The client
A potential purchaser of a healthcare organisation.
Challenge
Our client was in the early stages of agreeing the purchase of a large healthcare organisation. This was the client’s first acquisition in the UK healthcare sector and so had limited experience with industry standards in what is an inherently risky market.
The focus of traditional due diligence on health and care organisations does not fully reflect the risks of the industry. Our client was committed to becoming a responsible and quality focused owner and acknowledged that financially driven due diligence can mask serious underlying problems in an organisation. The fallout from incidents becoming public can have wide-ranging negative effects on the profitability of the business.
Scope
Verita’s mandate was to conduct a rapid diagnostic assessment of the target organisation in order to establish a clear opinion of the strengths and weaknesses of its clinical governance. We reviewed the structures and processes in place to provide executive oversight on clinical operations, risks, and the nature and quality of the information provided to senior management.
Given the discreet nature of M&A transactions, our team engaged the organisation at the executive level and through the analysis of documentary evidence.
Methodology
A multi-disciplinary team of Verita consultants and associates consisting of Ed Marsden, Peter Killwick, Chris Brougham, David Scott and Nicola Salmon undertook the work.
Verita used a specialist model of benchmarking healthcare organisations as a starting point to critically appraise performance or practice. Our benchmarking process can identify issues with efficiency, performance and safety as well as provide a ‘line in the sand’ against which to assess the impact of changes to the service.
In conducting our review, Verita assessed the organisation’s internal papers, external audits and reviews of the business and oral evidence against our clinical governance assessment tool. The tool is designed to review organisations against seven domains:
- Strategy
- Capability and culture
- Patient safety
- Structures and processes
- Patient experience
- Workforce
- Safety culture
Each domain contained an overall metric/ positioning question as well as a series of industry standard benchmarks. Our benchmarks are based on current published ‘best practice’ set by the NHS in England and other UK regulators.
Process
The organisation provided documents relevant to clinical governance to a shared due diligence portal. Verita provided input to our client to request further documentation specific to clinical governance. These included:
- policies and processes
- board packs
- external and internal audits
- incident reports and details of recent serious incident investigations
- clinical governance strategy, structure and terms of reference for committees
- job descriptions of clinical governance team
- HR policies
We have also used external data from the National Reporting and Learning System (NRLS) as an external comparator.
We conducted interviews with five members of the senior team including the chief executive. The purpose of these interviews was to test the knowledge and understanding of the senior management team of issues relating to clinical governance.
We formulated the most pertinent questions to ask based around the document review and shared these questions with our client in advance of the meetings.
We worked collaboratively with others involved in the due diligence process to ensure we did not duplicate workloads and to streamline our efforts.
Outcome
We produced a narrative benchmarked report to highlight any risks and concerns to the potential purchaser, along with recommendations for improving the organisation and an assessment of how difficult or costly these improvements would be to implement. Our assessment was informed by Verita’s wealth of experience in the health and cares sectors which enabled us to identify both excellence and areas with issues, and to suggest proportionate, tested actions to mitigate weaknesses in a practical and commercially-minded fashion.
Our assessment of the healthcare organisation found few areas of concern and our client went on to become the successful bidder and new owner for the organisation. Our client told us that our report was thorough, balanced and gave them comfort about acquiring the healthcare organisation. Our advice had allowed the client to make a better case for the purchase to their insurers. They also told us that our approach made clinical governance understandable and they had a better grasp of the issues in the management and oversight of a healthcare organisation as a result.