Two prominent trade association executives, including one specializing in healthcare governance, say their positions on the advisory board of a German healthcare information technology company trying to gain a foothold in the U.S. market pose no conflict of interest.
Indeed, said William Jessee, president and chief executive officer of the Medical Group Management Association, In all candor, thats what associations do. Were the marketing channel for a variety of companies.
Since 2005, Jessee and other physician-executives including John Combes, president and chief operating officer of the Center for Healthcare Governance, a not-for-profit subsidiary of the American Hospital Association, have advised InterComponentWare on product design and strategy. The ICW advisory board meets twice a year and pays an unspecified small honorarium and travel expenses, said Nils Effertz, a company spokesman.
Founded in 1998 with global headquarters in Walldorf, Germany, privately held ICW is marketing a Web-based personal health record. The companys principal investor is Dietmar Hopp, a co-founder and former CEO of IT company SAP, although ICW and SAP are completely independent, Effertz said.
We came new to the U.S. market two years ago and (the advisory board) helped us avoid pitfalls on the market-strategy side, so we are very happy with the board, Effertz said. But its important to point out that there is no conflict, no expectation as far as pushing business or sales.
Time spent on outside boards has been an issue of late for executives at not-for-profit organizations, including hospitals. Most recently, board members at the Smithsonian Institution were barred by the organizations regents from serving as directors on corporation boards. In addition, former Secretary Lawrence Small and Deputy Secretary and Chief Operating Officer Sheila Burke were criticized in part for spending too much time on lucrative outside boards (June 25, p. 8).
A trade association executives membership on the advisory board of a company that might be a potential vendor for its membership sounds reasonable as long as the executive complies with the internal policy of the associationand it is in fact a true advisory board, said Richard Cowart, a governance expert and head of the health law practice at Baker, Donelson, Bearman, Caldwell & Berkowitz in Nashville. I think its a fair question, but its something that should be handled within the conflict-of-interest policies, he said.
Prohibiting executives from serving on a board that directly does business with the association would be appropriate, but a blanket policy involving any potential vendor to its membership might be too broad, he added. I would consider it more in the extreme than the norm, Cowart said about such a policy.
Jessee said in compliance with his MGMA contract, he discloses all outside involvements, although in the case of ICW and companies like it, his membership on the ICW advisory board actually presents an opportunity for the trade association. The honorarium he is paid goes directly to the MGMA. I dont even want to deal with it on my income tax, he said.
Money he earns from consulting fees and other nondues revenue helps keep member dues affordable, Jessee added. We have companies that pay us for everything from advertising to exhibiting to consultation and advice. Thats basically the nature of the association business, Jessee said.
Combes similarly discloses his activities on the ICW advisory board to the AHA in compliance with the associations policy, and it was reviewed by the compliance officer, said Alicia Mitchell, an AHA spokeswoman. His honorarium is invested back in the association, she said. She noted that Combes serves on the ICW advisory board at the request of David Nash, chairman of the department of health policy at Jefferson Medical College in Philadelphia.
For his part, Nash said that he organized the advisory board in his capacity as the chairman of health policy at Jefferson under a grant to the department from ICW to conduct strategic planning with them. He would not disclose the size of the grant, deferring to ICW.
Other members of the nine-member ICW advisory board include Blackford Middleton, chairman and corporate director of clinical informatics research and development at the Partners HealthCare Systems Center for Information Technology Leadership; and David Merritt, project director at the Center for Health Transformation, which is led by former House Speaker Newt Gingrich.