Issue link: https://read.dmtmag.com/i/50323
14 Smart Talk MERGERS & ACQUISITIONS Protect yourself from take backs BY STEPHANIE MORGAN GREENE Q. Do I need to worry about auditing the seller's paperwork for claims that occurred before I purchased the company if I have an indemnification clause? A. Generally, indemnification claus- es are designed to protect the buyer from a take back or recoupment based upon claims filed before the buyer purchased the com- pany. I strongly recommend that every buyer consider including an indemnification clause in the agree- ment. But, in today's environment of ZPIC audits and 100% prepay- ment reviews, the indemnification clause alone may not be enough. Every buyer should review and verify all pre-sale claim compli- ance filed by the seller. Previous claims can have a direct impact on a buyer's on-going cash flow. Many prepayment reviews result from the ZPIC auditor first completing a post-payment analysis of previously submitted and paid claims. These are likely claims filed by the seller WWW.HMENEWS.COM / JANUARY 2012 / HME NEWS long before you purchased the company. Now, because of the policies and procedures of the previous owner, your cash flow has slowed significantly. In a ZPIC prepayment review, even a good claim can take up to four months from the date it is filed until you receive payment. The buyer did not provide and bill past claims, but it will suffer slow cash flow. And be warned, most indemnification clauses do not protect against this type of cash flow problem. It is important to realize that even with the most compliant internal systems, a new buyer could easily face six or more months of slow to non-existent cash flow. HME Stephanie Morgan Greene is general counsel for Harrington Management Group, also known as The Audit Team. Reach her at sgreene@theauditteam. com or 888-833-3478. BUSINESS ASSETS Identify asset, expected return BY RYAN RUSKIN Meters, meters, everywhere but no support in sight…until now CALL US TODAY to learn how we can specialize a program to help you gain and retain customers and increase your margins. 1.800.848.0614 www.glucocardusa.com Affordably priced meter system • Proven accuracy1 • Ongoing customized support • Specialized programs to help you grow and retain business 1. Data on fi le Low Cost Highly Accurate Easy to Use Members of www.glucocardusa.com ARKRAY USA, Inc. Minneapolis, MN 55439 www.arkrayusa.com Nov. 2011 Retain your customers with our Patient Wellness Program • Starter Kit • Logbook • Smart Servings Guide • Delicious recipes Q. What type of marketing platform would I use to leverage an identified intangible business asset? A. Each marketing platform used for organic growth within your organization should be customized to the potential revenue gain. As you know, there are multiple medi- ums of marketing including direct mail, call center utilization and specialized retail sales platforms. To determine the best marketing source to capture the largest return on your investment you must first complete a mini business model identifying the targeted intangible assets to be used and your expected return. Let's start with using a current customer database as the identi- fied intangible asset. The next step in the process would be to deter- mine what product or products you would like to sell to this database. You would then need to determine a gross profit margin based on esti- mated volume sales. Finally, you would need to determine what the operational impact cost would be in this process including billing, customer service and delivery. This would bring you to a point where you could determine what would be the potential net profit per patient not including your market- ing costs. Using this number you would then conduct an analysis of marketing techniques and decide whether the marketing expense could produce enough return to justify at least a pilot program. The more information you can extract about the database you would be leveraging, the better the likelihood of success. Informa- tion allows you to target individual patient categories and geographic areas, allowing your company to closer match products and servic- es a customer may need as well as identify operational costs based on shipping and delivery. HME Ryan Ruskin is an independent con- sultant and attorney. Reach him at ryanm17r@yahoo.com or 772-528-4818.