How to reduce corruption risk in foreign healthcare acquisitions

With the U.S Department of Justice and the Securities Exchange Commission setting targets on healthcare companies for anti-corruption enforcement, organizations looking to acquire healthcare entities operating abroad should take steps to prevent potential corruption, according to a newly released article from law firm Mintz Levin.

Healthcare companies continue to partner with providers doing business in emerging markets including China, Venezuela and Brazil, with healthcare organizations making more than 1,000 of such transactions in 2011 alone, according to the report published in the March 2013 issue of Compliance Today.

Yet with more business abroad comes investigations and Foreign Corrupt Practices Act (FCPA) enforcement actions against the U.S. healthcare industry, and therefore, the need to conduct corruption-related due diligence, the report noted.

The law firm recommends U.S. firms review potential relationships between the target healthcare company and employees of foreign governments. For example, if the target company requires regulatory approvals or licenses, look into how it obtained and renewed those approvals and licenses.

Then perform a second-level review of all contractual relationships with distributors and sales agents, as well with consultants and any third-party intermediaries for potential corruption risk, the report noted.

Once a transaction is complete, performing anti-corruption training for employees of the acquired company and its intermediaries and business partners will help assimilate them into the U.S. firm's corporate culture of compliance, the report noted.

Such recommendations would prove helpful to major U.S. health systems with international expansion plans, such as the Cleveland Clinic, which is looking to hire about 2,500 nurses and allied health professionals and 175 staff doctors to work at its 360-bed hospital under construction in Abu Dhabi. Last year, the Clinic opened an affiliate office in the Kingdom of Saudi Arabia.

The University of Pittsburgh Medical Center also has been looking into partnerships with academic hospitals or private healthcare hospitals in China and South Korea.

To learn more:
- here's the article and report (.pdf)