Healthcares reliance on government reimbursements and the changing nature of serving on a corporate board of directors explain why three healthcare companies have recently appointed former politicians to their boards, according to one executive recruiter.
Tom Giella, head of the North American healthcare services practice for Korn/Ferry International, said it shouldnt be surprising that Tenet Healthcare Corp., Universal Health Services and Magellan Health Services have appointed prominent politicians to their boards.
Magellan, Avon, Conn., added former U.S. Rep. Nancy Johnson (R-Conn.) to its board last week. In April, Dallas-based Tenet added former Florida Gov. Jeb Bush, also a Republican, to its board, while Universal, King of Prussia, Pa., appointed former U.S. Sen. Rick Santorum (R-Pa.) to its board. Records show that all three politicians received political donations from organizations or people related to the companies that they joined, which could lead to questions about how close the relationship is between the politicians and the companies.
Directors are under more pressure to scrutinize company operations because of the Sarbanes-Oxley Act, Giella said, so companies are looking for directors who have expertise in key areas. One example is auditing partners from major accounting firms, he said. Former politicians bring experience with Medicare and Medicaid, and relationships with legislators and program administrators, he added.
But companies should tread carefully, Giella added. You cant get someone who is controversial or has some baggage, he said. Ideally, the company and its executives have not contributed to the campaigns of a politician who is being considered for its board, Giella said. Otherwise, it gives the appearance that the relationship between the politician and company is too cozy, he said.
Nevertheless, Bush, Johnson and Santorum all have received campaign contributions from either the chief executive officers or the political action committees affiliated with the companies that have appointed them as directors.
Santorum has received the most support among the three. Alan Miller, the founder, chairman, president and CEO of Universal, donated more than $5,300 to Santorums campaigns between 1999 and 2006, according to the Center for Responsive Politics.
The Universal Health Services Employees Good Government Fund donated $1,000 to Santorums campaign during the 2000 election cycle, according to the centers Web site.
Miller did not address his donations to Santorums campaigns, but said through a spokesman: Rick Santorum is everything youd want in a board memberhes thoughtful, inquisitive and committed.
Johnson received $4,200 from Magellan Chairman and CEO Steven Shulman during the 2006 election cycle, according to the center. Shulman lives in the district that Johnson used to represent and has long admired her work, said Erin Somers, a Magellan spokeswoman.
Tenet gave $500 to Jeb Bush in 2001, according to the Elections Division of Floridas Department of State. There was also Tenet-related support for Bushs brother. Trevor Fetter, Tenets president and CEO, donated $3,000 to George W. Bush in 1999 and 2003, according to the centers database. The Tenet Healthcare Corp. PAC gave $5,000 to George Bush in the 2000 election cycle, also according to the center.
Tenet had asked a recruiter to find a director with Florida ties about a year ago, said Steve Campanini, a Tenet spokesman. The company approached Bush earlier this spring, after he left office, Campanini said.
Craig Holman, campaign finance lobbyist for advocacy group Public Citizen, said the so-called revolving door between politics and industry is not a Republican problem or a Democratic problem. Both parties partake in the abuse.