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The Heart of Due Diligence – Compliance and Revenue Cycle


Consider: What drives the value of any business? First it’s revenue and second it’s the ability to derive the revenue effectively, and third, the risk of maintaining that stream of income.


The trend toward consolidation of health care entities continues. A purchaser may have significant or very little knowledge in the type of services provided by the Target organization. Investors may require an independent evaluation of revenue compliance. The finer compliance points of the Target’s business may need to be evaluated and explained. Consultants that specialize in determining the Target’s valuation generally have a limited understanding of the inherent and often hidden risks in supporting the on-going revenue level.


In any acquisition, there is a valuation of the entity – whether a medical practice, hospital, home agency, SNF, dental or other medical entity/organization. The integrity of the EBITDA (earnings before interest, taxes, depreciation and amortization) is highly dependent on whether the revenue is presented as based on compliant practice. The risk is both historical and ongoing since in the acquisition the purchaser takes on the current practices and philosophy unless changes are spelled out as part of the acquisition process. These same factors may negatively impact the value of the Target. Target management may not even be aware of some potential risks.


Compliance has changed. It’s no longer whether the code is the right one supported by a medical record. It is all about whether the invoice submitted is a compliant claim based on many regulations and requirements.


What Can Kohler HealthCare Do?


Our goal is to identify any existing conditions which may result in paybacks, penalties or Government intervention. Although we understand the component of valuing a health care business, our focus and strength is on whether the Target organization is compliant with a rigorous platform to assure that all regulations are followed, all revenues captured correctly, and that every invoice for service is compliant.


We prevent surprises through the following evaluations:

  • Balanced Analytical Review and Compliance Report (BARCR)
  • Improve Coding Accuracy
  • Documentation Integrity
  • Denials Prevention and Management
  • Overall Revenue Cycle and Compliance Program Sufficiency

KOHLER HealthCare Consulting, Inc. (KHC)
has been a leader in compliance, revenue cycle and coding. Understanding the compliance within revenue cycle/production is based on both the experience gained by working in the industry as well as continued education and research:


We understand operational compliance and can evaluate the gap between what is done versus what is written. We understand the compliance issues that may jeopardize the future stream of income. To accomplish this, we match experienced consultants to the type of providers or services being evaluated.


Health system consolidation was active well before the passing of the Affordable Care Act (ACA). Strategic acquisitions may be driven by market share goals, physician alignment or physician recruitment and retention plans, or population health management objectives.


Our team provides support in analyzing data, conducting interviews and reviewing policies, procedures and activities to provide a focused review of compliance risk areas and potential revenue impact. The approach is “I hear you, now let me see the results.” The results can then be utilized as leverage to negotiate the deal, to develop plans for the acquisition pre and post acquisition and to understand compliance requirements.


KHC’s due diligence services reduce acquisition risk while increasing negotiation leverage, understanding that your professionally performed valuation is contingent on the integrity of the revenue stream.


Contact us to help

put the pieces together

Office: (410) 461 - 5116

Charlotte Kohler: (443) 956 - 1434


Collaboration + Knowledge = Sustainable Results

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