Strengthening Healthcare Deals with Financial Diligence and Compliance

Summary

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Becker’s Healthcare Podcast

Episode: Strengthening Healthcare Deals with Financial Diligence and Compliance
Date: September 23, 2025
Guests:

• Chad Zoratek, Managing Director, VMG Health
• Pam D’Apuzzo, Managing Director, VMG Health
• Host: Scott Becker

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Episode Overview

This episode explores the unique complexities and essential best practices in healthcare deal-making, specifically the role of comprehensive diligence—financial and compliance—in ensuring successful investments. Chad Zoratek and Pam D’Apuzzo from VMG Health share their expertise on why healthcare deals are different, how to approach diligence as a tool for value creation (not just risk mitigation), and why integrating financial, coding, and compliance diligence yields a more accurate, actionable understanding of potential investments.

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Key Discussion Points and Insights

1. Healthcare’s Complexity in Diligence

Timestamp: 02:28—04:15

• Heavy Regulation Sets Healthcare Apart:
  • Pam highlights the frameworks of federal and state regulations (CMS, OIG, HIPAA, commercial payers) that make healthcare diligence especially stringent.
  • "It's a highly regulated environment... this financial tie to coding so that coding accuracy directly determines reimbursement." — Pam D’Apuzzo [02:28]
• Constant Change & Uncertainty:
  • Chad notes, "The only thing that has certainty in healthcare is the demand... the past is not necessarily a bold predictor of the future." [04:15]
  • Emphasizes evolving reimbursement models (shift to value-based care), changing technology, and regulatory flux.

2. Expanding the Purpose of Diligence

Timestamp: 05:43—07:18

• Beyond ‘Check the Box’:
  • Chad urges investors to use diligence not just as a risk-verification tool but as the foundation for post-close improvements.
    • "I would encourage the investors to use the diligence period as a great foundation for the post merger and...opportunities to optimize the business." — Chad Zoratek [06:11]
  • Identifying areas for operational/revenue cycle management improvements (e.g., reducing DSOs, recapturing revenue leakage).
• Forward-Thinking Compliance:
  • Pam adds: "We're not just there to validate the coding we're seeing... but also looking for opportunities. If we're seeing undercoding or missed opportunities... we’re reporting that as well." [07:18]
  • Sees diligence as a way to give clients a roadmap and actionable next-steps for compliance post-deal.

3. Silo-Breaking: Integrating Financial, Coding & Compliance Diligence

Timestamp: 09:13—12:00

• Benefits of Collaboration:
  • Traditional approach: “very siloed... two very complete and distinct areas.” — Pam D’Apuzzo [09:40]
  • Collaborative approach offers a "360-degree view" of risk, opportunity, and current state.
• Example of Synergy:
  • Pam's team might discover causes of denied claims; resolving these helps the financial team extrapolate improvements to revenue and working capital.
  • "It's really nice to have that... cohesive, collaborative perspective on, you know, common issues." — Chad Zoratek [11:13]
• Deal-Killing or Deal-Making Insight:
  • Integrated diligence gives the client the insight to decide if a deal is worth pursuing, and if so, how to remedy issues post-close.

4. Comprehensive Solutions at VMG Health

Timestamp: 12:38—13:55

• The ‘Three Legs of the Stool’:
  • Financial diligence, coding/compliance diligence, and valuation expertise combine for “the best odds at really realizing your investment thesis.” — Chad Zoratek [13:24]
  • Involving valuation experts strengthens both forecast accuracy and diligence validity.
• Technology as a Game-Changer:
  • Chad and Pam are excited about expanding technology partnerships in revenue cycle, coding, and compliance.
  • "Our current analytical tool, which is CRA... quite revolutionary and a game changer in how we're approaching compliance..." — Pam D’Apuzzo [13:55]
  • Statistical oversight and high-precision analytics drive targeted, meaningful sampling for audits and compliance reviews.

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Notable Quotes & Memorable Moments

• Chad Zoratek, on Healthcare’s Volatility:
  “The crystal ball in health care can appear a little bit more like a snow globe.” [04:34]

• Pam D’Apuzzo, on Comprehensive Compliance:
  “We're not just focused on validating the coding. We are looking with a forward path, like where can we assist these organizations in being able to really improve overall from a financial perspective.” [08:40]

• Chad Zoratek, on Diligence as a Collaborative Process:
  “I call it the warm blanket effect. And so it's so nice having so many different subject matter experts view healthcare through their different lenses...” [10:46]

• Pam D’Apuzzo, on Analytics: "It is really allowing us with much more high precision sampling, which from an audit perspective allows us to really drill down into a more meaningful sample." [13:55]

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Timestamps for Key Segments

• [00:56] — Guest introductions and backgrounds
• [02:28]–[04:15] — Why healthcare diligence is unique; regulatory and compliance challenges
• [04:15]–[05:43] — Pain points and the unpredictability of healthcare transactions
• [05:43]–[07:18] — Expanding diligence beyond verification into value creation
• [07:18]–[09:13] — How compliance diligence can uncover revenue leakage and operational improvements
• [09:13]–[12:00] — Integration of financial, coding, and compliance diligence
• [12:38]–[13:55] — VMG Health’s integrated approach and technology breakthroughs
• [13:55]–[14:58] — Excitement for analytical tools and the future of compliance

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Conclusion

Chad Zoratek and Pam D’Apuzzo emphasize that in healthcare deals, diligence is about more than risk—it is a lever for surfacing opportunity, driving post-deal value, and ensuring compliance in one of the most complex, regulated industries. Their discussion highlights the outsized benefit of integrating financial, coding, and compliance diligence; leveraging technology and analytics to improve precision; and maintaining a forward-looking, adaptable mindset for successful investments in healthcare.

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Transcript

[A]

This is Scott Becker with the Becker Healthcare Podcast. I am thrilled today to be joined by two brilliant leaders from VMG Health. We're joined today by Chad Zoratek, managing director at VMG Health. We're also joined by Pam d', Apuzzo, Managing director also at VMG Health. We're gonna talk today about healthcare, sort of investing in deal making and trying to make sure that people are taking a comprehensive approach approach to diligence, making sure they're getting what they think they're buying and investing it and a lot more. The title of the talk today or discussions pre close Precision Strengthening Healthcare Deals with Financial Diligence and Compliance Insights. Let me kick us off by asking Chad and Pam to take a moment each to introduce yourselves and tell us a little bit about your work in healthcare. Chad, do you want to kick off here and then Pam will ask you to jump in?

[B]

Yeah, sure. Thanks Scott. I appreciate being here. Nice chatting with you again. I'm Chad Zreddick. As Scott said, I'm managing director at BMG Health and I run our transaction advisory group. I've got a 30 year, over 30 year background in the M and A space ranging from a decade of diligence at Big 4 Transaction Advisory to CFO of Private Equity backed healthcare companies, to corporate finance functions for public health care companies. And I'm based in Atlanta, Georgia.

[A]

Fantastic. And Pam, could you take a moment to introduce yourself and tell us about what you do and what you do at VNB Health?

[C]

Of course. Thanks again for having us. I have over 30 years of experience in healthcare. I specialize in healthcare coding and compliance. And my work focuses on helping organizations and providers ensure accurate coding while they're maintaining regulatory compliance and ultimately minimizing audit risk.

[A]

Thank you. And I'll kick us off with a couple discussions about healthcare deals. And Pam, I'll start with you and then ask Chad to weigh in as well. So healthcare deals bring a unique set of complexity from a regulatory exposure to clinical and reimbursement risk. All kinds of different challenges. We've seen them over the years. Cyber risks, reimbursement risks, regulatory risks, and a lot more. And Pam, from your perspective, talk about diligence in health care and what makes it a little bit different from other industries and why it's so critical to make sure you get it right.

[C]

Sure. I mean, I think the first issue is that it's a highly regulated environment. We're operating under a very complex framework of both federal and state regulations. We've got cms, oig, hipaa, separate commercial payer policies. So it's very stringent, I think much more stringent than other industries. And here there is this financial tie to coding so that coding accuracy directly determines reimbursement. And so that's another area where somewhat different. And then there is a potential repayment risk if the documentation and the coding are inaccurate or not supported. There's opportunity there for potential repayment demands, penalties, even legal exposure. So it's a very different environment. And lastly, from a coding perspective, I think the biggest challenge is the constant changes of the rules. We've got these annual updates for CPT and icd. Now we've got a lot more focus on HCC coding and radv. So there's a lot here that requires real regulatory guidance that someone really needs to understand the rules and that they're being applied appropriately. So I feel like this is probably why there's such a distinct difference between the healthcare industry and due diligence than in others.

[A]

Thank you. And Chad, you've been in this like Pam for a good deal of time now. Great, great experience. I'm thrilled I've had a chance to visit with both of you before. Both, both great on this. Talk a little bit about why you see healthcare differently than some other industries and where are some of the particular pain points you got to worry about in health care that you got to be most concerned about or top compliance pitfalls?

[B]

Yeah, so I totally agree with what Pam has laid out. Just a lot of change. I mean really the only thing that has certainty in healthcare is the demand. We know the demand is going to be there, but everything else is a lot of change, whether it's reimbursement, regulatory, even the shifting of the revenue model in a lot of cases toward VBC and even within valley based care changes with how that, how that is measured along with all the new technology that is coming to market. So really due to all this change, healthcare is one industry where the past is not necessarily a bold predictor of the future. So I sometimes joke that the crystal ball in health care can appear a little bit more like a snow globe with all changes. And so as an investor they have to really cover their bases to not only diagnose where the business has been, where it is today, and arming themselves with the best knowledge on all these changes that we talked about where the business will be. So I think I would challenge investors to use the information gathered during healthcare diligence to also form a thesis on what the business could be instead of just what the business was doing.

[A]

Thank you very, very much. And Chad, to follow up on that. There's a lot of people that view diligence is sort of either a check the box or red flag exercise to sort of validate historical revenues and earnings. Just sort of go through it. But, but how should people really think about diligence in terms of expanding its use? And how can you unlock hidden opportunities to really see what either could be missed for opportunities are, how do you do diligence in a more, in a more comprehensive way or more important way?

[B]

Yeah, I've always kind of joked, Scott, that when the due diligence advisors have it easy. So I can often say, you know, congrats on closing the deal, but now the real work starts. So I would, I would encourage the investors to use the diligence period as a great foundation for the post merger and you know, opportunities to optimize the business. So don't just use those. Check the box to verify what the historical numbers were or to make sure there's no red flags. Use the due diligence to have your day one readiness list pulled together. Design your financial diligence so that the financial results are presented in a fashion that you want to see those financial results post transaction. Use the financial results in diligence to focus on the areas of improvement. Are there any low hanging fruit, especially in the area of revenue cycle management, like for reducing DSOs? And I'll kind of hand the baton over to Pam because I think a lot of that falls in the work that she does.

[C]

Thank you. Our goal here really is to deliver a very comprehensive analysis to our clients so that post close they have what they need as far as a roadmap to support ongoing compliance. And the way that we approach compliance is that we're not just there to validate the coding that we're seeing kind of retrospectively, but we're also looking for opportunities. So if we're seeing undercoating or missed opportunities, services that were being provided and either not coded appropriately or not coded at all, we're reporting that as well. Because from a post close transaction that gives our clients the opportunity. We've identified this potential revenue leakage. There's an opportunity to recoup that and be able to educate the providers, educate the billing and coding staff on the, the issues that we identified. Also when we are reviewing this from a compliance perspective, we, we're looking at it operationally, like where can we operationally identify any efficiencies that would help just build a better sustainable coding practice. We will help update their policies and procedures. We are recognizing. Again, the guidelines as we mentioned here, are changing constantly and there's been significant changes in the industry over the last couple of years, specifically evaluation and management services, which is a very big part of coding for most organizations and most providers. So that's just an area where there's opportunity for improvement. Documentation, templates, EMR workflow for the providers, there's so much opportunity. But we are, we are not just focused on validating the coding. We are looking with a forward path, like where can we assist these organizations in being able to really improve overall from a financial perspective.

[A]

Thank you very, very much. And Pam, I'll have you lead on this next question and then have Chad weigh in. Coding and compliance and financial diligence are treated very separately. You know, there's often one team doing quality of earnings, a totally different team during reimbursement review and coding, a compliance review. Can you share an example of why it's beneficial to bring some of these functions together pre close and why that could be useful and powerful in terms of really understanding a business?

[B]

Sure.

[C]

And you're right, they have been traditionally very siloed like two very complete and distinct areas. Here we take a very collaborative approach and I think that that's obviously to the benefit of our clients because when you're keeping these two distinct areas of diligence separate, it's not allowing the client to see the full picture of the organization. So when you're bringing those together, you're kind of seeing that 360 degree view of what's happening in the organization, what's accurate, what needs attention and ultimately what the potential risk exposure might be. So that opportunity for us to collaborate here gives the client an opportunity to make some smarter decisions regarding the acquisition. It may be a no go for the deal. It may just be a post close opportunity with a. What is a very strong approach for post closing close on how we're going to take some corrective action to improve the overall coding and financial stability of the organization. I don't know if maybe here, Chad, a couple of things you might want to add to that.

[B]

Yeah, Scott, I call it the warm blanket effect. And so it's so nice having so many different subject matter experts view healthcare through their different lenses or view the target through different lenses. But case in point, Pam's team could be very focused on figuring out what the heck is causing all these denied claims. Right? Well, they do their work and they figure out the main causes of it. And it could be maybe a biller had the wrong training and so they can help retrain that biller to make those mistakes stop. The financial team can extrapolate, okay, once those errors stop, what does that mean to revenue realization? How greatly is it increased by that? And, and also what type of working capital optimization will result by being able to fix everything and hopefully recoup or recapture some of those denied claims. So it's really nice to have that, you know, cohesive, collaborative perspective on, you know, common issues.

[A]

Thank you. And Chad, let me ask you this question. We've talked a lot about comprehensive diligence. I seen this upfront and personal where sometimes you see diligence where the right hand doesn't know what the left hand is doing and then the ultimate client, the investor doesn't get as great of clarity at what they're really seeing in the business. And VMG does a wonderful job of pulling these things together so people really know what they're investing in and what they're doing. Take a moment. Any of the thoughts that you'd like to share with us that we didn't touch on today and maybe what you're most focused on and excited about as we finish this year and start into next year.

[B]

I need, I need another hour at least, Scott. But I'll nutshell it. I think also, you know, at BMG Health we also have a tremendous, tremendous squad of valuation experts. So we often pull them in to help out with the financial projections, even to assess our clients projections to see if, if there's anything that they would model out differently. So I think when all the three legs of the stool work together, like the coding and compliance financial diligence team and the valuation team, we can be a very comprehensive solution to kind of give you the best odds at really realizing your investment thesis. I think in terms of excitement on the horizon. We're at bmg, we're extremely excited about some of the technology solutions that we're partnering with and providing to our clients that are helping to solve for some of these challenges encountered by our clients, you know, especially in the revenue cycle management, coding and compliance space.

[A]

Thank you. And Pam, anything you'd like to add there and also anything that you're most focused on and excited about coming into the end of the year.

[C]

I'll echo what Chad said about these new areas that we're moving into from a technology standpoint. But I also want to highlight our current analytical tool, which is cra. It's really been for us quite revolutionary and a game changer in how we're approaching compliance both from a due diligence standpoint as well as from a prospective standpoint. It is really allowing us with much more high precision sampling, which from an audit perspective allows us to really drill down into a more meaningful sample. And then we've got our statistician who is really involved in oversight and the data integrity and the reliability of those analytics. So I think that that's really changed our approach here to compliance, both from due diligence and a prospective approach. So we're excited about what's coming in 2026. I think the expansion of those analytic tools will really be quite changing and transformative to our team and to our clients as well.

[A]

Fantastic. Pam and Chad, it's always a fantastic pleasure to visit with you and the leaders of VMG Health. What a magnificent firm. I know that VMG also has a webinar coming up on October 14, how to invest in Healthcare with Confidence From QOV to Compliance. We can't wait to listen in on that. Again, thank you both for joining us today on the Becker's Healthcare podcast. Just fantastic and a pleasure to be with you. Thank you very, very much.

[C]

Thanks.

[B]

Thanks a lot, Scott.

[C]

Thank you.