When any special interest group seeks financial relief from Washington lawmakers, the one thing the group can't afford is the perception that one of its members is greedy. That is the risk the American Hospital Association runs by continuing to allow key members of its board of trustees to serve on the boards of companies that sell goods or services to the nation's hospitals.
In his Dec. 2 cover story "Boardroom disclosure" (p. 8), reporter Vince Galloro disclosed that five AHA board chairmen over the past 10 years simultaneously served on the boards of other healthcare companies during their three-year tenure as an AHA chair officer. Those posts include chairman-elect, chairman and immediate past chairman. Many of the chairmen over that same period of time are split on the issue. Some, like Reginald Ballantyne III who chaired the AHA board in 1997, say it's OK. Others, like Larry Mathis who was AHA board chairman in 1993, say it isn't. Mathis is right for both political and practical reasons.
Modern Healthcare readers know that this magazine often takes a skeptical view of any segment of the healthcare industry that claims it's going broke. When blowing against a gale of high-profit margins, building booms, rising executive compensation, growth of specialty providers, expanding market share and initial public offerings, those claims often fall short. But if you want Medicare and Medicaid payment relief, it's a prerequisite position to argue that your segment of the industry is in a state of crisis. And that's what the AHA is saying about the hospital industry right now. In one position paper, the AHA says, "We are not struggling to be a viable entity; we are struggling to survive."
If that's the case, industry icons such as those serving as AHA chair officers shouldn't look like they're trying to cash in on their insider status by accepting board positions-often paid positions-at other healthcare companies. These deals make the AHA look hypocritical: How can its leaders say hospitals are going broke while the leaders themselves may be personally profiting? And if the hospital industry is indeed in a state of crisis, why would so many entrepreneurial companies be targeting the industry with high-powered hospital executives on their boards?
The AHA says none of this is a problem because chair officers are required to disclose their corporate affiliations, and the individuals themselves are beyond reproach and would never act in a fashion contradictory to AHA policy objectives. That may be true, but no one cares. In our Nov. 25 editorial "Trust, that valuable, fragile asset" (p. 16), Managing Editor Neil McLaughlin wrote about the level of trust in the healthcare industry being at a critically low level, according to several experts. Saying something is acceptable simply because it was disclosed and because the executive involved is a good guy isn't enough anymore. Even the appearance of a conflict of interest can be devastating.
There are practical reasons that the AHA should change its policy as well. What is good policy for AHA hospital members may not be good business for certain companies that sell things to AHA hospital members. Let's say hospitals want some product or service regulated by the federal government, and the company that makes the product or provides the service doesn't want to be regulated and has the AHA chair on its board. Why even go there?
Finally, you have to wonder how AHA chairs can run their own complex health systems, serve as the AHA's elected leaders and find the time to serve on outside boards. If the nation's hospitals are truly struggling financially, they deserve to have their AHA chair officers paying full attention to their needs.
Hence, the AHA should bar its chair officers from serving on the boards of for-profit healthcare companies if the association truly wants to serve its members. We've received a number of calls and letters reacting to Galloro's cover story, all supporting such a prohibition.
What do you think?
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