The Physician Trustee04.01.12 by Charlotte Huff
Balancing clinical perspective and conflicts of interest
More than five years ago, before elective inductions were generating national headlines, William "Dore" Binder, M.D., was learning a lot about the potential risks at meetings he attended through the Institute for Healthcare Improvement's perinatal collaborative.
Binder, an obstetrician/gynecologist who practices at Woman's Hospital in Baton Rouge and serves on the foundation board that operates the hospital, started to fill in his fellow trustees. Beginning in 2006, physician board members joined forces with other supportive doctors to discourage non-medically necessary deliveries of babies prior to 39 weeks.
"At the time, it was poorly received by the medical staff," recalls Binder, a longtime board member. "A lot of the doctors felt that 'This is my business, not your business,' meaning the hospital. And they'd say, 'I've never had a bad outcome.'"
Practice shifted. By 2011, Binder estimates that about 15 percent of physicians occasionally were delivering babies early, and far fewer frequently did so. But board members decided to take the next step, putting a "hard stop" on the practice. It was an "unprecedented" board directive, says Teri Fontenot, the hospital's president and CEO and a member of the foundation board. She is also chair of the American Hospital Association board of trustees. "Had we not had physician champions on our board, it probably would not have happened," she says.
The experience at Woman's Hospital illustrates how adding physician expertise to the board can help better address complex and sometimes dicey medical concerns. But the ongoing integration of doctors and hospitals, combined with a heightened emphasis on board independence, is making it more challenging to identify the best doctor to fill that board seat, governance experts say. "While we want physician input, I think we have to be very careful about all of the potential conflicts of interest," says David Nash, M.D., dean of the Jefferson School of Population Health in Philadelphia.
Increasingly, physicians are becoming hospital employees or forming closer contractual relationships with hospitals, says Barry S. Bader, who leads a governance consultancy based in Scottsdale, Ariz., and is a senior consultant to the AHA's Center for Healthcare Governance. "When those individuals come to serve on the board, you have what can be an uncomfortable situation in which the CEO is not the only employee on the board," he says.
Independent and Disinterested
To be sure, physicians aren't the only board members who must wrestle with potential conflicts, stress Bader and other governance experts.
Particularly in smaller communities, a talented professional may have developed an extensive network of relationships over the years that at some point could pose a conflict in the boardroom, says Dan Roble, a health care attorney who recently retired as a partner at Ropes & Gray LLP in Boston. "It's not only the doctors. It's the lawyers, the bankers, the contractors," he says. "There is no way around it — there's not a large number of people that you'd want on your board."
Federal tax officials require a nonprofit organization to specify on its Form 990 how many of the board's members are independent. To be designated as independent, a physician or other member must meet four criteria, including no direct compensation as an employee and no total compensation exceeding $10,000 as an independent contractor during that tax year, among other measures (see The IRS on Independence, below).
Nonindependent members still can serve on a nonprofit organization's board, according to governance guidance provided by the Internal Revenue Service. But federal officials state that the board "should include independent members and should not be dominated by employees or others who are not, by their very nature, independent individuals because of family or business relationships."
The Sarbanes-Oxley Act of 2002, albeit largely focused on publicly traded companies, has been influential in recent years, as nonprofit hospital systems consider their respective board's composition, among other governance practices, Bader says. "Most not-for-profit hospitals have said, 'We want to follow the spirit of Sarbanes-Oxley because it reflects best practices in effective governance.'"
In accordance with the 2002 law's spirit, Bader recommends against assigning a doctor affiliated with a hospital to that same hospital board's audit committee. Federal tax officials also have provided guidance related to compensation decisions, Bader says. Under Section 4958 of the IRS code, those members serving on the compensation committee should be able to demonstrate that they are disinterested parties.
To shed light on any potential concerns, boards should perform "conflict-of-interest reviews and disclosures in a very systematic way," says Lawrence Prybil, a professor and associate dean at the University of Kentucky's College of Public Health. "So it's all above board and very transparent," he says.
Some conflicts are clear-cut, Prybil notes. If the hospital's board is discussing a partnership with a physician group in which one of the trustees practices, that member should step aside from the discussion, he says. But other conflicts fall into shades of gray, he acknowledges. "And then it gets down to integrity," he says. "The caliber of persons you want on your boards will be very mindful of that and will err on the side of being conservative."
But an ethical dilemma can emerge if boards are not careful, Nash says. As a quality improvement proponent, he worries about the role of affiliated or employed doctors on related committees. The stakes are highest if that doctor chairs the quality committee, he argues.
"Since there is no precedent-setting case law here," Nash says, "it's my opinion that it puts the physician in a very compromised position. How can he or she be able to be dispassionate about unprofessional behavior on the part of a colleague, or an elderly colleague who clearly has had a dangerous decrease in their functioning?"
Even when the chair opts for recusal, the ensuing logistics might threaten patient care, Nash says. He described one scenario, related to his consulting work with boards, in which a quality committee was asked to address serious concerns about the abilities of a prominent yet aging physician.
The committee's chair, also a physician, viewed the doctor involved as his personal mentor, Nash says. "And he had to recuse himself from the conversation, delaying the decision for months, and putting patients at risk."
It's easier for nationally recognized health systems to recruit a physician expert without the related conflicts, Prybil says. Those systems have the money and the profile to fly in a leader in academic medicine or a health information technology guru to attend the board meetings.
Prybil, who recently completed a study of board composition at 14 of the 15 largest nonprofit health systems, found that 20 percent of the seats were filled by members with clinical training. Doctors comprised 14 percent, according to the study, which will be released later this year. Nurses had been selected for 6 percent of the seats on the boards for the 14 systems, which together oversee the operation of 460 hospitals.
Recruiting a doctor from outside the region or at least one who doesn't practice at the hospital or system, can help head off quality-related conflicts as well, Nash says. Until 2009, he regularly traveled from Philadelphia to serve on the board of Catholic Healthcare Partners in Cincinnati.
Now he chairs the quality and safety committee for Main Line Health, a nonprofit hospital system in suburban Philadelphia, closer to home. Nash doesn't have any practice ties to Main Line Health, he says. But the system does fall under the larger corporate umbrella of the Jefferson Health System. So, if a politically charged issue arises involving the system, a situation that might develop once or twice a year, he doesn't attend the related board meeting, he says.
Closer to home, employed physicians can sit on the boards of their own hospitals. But the potential for conflict should be weighed, ideally in advance, Bader says. "If individuals are constantly recusing themselves, then probably their level of conflict is such that they should not be on the board."
There's another practical consideration, according to health care attorney Roble. An employed physician on the board might be viewed with some suspicion by doctors on the medical staff. "An employed physician is seen to be a representative of the hospital," he says.
Navigating Gray Areas
For physician trustees with hospital ties, it's crucial that they not only fill out conflict-of-interest paperwork, but also update the board chair if a new situation arises, Roble says. When in doubt, err on the side of disclosure, he stresses. "The crucial piece is that they come forward, because as long as they come forward, it can be dealt with," he notes.
One approach Roble uses is to ask members to also verbally disclose their conflicts. By going around the room and briefly sharing the details, it can help fellow members, he says. "Somebody who is listening might say, 'Oh, gee, I have that same situation and I didn't think of it,'" Roble says. "That's the real reason for it. It's not to embarrass anybody. It's a way to raise consciousness."
If a potential conflict later arises, the board member should discuss it with the chair, Roble says. "And a lot of times, the chairperson can resolve it." If it's unclear what path should be pursued, the issue can be referred to the board's governance committee, he says.
At Woman's Hospital, the board takes any potential conflicts very seriously because of the close alignment between physician trustees and the hospital, Fontenot says. The foundation, which operates the 350-bed nonprofit hospital, is governed by a 14-member board. Six of the 14 are physicians, including five obstetricians/ gynecologists who admit patients to the hospital.
Physician trustees guard against even the perception of a conflict, Fontenot says. Several years ago, for example, the board had to approve the construction cost of the first physician office building on the hospital's campus. "There were physicians on our board who were going to be tenants of the building, so they abstained from the vote," she says.
Louis McKeever, M.D., a board member at Elmhurst Memorial Healthcare in suburban Chicago, also wears dual hats and steps aside when they threaten to conflict. Along with his board role, he's part of a large cardiology group that co-manages cardiology services at the hospital. When that group provides an annual update on heart treatment, including related statistics, McKeever says that he typically excuses himself.
At other times, it's been helpful for nonclinicians to have a physician at the board table, McKeever says. He described one situation many years ago in which a worrisome uptick in angioplasty complications was identified. "We were having all of these complications with angioplasty, and we couldn't figure it out," he says.
It turned out to be a medical coding issue, in which a routine anatomical detail in the heart was being classified as a complication. Once identified, McKeever educated his fellow board members.
A Source for Clinical Expertise
From a legal standpoint, the safest route is to select a retired physician or nonpracticing physician who doesn't have any economic ties to that hospital or system, Roble says. If a hospital decides to tap the expertise of an economically affiliated doctor, he recommends that they be included as a trustee rather than in an advisory role.
"The advantage is that they take more interest because they're board members," he says. "They feel that they have a real role to play. I've found over the years that advisers typically do not take their responsibilities as seriously."
As an alternative strategy to gain clinical insight, some hospitals have created a separate clinical board, Bader says. It might be affiliated with or linked to the full board of directors, but meets separately, he says.
That board, which doesn't have to worry about meeting independence criteria, then can submit reports and clinical recommendations to the full board. Depending upon how it's structured, the clinical board's chair might also sit on the full board as an advisory or voting member, Bader says.
At Woman's Hospital, the impact of the physician board members has proven to be measurable, at least where elective inductions are concerned. From September 2007 to August 2010, the number of newborns requiring admission to the neonatal intensive care unit declined by 35 percent, according to data provided by hospital officials. They credit the new policy with roughly half of that decline, citing a corresponding decline in NICU admissions among babies of 38 or 39 weeks' gestation.
"Our community [board] members could have never pushed that initiative, because they don't know the clinical concern," Fontenot says.
Although education reduced the clinical practice and related NICU admissions declined, she says, "we got to the point where it kind of stalled.
"The board, through the clinical oversight committee and Dr. Binder, in particular, said, 'It's time that we put a hard stop on scheduling these inductions. And it needs to come from the board.'"
Charlotte Huff is a freelance medical writer in Fort Worth, Texas.
|Sidebar - The IRS on Independence|
For more details on the criteria, as well as related exceptions, consult Part VI of the Form 990 instructions at www.irs.gov/pub/irs-pdf/i990.pdf.
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