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Hospital trustees typically are involved with multiple community organizations, resulting in a wide range of business and personal relationships. Because of their many connections, it's important that they adhere to a conflict of interest policy that includes an opportunity to disclose potentially conflicting interests. This policy serves as the foundation of open and honest deliberation in the best interests of the organization.

Questionable Motives

A conflict of interest exists when a board member has a personal or business stake that may clash with the interests of the hospital or lead to personal gain. This type of conflict often is unintentional and in some cases, the perception of a conflict — whether or not it exists — can be just as damaging to the organization. When trustees serve in various roles with other organizations, for example, questions may arise. Interpersonal and financial relationships also may raise questions about whether a trustee is able to make decisions free from the influence of his or her other roles.

Board members have a fiduciary duty to act in the organization's best interests and ensure prudent management of the organization's resources. Adhering to strict ethical standards when making decisions is a vital part of this responsibility.

Addressing these conflicts is not just the board's fiduciary responsibility, it is a key factor in building and sustaining public trust. The ability to demonstrate that leadership decisions are made with the best interest of the hospital in mind is critical. Developing and adhering to ethical guidelines builds public trust in difficult times, while the absence or disregard of such guidelines can and will be used to tear down the hospital's reputation.

Preventing a Problem

Having a policy in place to guard against conflicts of interest enables the board to minimize personal dilemmas covering a variety of issues, such as financial gain or professional or personal benefits. The policy will help the hospital and its board to be prepared when real or perceived conflicts do occur.

Self-monitoring is the best preventive measure a hospital can take to prevent conflicts. It requires a shared understanding of the organization's conflict of interest policies and procedures, and an environment that promotes transparency and accountability among board members and hospital leaders.

The key to ensuring conflict-free discussion and decision-making is to recognize and minimize conflicts of interest as much as possible, even though they may not be eliminated completely. The first step is developing a comprehensive conflict of interest policy that requires full disclosure. This allows board members with conflicts to remove themselves from discussions and decisions when appropriate.

To minimize the discomfort of calling out a trustee on a potential conflict of interest, the board should develop a policy for members to either declare a conflict of interest or to request consideration about whether a fellow board member has a potential conflict of interest. This makes evaluating potential conflicts an impersonal, standardized procedure.

The board chair, armed with a thorough understanding of the hospital's policies, is responsible for overseeing this process. The chair should encourage trustees to be transparent about any concerns they may have and meet individually with them to discuss potential conflicts. Additionally, the chair is responsible for deciding if an issue needs to be reconsidered because an individual's conflict may have influenced the discussion, and reviewing the policy annually to ensure that it is up-to-date and understood by all board members.

Annual Checks

A conflict of interest policy expresses a common understanding of what will put a board member in conflict with the interests of the hospital, and provides members and the hospital with a process for addressing potentially conflicting situations in a consistent, transparent and tactful manner. Each trustee should understand the hospital's policy.

Once the policy has been approved, every trustee and senior leader should complete a disclosure statement. While the policy defines conflicts, the disclosure statement is the mechanism for individuals to declare any potential conflicts they may have.

The disclosure statement is a form prepared by the organization that requires individuals to agree with two statements: First, he or she has read and is familiar with the conflict of interest policy; and second, he or she is not aware of any direct or indirect conflicts of interest, based on the definitions developed by the organization, or has attached a letter describing any direct or indirect conflicts of interest that exist, based on the definitions developed by the organization. In addition, individuals should sign a statement agreeing to report any new conflicts in a timely manner.

Physicians, Too

Physician trustees also must adhere to the board's conflict policy. They are expected to maintain the same level of confidentiality and declare all potential conflicts in the same manner as do other board members.

Physicians bring different conflicts to the table. They may feel torn between representing the interests of the hospital and serving the interests of the medical staff or have additional conflicts related to competition with the hospital. Those on the hospital's staff also may own or govern an ambulatory surgical center or may be considering part ownership of an imaging center or cardiac hospital. In this case, the conflict emerges when the board discusses a potential new service or clinic and the physician trustee is considering a competitive venture or is aware that one or more of his or her colleagues is doing so.

Because of the variety and complexity of physician-hospital relationships, the board must take extra precautions to ensure that physician trustees understand their fiduciary responsibility to represent the community, not other physicians. Boards must take extra care when seeking physician members and identify those who are committed to the hospital and are less likely to become competitors.

Resolving Conflicts

If a potential conflict is recognized by a trustee during a meeting, the conflicted board member should leave the meeting and not participate in the discussion of or vote on the issue in question. Remaining in the room, even silently, has the potential to influence other trustees' thinking and decision-making.

In addition, if a trustee believes that an undeclared conflict exists and the affected trustee refuses to acknowledge the conflict, a candid discussion should take place at that time to resolve the situation. If a majority of the board determines that no conflict exists, no further action is necessary. However, if a majority of the board votes that the conflict violates the policy, the affected trustee must excuse him or herself from the meeting and neither participate in discussion nor vote on the issue in question.

Larry Walker (lw@walkercompany.com) is president of the Walker Company Healthcare Consulting LLC, Wilsonville, Ore. He is also a member of Speakers Express.

Sidebar - Vetting Process Must Explore Conflicts