Regulatory Due Diligence

Client Situation

A large non-profit hospital located in the Midwest was losing market share on its laboratory services to a commercial for-profit laboratory and was considering whether to spin off the hospital laboratory into a separate stand-alone entity, joint venture with a commercial laboratory or maintain the status quo. McAllister Consulting was engaged to work with the hospital’s financial planners to determine the best structure from an operational standpoint.

Core Competency: Regulatory, Financial Planning & Strategic Plan Development

Consulting Objectives:

• Identify all possible alternative scenarios
• Determine the optimum structure from both a regulatory compliance perspective as well as an operational perspective based on senior management’s risk comfort level

Approach:

• Research and identify all applicable compliance considerations for each alternative scenario, including IRS regulations governing tax exempt organizations.
• Rank the scenarios from those representing the least compliance risk to those representing the greatest.
• Conduct a financial feasibility analysis in conjunction with the hospital’s financial planners to determine the best structure from an operational standpoint.

Outcomes:

• Senior Management was able to submit a well-reasoned recommendation to the hospital’s Board of Directors to maintain the status quo, but develop a more aggressive marketing strategy and more competitive pricing.

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