Jeremy Sherer and Thora Johnson share insight on:
- Key due diligence considerations for healthtech companies
- State and federal regulations aimed at virtual care delivery
Thora: Jeremy, what are the top-of-mind issues for you when you're conducting due diligence on a healthtech company that is about to enter a fundraise?
Jeremy: It's a great question and, of course, it depends on the type of healthtech or healthcare technology company. When we're talking about virtual care delivery, there is a playbook. There are really four buckets that we think about.
The first is the corporate practice of medicine and other regulated healthcare professions. That’s about ensuring that the business’ structure is set up in a way that it is going to comply with the laws of those states that have prohibitions against the corporate practice of medicine, or psychology, or speech and language pathology.
The second bucket is from a scope of practice perspective, with virtual care delivery. Ensuring that the clinicians who are providing care in this model are doing so in compliance with the laws of the state where the patient is located. That has to do with issues like state licensure, consent standards, and rules regarding prescribing controlled substances.
After that is fraud and abuse, which is at the heart of the way we’d want to structure any compensation arrangements to ensure we’re not running afoul of federal or state kickback and self-referral laws. We hear about the Stark law a lot, but there are state-level authorities that get at the same sort of conduct. Those are really important because of how serious the consequences can be.
The fourth bucket is health information privacy and security – ensuring compliance with HIPAA and corresponding state laws that address patient privacy considerations.
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