Healthcare operational due diligence: can this business actually deliver the plan?
Financial diligence describes what a healthcare business has done. Operational diligence establishes whether it can do it again at twice the volume, with the same clinicians, the same systems and the same front door. That is the question that decides most healthcare returns.
An operator's second opinion
Clarendum is led by Ian McPhee, formerly Vice President of Operations at Optum Behavioural Care, part of United Health Group, where he led operations across a national network of 236 clinics and telehealth services serving patients in all 50 states, and built a patient access organisation of more than 150 people. Diligence conducted from that seat asks different questions: not whether the numbers add up, but whether the operation behind them can carry weight.
This work sits alongside — and deliberately does not substitute for — legal, financial and clinical or regulatory diligence, which should be commissioned from qualified specialists in those fields.
What we test
Capacity realism
Stated capacity is usually theoretical. We separate contracted capacity from available capacity and from capacity actually used, then establish what utilisation rate the growth case assumes and whether the business has ever achieved it.
Workforce dependency
How much of delivery and revenue rests on a small number of clinicians, or on the founder personally. Recruitment lead times, attrition history, supervision requirements and pay position relative to market determine whether the plan is staffable at all.
Patient access and conversion
The front door is where growth cases quietly fail. We test enquiry and referral conversion, time to first appointment, attendance rates and whether demand is genuinely constrained by capacity or by process.
Clinical-operational bottlenecks
Where throughput is limited by pathway design rather than resource: assessment steps that could be delegated, sequencing that idles clinicians, documentation load, and handoffs that create rework.
Systems and process maturity
Whether CRM and EHR configuration supports the pathway or works around it; how much of the operation depends on spreadsheets, individual knowledge and goodwill; and what integration or configuration work is unavoidable post-close.
Scalability of the operating model
What breaks first at 1.5x and 3x volume — rota structure, supervision ratios, back office, billing, or the access function. Scalability is a property of the model, not of ambition.
Management information
Can management answer throughput, conversion and utilisation questions from their own systems, on demand? Where the answer requires reconstruction, the board is steering on lagging financials alone.
100-day plan
The output is not only a risk list. It is a sequenced first hundred days: what to stabilise, what to measure from week one, which appointments matter, and which improvements are worth capital before scale is attempted.
What you receive
- A clear operational view of the asset: what works, what is fragile, and what is assumed rather than evidenced.
- The specific risks that would change the price, the structure or the pace of the growth plan.
- The management questions still worth asking before signing.
- A sequenced 100-day operating plan to de-risk execution after close.
Where diligence meets expansion
Many diligence questions are really expansion questions. If the thesis depends on entering the US, US market entry sets out what has to be true operationally. If the choice is between acquiring and building, build vs buy compares them on total cash to a stable margin. And where the growth case rests on converting more of existing demand, patient access is usually the line to interrogate first.
Frequently asked questions
- What is healthcare operational due diligence?
- It is an assessment of whether a healthcare business can deliver the plan it is being valued on. Financial diligence explains what happened; operational diligence tests whether the same result is repeatable at higher volume, with the same workforce, systems and access pathway. It is distinct from legal, financial and clinical-regulatory diligence, and complements them.
- How is this different from commercial due diligence?
- Commercial diligence asks whether the market wants what the business sells. Operational diligence asks whether the business can produce and deliver it reliably as it grows — capacity, workforce, throughput, process maturity and the management information needed to run it.
- What are the most common operational red flags?
- Reported capacity that assumes near-perfect utilisation; delivery concentrated in a handful of clinicians or one founder; growth plans that depend on recruitment in a market where recruitment has historically been slow; access processes held together by individual effort; and management information that cannot answer basic throughput questions without manual rebuilding.
- How long does an operational diligence engagement take?
- A focused diligence review typically runs over two to four weeks, depending on data availability and management access. Where a transaction timetable is tighter, the scope is narrowed to the two or three operational questions that carry the most valuation risk.
- Does this include clinical or regulatory assurance?
- No. Clinical governance assurance, regulatory compliance opinions, legal and financial diligence should be commissioned from appropriately qualified specialists. Clarendum's contribution is the operator's view: whether the business can run at the scale the thesis assumes, and what the first hundred days should address.
Evaluating a healthcare asset?
A short call is enough to agree which operational questions carry the most valuation risk and how tightly diligence can be scoped.