Healthcare carve outs are different. The TSA reflects that.

HIPAA boundaries and protected health information.

Protected health information sits at the center of every healthcare TSA. The seller is the covered entity or business associate that holds the data. Newco becomes a new covered entity or business associate at close. The TSA service catalog defines who can access protected health information, under what authority, with what audit trail, and for what purpose. The default rule is least access. Every deviation is documented.

Business associate agreements between the seller and Newco are signed at close. The agreements cover permitted uses, breach notification timelines, subcontractor controls, return or destruction of protected health information at exit, and audit rights. The buyer side legal team reviews these agreements with the same intensity as the TSA itself. A weak business associate agreement creates compliance risk that survives the TSA exit.

State law adds layers. California Consumer Privacy Act overlays for resident data. New York SHIELD Act notification timelines. Texas Medical Records Privacy Act provisions. Each state where Newco operates contributes its own requirements. The legal team builds a state matrix that informs the TSA controls and the data handling protocols. The work pairs with the broader carve out data separation framework.

Audit logging is configured to support a regulatory investigation. Every access to protected health information is logged with user identity, timestamp, record accessed, action taken, and source system. The logs travel to a Newco controlled store with retention that meets the longer of HIPAA, state law, and Newco internal policy. The discipline avoids the discovery scramble that always follows a breach.

EHR separation and clinical continuity.

Electronic health record separation is the largest IT workstream in most healthcare carve outs. Epic, Cerner, Meditech, athenahealth, and other platforms each have their own approach to multi entity hosting and data extract. The seller almost never permits Newco to operate inside the seller production tenant after a defined sunset date. Newco builds its own tenant or migrates to a different vendor.

Clinical continuity drives every cutover decision. Patient charts cannot disappear at midnight on Day One. Active medication orders, allergies, problem lists, recent imaging, and lab results have to be accessible to clinicians on the new system from the first patient encounter. The migration runs in three layers. Historical records as a read only archive. Active records as a complete copy. Real time interfaces as a re configured pipeline.

Interface engines like Corepoint, Rhapsody, and Mirth Connect map the HL7 and FHIR traffic between the EHR and dozens of ancillary systems. Lab. Pharmacy. Radiology. Cardiology. Billing. Each interface gets inventoried, replicated, and tested on the new tenant before clinical go live. The work surfaces silent dependencies that have not been touched in years. Each one becomes a critical path item.

Provider training and adoption add a parallel workstream. Clinicians who built their workflows around the seller EHR configuration have to learn the new configuration. The training calendar runs weeks before cutover. The clinical informatics team handles the configuration choices that affect provider efficiency. The decisions get pressure tested with provider councils before they ship.

Payer credentialing and revenue cycle continuity.

Payer credentialing is the workstream that determines whether Newco gets paid for the services it delivers. Each provider in the Newco network has to be credentialed under the new tax identification number with every payer that covers the patient base. Medicare. Medicaid by state. Commercial payers. Workers compensation carriers. Each payer has its own application, its own document requirements, and its own processing window.

The credentialing timeline often runs 90 to 180 days from application. Newco starts the work before the deal closes when permitted. Where the deal is confidential before signing, Newco prepares the packages so they can submit on day one. The credentialing tracker becomes a critical path artifact for the revenue cycle workstream. A provider who is not credentialed under Newco is a provider who cannot bill cleanly.

Claims rejection rates spike in the first 60 days after Day One in every healthcare carve out. New tax identification numbers, new provider numbers, new payer contracts, and new electronic data interchange connections all contribute. The Newco revenue cycle team builds a denial management workstream that catches and resolves rejections within service-level commitments before the denials age out of timely filing windows.

The seller billing service may continue under the TSA during the transition. The arrangement is documented with explicit responsibility for cash collection, write off authority, denial appeals, and patient billing communications. The discipline pairs with the broader carve out Day One readiness framework. Revenue cycle is the workstream where stranded value lives if the TSA is not negotiated carefully.

Pharmacy, controlled substances, and clinical licensing.

Pharmacy and controlled substance reporting carry licenses that do not transfer with the deal. The Drug Enforcement Administration registration for each clinical location and the state controlled substance registrations all have to issue under the Newco entity before controlled substances can be ordered, dispensed, or administered. The timeline runs months. Inventory transfer requires a documented controlled substance reconciliation at the cutover moment.

Clinical licensing covers facility licenses, accreditation, and Medicare provider numbers. Joint Commission accreditation, DNV accreditation, AAAHC accreditation, and the state department of health licenses all require re issuance or a defined survey under the Newco entity. Medicare provider numbers reissue through the change of ownership process with the regional contractor. Each authority has its own timeline.

340B status, REMS programs, and the various pharmacy benefit manager contracts each require explicit transition planning. The clinical operations team maintains a register of every regulatory authorization the entity relies on, with the status under the Newco entity for each one. The register is reviewed weekly during the runway and becomes the go live decision document.

Service catalog pricing reflects the regulated nature of the work. A clinical workflow service in a healthcare TSA carries different cost-plus economics than a generic IT service because the seller resources doing the work are typically clinically credentialed staff with limited substitutability. The buyer side TSA review accepts the cost only after auditing the underlying time records.

Pre signing leverage and the buyer side review.

Healthcare TSAs are negotiated under information asymmetry. The seller knows the regulated dependencies, the clinical workflow constraints, and the historical cost of each service. The buyer side team brings a healthcare specific TSA review checklist into pre signing diligence. EHR transition feasibility. Credentialing runway. Controlled substance inventory. Accreditation survey timing. Each item gets a buyer side estimate of cost, time, and risk.

The pre signing review focuses on extension fees, exit ramps, and pass-through pricing. Healthcare TSAs default to seller favorable extension fee curves because clinical workflows often run longer than the buyer plans. The buyer side review rewrites the extension language to reflect a realistic Newco runway. The work pairs with the pre signing leverage playbook.

Service credits and SLA structure reflect clinical safety, not generic IT performance. A claims processing SLA matters in revenue terms. A pharmacy interface SLA matters in patient safety terms. The structure recognizes the difference and prices the credits accordingly. The audit rights section ensures Newco can validate seller performance through independent records.

Healthcare carve out TSA reviews and exit programs are delivered under a Fixed Fee + Portfolio Retainer engagement model through TSA pre signing review and the Day One readiness program. The healthcare overlay does not change the discipline. It changes the documentation and the regulated timeline behind every workstream.

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