Public accounting firm Crowe Horwath finalized a transaction to buy a majority stake in CHAN Healthcare, a business started by two Catholic health systems to provide internal audit services to health care organizations.
The two Catholic health care systems, St. Louis-based Ascension and Englewood, Colo.-based Catholic Health Initiatives, each retain a 10 percent stake in CHAN moving forward and continue as CHAN clients, said executives involved with the transition. Terms of the deal, which closed in October, were not disclosed.
Crowe Horwath and CHAN said the deal will strengthen existing services to meet the internal audit, risk management and financial advisory needs of the changing health care industry.
Steve Strammello, managing partner of risk consulting services at Crowe Horwath, will remain in that position and become chief executive of Clayton, Mo.-based CHAN. Strammello said Crowe Horwath is not going to change the business model of CHAN in any way, and it has been communicating that to clients. Crowe Horwath sees CHAN as a complement to Crowe Horwath's health care consultancy. "There's a lot of recognition of how unique CHAN Healthcare is, and how important it has been to the industry, and the concern has been we don't want that to change or go away. I think the message is: it's not," he said. CHAN executives describe it as being the only organization that exists solely to provide internal audit services for health care organizations.
Sarah Cole, CHAN's senior vice president of audit, said CHAN was launched in 1997 to advance the strategic initiatives of clients through high-quality internal audits. The audits look at a company's processes and controls to make sure they are working as intended. CHAN learns about management's intent, analyzes the rules and regulations that the company is required to comply with and the internal policies in place to secure that compliance. It determines if compliance procedures are followed every time. Cole said internal audits are not financial audits. "You could audit their intent to follow ethical and religious directives; you could audit their intent to follow IRS guidelines; you could audit their intent to follow Medicare regulations," she said.
CHAN's clients extend beyond Catholic systems to other health care organizations, she said.
CHAN will remain a limited liability company, employing about 320 people nationwide. CHAN maintains a permanent, on-site presence in more than 20 tax-exempt health care networks and provides services to more than 350 hospitals and health care facilities, according to an Oct. 15 statement. CHAN is a faith-based company and will retain its core values: reverence, integrity, servant leadership and excellence, Cole said.
She said before the acquisition, Crowe Horwath's Chief Executive Chuck Allen determined the core values of CHAN and Crowe Horwath were aligned. Chicago-based Crowe Horwath and its subsidiaries have more than 3,000 personnel. Crowe Horwath is an independent member of Crowe Horwath International, a global accounting network, according to the company.
Cole said she believes Ascension and CHI had been looking for an opportunity to help CHAN grow, and that the growth should better serve clients. "The goal is not that we change who we are, but that we become better because of this," she said.