating how investments into staff impact consumer experiences.  
  • Provide accurate valuations considering factors like PDGM impact and star ratings. 
  • Look beyond capital structure to assess company management, operational details, and market activity. 
  • Evaluate referral patterns and growth potential in target markets. 
  • Identify untapped opportunities and assess brand loyalty in seemingly saturated markets. 
  • Ensure smooth transitions, focusing on care continuity and staff retention. 
  • Provide interim management, technology consulting, and operational support. 
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How C4 Consulting Can Help With Clinical Due Diligence

While all transactions in behavioral health require an understanding of the compliance requirements as a baseline, measuring financial performance is often the most weighted activity in a typical due diligence exploration.   Yet, the numbers only reveal part of the value. Without diving into clinical content and quality of care assessment, the true value of the business is often underinformed and largely misunderstood.  

Clinical Due Diligence involves examining the services and offerings, through the context of staff’s delivery of care through measurement of in-care and post treatment outcomes.  While an excel spreadsheet of numbers demonstrating revenue capture show the fiscal performance, the context of how the care is delivered isn’t measured. 

To properly conduct clinical due diligence, the following areas and activities should be explored:

  • Review of revenue cycle management systems and documentation to assess precision of asserted claims in financial due diligence.
    • Conduct an initial review and assessment of the medical billing processes, policies, procedures via access to the EHR and any third-party billing platform data and processes.
  • Review and examine types, content, frequency, and quality of billing practices executed via reimbursement data analysis.
    • Review claims and billing data by reviewing patient files for timely filing, unbilled appointments, and any management issues with claims filing.
  • Review and examine billing best practice documentation standards employed.
    • Analyze the denial management process and help formulate a process to reduce further claim denials and improve claim denial management processing outcomes.
  • Review and assess reimbursement data for revenue consistency and term sustainability.
    • Review claims data from at least 24 months prior to the present to determine trends, verification for proper coding, and identifying any revenue missed on claims vs encounter.
  • Review and assess reimbursement data for patterned billing trends consistent with market response shifts in best practices.
    • Analyze Revenue Cycle Management process including days in Account Receivables (AR), clean claims ratio, collection rate, and uncaptured revenue.
  • Provide Client with industry data as it relates to billing, changing market conditions, industry tone, considerations for reimbursement, and forecast changes for Commercial payor mix considerations.
  • Summarize key performance assessments, considerations, and recommendations for further due diligence inquiry and/or future action planning post-acquisition to assist with understanding the systemic claim management process to inform overall revenue cycle management performance and strategic growth considerations. 
  • Review of facility compliance with federal/state statutes and regulations. 
  • Review of policy and procedure manual with emphasis on clinical care and clinical operations. 
  • Review of staffing patterns and job descriptions to ensure compliance with all mandated regulations to meet the needs of patients and the programs and services delivered.
  • Review of all current agreements with consultants or practitioners, including the medical director. 
  • Review of written policies and procedures governing the recruitment, selection, promotion and termination of clinical staff, including employee work rules, disciplinary process, annual job performance evaluation and personnel files.
  • Review of written job descriptions for each staff position which includes definition of duties to be performed, notation of direct supervision, minimum qualifications and the effective/revision date. 
  • Review of staff development and orientation including focus on clinical duties and safety provision management. 
  • Chart review, including initial and ongoing assessments, progress notes and treatment plans.
  • Identification of target population, criteria for admission, readmission, admission process, voluntary and involuntary discharge and referrals.
  • Assessment of clinical best practices.
  • Review of patient rights documents, including patient consent to treatment.
  • Protocols for the clinical supervision of staff and the medical oversight of all prescribers.
  • Emergency response procedures for participants, including protocols around suicidality, homicidality and substance intoxication. 
  • Review of clinical records to evaluate medical necessity, level of care, presence of appropriate documentation, and confirmation that records meet coding and billing standards for contracted payers.
  • Review of any critical incident protocols and any incident investigations and follow up.
  • Review of relevant internal audits and/or compliance audits and monitoring activities to determine the comprehensiveness of the compliance audit plans and appropriateness of audit findings, responses and corrective actions.
  • Review of clinical leadership, including infrastructure and appropriateness for size of agency.
  • Review of admissions, discharges and referrals, with special emphasis on higher levels of care and ensuring patient safety.
  • Policies for the storage, safeguarding, preparation, dispensing and administration of medications (as appropriate).
  • Review and examination of current outcome data measures utilized in current clinical practices
  • Review and examination of accrediting body outcomes data system utilization
  • Exploration for potential outcome data source development opportunities with current clinical practices
  • Present outcome data systems for consideration post-acquisition

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Get Started with C4 Consulting for Clinical Due Diligence Support

As part of C4 Consulting’s range of consulting services, we help behavioral healthcare businesses with clinical due diligence processes. Our team of experts can assist you in gaining critical insight to make informed decisions about the growth of your business. Reach out to our team today to learn more about our consulting services. 

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