As if U.S. healthcare organizations didn’t have enough on their plates at the moment with a global pandemic and ensuing crisis to deal with, they also need to ensure the entity management and subsidiary governance checks and balances are kept up to date if they want to be able to keep caring for the community.
Business legal administration, entity management and corporate governance are key to being legally able to operate; it’s the foundation for financial integrity, brand reputation and sustainable performance. It’s where business performance, compliance with laws and regulations, and ethical practices align – all of which is essential to keeping those regulators, stakeholders and the wider community on your side.
Healthcare companies ignore all of this at their peril.
However, healthcare subsidiary governance is not without its challenges. These institutions make up 18% of the U.S. economy, but behind the scenes lies a tangle of complexities. Patient information needs to be handled with the utmost privacy, while the regulatory and legal requirements that need to be met just to open the doors are many and varied.
Regulatory requirements such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA) – which governs the handling of sensitive patient health information, ensuring it’s not disclosed without the patient’s consent or knowledge – demands careful management. Regulators will expect compliance with the Affordable Care Act, too, and recent movements on that law show the constantly changing nature of U.S. healthcare regulation.
And all of this is before the drive to increase efficiency and reduce costs is taken into consideration.
To help tackle those subsidiary governance challenges, best-in-class healthcare organizations are shifting their perception of the legal and compliance function away from a cost center. Instead, they are recognizing that investing in governance and compliance can help to increase the top and bottom line, and also mitigate risks of organizational and reputational risk.
3 Subsidiary Governance Challenges for Regulated Healthcare Organizations
Investing in modern governance and compliance is often best served via smart and secure entity management software.
The corporate record of a healthcare organization contains data at the individual hospital level, and the collective system or institution level – those details such as addresses, where accounting information is stored, director and executive personal details, signatories and authorities, plus how hospitals are interrelated, such as the organizational and ownership structure and how funds flow between entities.
This corporate record needs careful management and control to ensure strategic business decisions are made based using the best available positions, and to ensure you can prove the business is in compliance with regulatory requirements if (or when) auditors or regulators come calling – especially in the areas of managing regulatory compliance such as the HIPAA, M&A activity, and business continuity in this uncertain climate.
1. Business continuity
Let’s start with the obvious: The world as a whole has faced unique and unprecedented challenges in 2020. The uncertainty delivered by COVID-19 caught many businesses by surprise, causing many to try to pivot their operations in a bid for business continuity. That’s not a luxury afforded to many healthcare organizations, though.
As we near the end of this year of pandemic, the healthcare industry in the U.S. is suffering a historic collapse in businesses. Most surgeries were postponed nationwide in mid-March and are only now starting to be rescheduled; physicians stopped seeing all but the sickest of patients in person; stay-at-home orders led people to avoid medical services. As a result, healthcare spending is declining at an unprecedented rate, and industry losses are mounting up.
Many healthcare providers have moved to seeing patients through telephone or virtual meetings, but this in turn brings with it a swathe of data and compliance needs; it’s more complex managing virtual records in accordance with acts like the HIPAA.
Remote working, too, is transforming how legal administrators access the corporate record; they require cloud-based remote access now that they can’t walk over to a filing cabinet in the corner. To keep the wheels spinning and ensure business continuity, healthcare organizations require flexibility.
2. Dealing with mergers and acquisitions
With the healthcare industry under increasing financial pressure, some organizations are turning to hospital merger and acquisition (M&A) activity. Experts expect this to continue or even increase in the current environment, especially as the pandemic markets lead to financial issues for many businesses.
Private equity is also increasingly entering the healthcare M&A market, as are non-healthcare organizations – see Nestle’s acquisition of Aimmune Therapeutics – so companies must be deal-ready at all times.
Healthcare organizations are looking for efficiency, cost control, improved care quality and sustainability. High-value M&A can give systems greater scale to reduce costs, offer additional care services and create a larger footprint in the local market. But as businesses grow and structures become more complex, issues of governance and compliance can negatively impact efficiency of legal operations.
3. Remaining in good standing for regulatory compliance
Finally, regulatory compliance is not a new requirement for healthcare operators (as mentioned, the HIPAA has been around since 1996), but an already challenging process got more difficult with the need for remote working. Suddenly, legal operations teams needed different types of access to the corporate record, and needed to find ways to keep efficient in sign-off and approval processes, organizing board meetings, and so on.
And that’s just the business operations side of things; the government regulators also demand protection for patient privacy, ensuring quality care, and combating fraud. Federal healthcare laws and programs govern what a healthcare organization can and can’t do in the eyes of the law, and penalties for noncompliance can reach millions of dollars.
Those responsible for regulatory compliance – whether financial, care-based or otherwise – must have immediate, real-time access to correct and full operational data in order to spot potential issues before they become dramas. Cloud-based entity management software can provide this while ensuring access is strictly controlled.
How Entity Management Software Streamlines Subsidiary Governance for Healthcare Organizations
Establishing modern governance practices empowers healthcare administrative leaders with the technology, insights and processes required to fuel good subsidiary governance. It helps to get the right information to the right people at the right time so they can ask better questions and make better decisions.
For a lot of organizations, establishing a single source of truth for entity management is a simple step in the right direction. This source of truth brings entity information, data and documents into a centralized location – ideally not a spreadsheet, but a dynamic and customizable cloud-based platform.
To get there, healthcare organizations need to invest in the right technology. Entity management software such as Diligent Entities helps to elevate entity governance in healthcare by establishing a single source of truth for all corporate data. Diligent Entities helps to centralize, manage and effectively structure the corporate record to better ensure compliance, mitigate risk and improve decision making.
Get in touch and request a demo to see how Diligent Entities’ entity management software can help your legal operations team to tackle the entity management challenges faced by US healthcare organizations.