John Forsyth has a stellar background for his new position as president of Iowa's Board of Regents, which oversees the University of Iowa Hospitals and Clinics as well as three state universities. In addition to being one of the state's leading business executives, Forsyth logged 26 years at the University of Michigan Health System, including 10 years at its helm.
But there's a hitch: Forsyth also is chairman and chief executive officer of the state's largest health insurer, Wellmark Blue Cross and Blue Shield. Wellmark is the 769-bed university hospital's second-largest payer, after Medicare.
In an era of tension between health plans and hospitals, having an insurance executive lead a board that oversees a major teaching hospital is unusual, if not unique, according to industry sources. But in Iowa, where some argue that the pool of top business and academic leaders is limited, few eyebrows have been raised.
Governance experts say it's a prime example of how potential conflicts can be difficult to avoid, and therefore must be carefully managed, primarily through disclosure and selective abstentions.
In Iowa, regents hold public meetings and are required to file annual financial disclosures with the state.
"There are so many conflicts of interest, you are never going to eliminate them all," said Thomas Dolan, president and CEO of the American College of Healthcare Executives. "The question is how do you ensure the public trust?"
Iowa Hospital Association spokesman Scott McIntyre said some of its members expressed concern about a conflict of interest, but the association was assured by the integrity of the nomination pro- cess. Forsyth was nominated to the board last year by Gov. Tom Vilsack and confirmed unanimously by the state Senate. The Blue Cross and Blue Shield Association had no comment.
Forsyth has assured skeptical Iowans that Wellmark's payment structure-which includes uniform fees for all hospitals adjusted annually based on government inflation indicators-has abolished negotiations that might pose a financial conflict. In addition, he said, regents don't select health plans for university employees. "I think I could serve on any hospital board in Iowa and not have a conflict," he said.
In addition, Forsyth said the board of the Des Moines-based insurer commissioned an independent review to make sure that no embarrassing conflicts would arise and delegated contacts with the university hospital, which is located in Iowa City, to Wellmark's chief financial officer.
The regent's seat doesn't come with compensation or even free football tickets, said Forsyth, 54, who added that he pays for his own travel to meetings. "I have a great passion about higher education," he said. "To me, it's just a way to give back."
Several governance consultants said Forsyth's position shouldn't preclude his service as a regent, but they cautioned that it must be managed carefully.
Governance consultant James Orlikoff said Forsyth could be "subtly conflicted" by a desire to hold down the state's overall healthcare costs, which could prompt him to oppose expensive capital projects. "The real issue is going to be the notion of a mission conflict. When you've got a board, you want everyone to be approaching it from the perspective of what's in the best interest of this organization," he said.
But other experts said the possibility that Forsyth could have a significant impact on healthcare capital spending is remote. The university hospital receives only between 6% and 7% of Wellmark's total claims payments in Iowa and South Dakota. Further, teaching hospitals tend to overspend on capital projects and might benefit from a fiscal conservative, some experts said.
But John Horty, a Pittsburgh healthcare lawyer, said the conflict could promote capital spending. "As chairman of the board of regents, he's got an incentive to aggrandize the university because it's on his watch," Horty said.
Fellow regent Amir Arbisser, a pediatric ophthalmologist who practices in Davenport, Iowa, said he feared that Forsyth might act against the teaching hospital's interests, but so far his concerns have been unfounded. In his first year on the board, Forsyth approved big-ticket diagnostic equipment and supported a plan to build an ambulatory surgery center adjacent to the hospital, which Arbisser himself opposes.
"He's supportive when it's logical. The only thing he insists upon is that people do their homework before they bring it before the board," Arbisser said.
Forsyth has abstained from one vote, on a contract for a chilled water plant designed by a company whose CEO sits on the Wellmark board. He voted for the hospital's $608 million annual budget, which constitutes a little more than half of the total university budget.
Robert Downer, the Board of Regents' president pro tem and an Iowa City lawyer, has identified areas of potential weakness in university governance and is drafting policies to shift reviews of board conflicts from the board president to the state attorney general's office and to restrict regents from requesting information from university divisions for a non-university purpose.
But Downer said neither of those ideas emanated from concerns about Forsyth. "In my view, the time to try to deal with things of this sort is not in terms of a reaction to something someone may feel is inappropriate," Downer said.
Some officials contacted by Modern Healthcare, including the two regents and the Iowa Hospital Association, said they were assured that the attorney general's office reviewed Forsyth's pending nomination at the request of the governor's office. "We take some comfort in that," McIntyre said.
However, that review might have been less rigorous than some believe. Bob Brammer, spokesman for Iowa Attorney General Tom Miller, said the attorney general did not rule that there were no conflicts of interest but rather advised the governor informally that Forsyth's appointment wasn't precluded by the state's incompatibility law, which bars one person from holding two different public offices that are at odds. That wasn't the case for Forsyth, who holds just one public position.
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