As a regulated business, you have a responsibility to ensure that you are compliant with industry standards and regulations. One effective way to do this is by hiring a mock inspector. A mock inspector is an independent consultant who simulates an official inspection and provides valuable feedback on your operations, highlighting areas for improvement and identifying potential compliance issues. In this article, we will explore the reasons why a regulated business, such as assisted living, should hire a mock inspector and provide five key pointers to consider when drafting or reviewing a mock inspection contract.
Why Hire a Mock Inspector?
- Identify Areas for Improvement: A mock inspection can help identify areas of weakness within your business. By highlighting these areas, you can take proactive steps to address any deficiencies before a real inspection occurs. This can ultimately help you avoid penalties and fines for non-compliance.
- Prepare for a Real Inspection: A mock inspection can provide valuable insight into what to expect during a real inspection. This allows you to prepare and make any necessary adjustments to your operations in advance, reducing the likelihood of surprises during an official inspection. For anyone who recently purchased an assisted living business, this is a valuable exercise. Civil penalty caps have recently increased to up to $10,000 in states like Colorado, and in Arizona a civil penalty may be imposed up to $500 “for each violation,” and “[e]ach day that a violation occurs constitutes a separate violation.” (A.R.S. § 36-431.01(A)). Because inspection results are a public record, the investment in a mock inspection can save both time and potential reputational damage if compliance areas are addressed in advance of a real inspection.
- Enhance Compliance: A mock inspection can help ensure that you are following all relevant regulations and standards. This can help enhance your compliance posture, mitigate risks, and ensure that your business is operating at its best, whether you are a new or seasoned business owner. Mock inspectors will typically know what regulatory compliance areas are current focus areas for the state agency.
- Gain External Perspective: A mock inspector brings an external perspective to your business operations. They can provide a fresh set of eyes and offer insights that you may not have considered before. This can help you identify blind spots and improve your overall compliance posture.
- Reduce Liability: By proactively addressing compliance issues, you can reduce the risk of costly penalties, lawsuits, and other legal liabilities. A mock inspection can help identify potential areas of liability and provide actionable recommendations to mitigate those risks.
Pointers for a Mock Inspection Contract
When hiring a mock inspector, it is essential to have a clear and concise contract that outlines the scope of the inspection, expectations, and deliverables. A true professional should have a written contract to present to you. That does not mean that you cannot negotiate changes that you feel are important to protect your business interests. Many mock inspectors have previously worked for the licensing agency, and still have connections within that agency. It is important to ensure that they will not reveal any information about your inspection to any third parties, unless you specifically request them to do so. Here are five key pointers to consider when drafting a mock inspection contract:
- Scope of the Inspection: Clearly define the scope of the inspection, including the areas of the business that will be assessed and any specific regulations or standards that will be evaluated.
- Deliverables: Specify the expected deliverables, including any reports, recommendations, or other documentation that will be provided at the end of the inspection.
- Timeline: Define the timeline for the inspection, including start and end dates, as well as any interim checkpoints or milestones. If material changes are recommended, consider including a provision addressing a follow-up review for the mock inspector to confirm that non-compliant areas have been properly remediated.
- Confidentiality: Include a confidentiality clause that outlines the confidentiality of all information shared during the inspection and restricts them from using your proprietary business information in their business. The enforceability provisions of this clause should be clearly-defined, so that the business feels free to share its records openly, and any confidential medical information the mock inspector will have access to is clearly protected.
- Limitations of Liability: Specify any limitations of liability, including indemnification clauses, and make sure to review these with legal counsel to ensure they are reasonable and enforceable. You may want to include a “satisfaction guarantee,” such that any items missed by the mock inspector that are found to be deficiencies by the state inspector would entitle you to a full or partial refund. The mock inspector, on the other hand, may want to exclude items that may have been added or modified by the business following the inspection, or only refund the amount of any civil penalties imposed.
In conclusion, hiring a mock inspector can be an invaluable investment for regulated businesses. By identifying areas for improvement, preparing for a real inspection, enhancing compliance, gaining an external perspective, and reducing liability, a mock inspection can help ensure that your business is operating at its best. When drafting a mock inspection contract, it is essential to consider the scope of the inspection, deliverables, timeline, confidentiality, and limitations of liability to ensure a successful engagement.
The information herein is intended to be educational and an introduction to the subject matter presented. Despite any statutory or regulatory references cited in the article above, it is NOT specific legal advice to be relied upon for specific individual circumstances. Contact your own legal professional or reach out to our firm if you would like specific advice on this topic.
Look for additional blog posts on topics of interest to regulated healthcare businesses. We welcome topic suggestions! Write to jwassermann@davismiles.com if you are curious to learn more about a certain topic impacting assisted living or other group housing concerns.