Chat with us, powered by LiveChat Research several hospitals of your choice and identify how many Board members are on the Board and their length of appointment. As Boards are prohibited from managing, discuss the m | Writeden


Review your lectures. Then:

  • Research several hospitals of your choice and identify how many Board members are on the Board and their length of appointment.
  • As Boards are prohibited from managing, discuss the major duty of a Board. By what mechanism does a board understand the status of the hospital financially and operationally?
  • What did the Saberness-Oxley Act demand of Boards and why?
  • What is D/O (Directors/Officers) insurance and why is it needed?

Read more on “Hospital Board Infrastructure and Functions: The Role of Governance in Financial Performance

Read more on "Physicians on Hospital Boards: Time for New Approaches"

 As in all assignments, cite your sources in your work and provide references for the citations in APA format.

Sarbanes Oxley101. (2017) Welcome to Sarbanes Oxley 101. Retrieved from:

Merino, B. D., Mayper, A. G., & Tolleson, T. D. (2010). Neoliberalism, deregulation and sarbanes-oxley. Accounting, Auditing & Accountability Journal, 23(6), 774-792. doi:

 Your initial posting should be addressed at 300-500 words. 

 commenting on at least two of your classmates’ responses 

Compensation; Meetings; and Insurance.html

Compensation; Meetings; and Insurance

 With few exceptions, the vast majority of board members are not compensated monetarily for the work they perform. Members are proposed, nominated, and appointed from the community at large. Typically, successful community leaders, who have achieved noteworthy accomplishments in the public or private sector, are sought after as volunteers to lend their expertise.

Monthly Board Meetings

Board members will receive summary reports on all aspects of HCO operations at their monthly board meeting. These reports are delivered by senior executive members of the organization's management team. It is here, at the monthly meeting, that board members receive all updated and pertinent information. The information compiled and presented at these meetings forms the basis for the group decision-making process. The board may then choose to act, by way of a vote, to continue with or to alter current organizational policy. Additionally, the board maintains the privilege, at any time, of going into executive session. When executive session is called, all nonboard members in attendance must leave the room.

 Liability (Insurance)

 As an organization's policymakers, boards constantly deal in sensitive medical-legal issues. Board decisions, and the subsequent actions, are subject to legal liability, thereby necessitating directors and officers (D&O) insurance. This indemnity policy offers protection against the poor decisions/actions of the board. There is an older legal concept referred to as "The Prudent Man," which was protection for board members who served on nonprofit boards (NB). The Prudent Man eliminated the need for the NB board member to carry D&O insurance.

In this last lecture you learned how Boards are compensated. You also learned about the importance of liability insurance that must be held for members. Lastly there was a discussion on how meetings are conducted. Review the material below for more information of these topics.

Read more on “ Hospital Board Infrastructure and Functions: The Role of Governance in Financial Performance

Read more on " Physicians on Hospital Boards: Time for New Approaches "

South University Established 1899 Call the Technical Support Help Desk 1-877-8869 Copyright South University


Board Composition.html

Board Composition

 The Board of Directors is truly the voice of the community within the walls of Ancheta Medical Center.

  • The president is nominated and elected, for a specified term, from the general board population. Presidential terms are typically two to three years in duration, at which time a new nomination committee is created and the process is repeated.
  • The vice president may assume duties of the president, as needed, in the president's absence.
  • The board secretary is charged with maintaining up-to-date minutes of meetings, discussions, and voting records, as well as setting agenda items at the request of the officers or general members.
  • The treasurer handles fiscal and budget matters.
  • Internal board members are an interesting subtype. They are board members, with full committee and voting privileges, who are also employees of the organization. In a hospital setting, physicians often serve this dual role; however, on occasion, other executive staff members may be given internal board member status.

Only board members are permitted to vote on policy issues. Senior management may not vote, but may make recommendations. In HCO, the Joint Commission accrediting body requires that at least one physician be appointed as a general board member, so that the medical staff and their issues are represented.

So far, we have learned about the composition of the Board of Directors the main takeaway from this lecture We will now build upon our knowledge with our next lecture, which compensation, meetings and insurance of board members. As you continue to explore the information presented this week, reflect on how you might use new knowledge and skills in your daily work as a healthcare manager. 

Additional Materials

Presents a chart on hospital organization. South University Established 1899 Call the Technical Support Help Desk 1-877-8869 Copyright South University


Hospital Organization Chart An organizational chart depicts, in a branching manner, the underlying structure in an organization. An organization is headed by a board of directors, and this board has a chairperson. The board comprises of a compliance officer, a chief executive officer, and a medical staff president. The chief executive officer has a chief financial officer, an allied health services vice president, a support services vice president, a nursing services vice president, and a marketing/PR manager in his/her subordination. The chief financial officer has a controller, a health information management manager, a patient financial service manager, a physicians and surgeons group, and a medical officer manager in his/her subordination. The allied health services vice president has an imaging manager, a cardiopulmonary manager, a laboratory manager, a person responsible for rehabilitation services, and an information services manager in his/her subordination. The support services vice president has a nutrition and diabetes education manager, a food services manager, an environmental services manager, and a person responsible for materials management in his/her subordination. The nursing services vice president has an acute care manager; an ED and trauma services manager; a surgical services manager; a home health and hospice manager; an EMP health, infection control, Pt Ed and wellness manager; and a pharmacy manager in his/her subordination. The marketing/PR manager has a quality/risk manager, a plant operations manager, a human resources manager, and an employed medical staff, allied health, and anesthesia.

Page 1 of 1 Healthcare Structure, Organization, and Governance

©2014 South University




The Board of Directors.html

The Board of Directors

For those healthcare organizations that deliver healthcare services directly to patients, a structure of governance is in place, which may be called either the board of directors or the board of trustees. This entity is the steward of the organization and, as such, has one main duty—the development and review of organizational policy.

Duty and Structure

The board of directors accomplishes its duty of policy setting by establishing a committee structure. Relevant topics are established by the board and broken down into component parts.  Committees are then formed, to which board members are appointed. Independent meetings are set, and each committee focuses on a specific issue, need or concern of the organization. These committees are appointed and controlled by the board at large. Their members must be active board members, one of whom will be appointed chairman. 

The various committees will research, recommend, and direct activities that are essential to the overall function of the organization.  It is not unusual to have multiple committees in place at any given time.  Board committees have the privilege to recommend external support (such as consulting firms) to execute projects, design and conduct surveys, and analyze operations within the realm of their expertise.  Committees may recommend a consulting firm on their own, or approve/reject a request for consulting assistance from the chief executive officer (CEO).

Common types of committees:

  1. Finance
  2. Building and Grounds
  3. Exploratory (For new services, expansion of departments etc.)
  4. Mergers and Acquisitions
  5. Ad-Hoc (formed when a special concern develops)
  6. Nonreimbursable Care (serving indigent patients) 
  7. Selection of Lobbyist

The board will select the organization’s top leader—the CEO.  Other senior positions may require board approval; however, the board is likely to choose from a panel recommended by the CEO. 

In this lecture we have learned about Board of Directors and the role of governance the main takeaways from this lecture We will now build upon our knowledge with our next lecture, which compensation, meetings and insurance of board members. As you continue to explore the information presented this week, reflect on how you might use new knowledge and skills in your daily work as a healthcare manager. Review the material below for more information of these topics.


Sarbanes Oxley101. (2017) Welcome to Sarbanes Oxley 101. Retrieved from:

Additional Materials

Presents an article on corporate responsibility and health care quality: a resource for health care boards of directors. South University Established 1899 Call the Technical Support Help Desk 1-877-8869 Copyright South University

media/transcripts/CorporateResponsibilityFinal 9-4-07.pdf

Corporate Responsibility and Health Care Quality: A Resource for Health Care Boards of Directors

United States Department of Health and Human Services Office of Inspector General

American Health Lawyers Association

Corporate Responsibility and Health Care Quality: A Resource for Health Care Boards of Directors

Arianne N. Callender Douglas A. Hastings Michael C. Hemsley Lewis Morris Michael W. Peregrine

I. Introduction This educational resource is the third in a series of co-sponsored documents by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services and the American Health Lawyers Association (AHLA), the leading health law educational organization.1 It seeks to assist direc- tors of health care organizations in carrying out their important oversight responsibilities in the current challeng- ing health care environment. Improving the knowledge base and effectiveness of those serving on health care organi- zation boards will help to achieve the important goal of continuously improv- ing the U.S. health care system.

The prior publications in this series addressed the unique fiduciary respon- sibilities of directors of health care organizations in the corporate compli- ance context. With a new era of focus on quality and patient safety rapidly emerging, oversight of quality also is

becoming more clearly recognized as a core fiduciary responsibility of health care organization directors. Health care organization boards have distinct responsibilities in this area because promoting quality of care and preserv- ing patient safety are at the core of the health care industry and the reputation of each health care organization. The heightened attention being given to health care quality measurement and reporting obligations also increasingly impacts the responsibilities of corpo- rate directors. Indeed, quality is also emerging as an enforcement priority for health care regulators.

The fiduciary duties of directors reflect the expectations of corporate stake- holders regarding oversight of corpo- rate affairs. The basic fiduciary duty of care principle, which requires a direc- tor to act in good faith with the care an ordinarily prudent person would exercise under similar circumstances, is being tested in the current corporate

climate. Embedded within the duty of care is the concept of reasonable inquiry. In other words, directors are expected to make inquiries to manage- ment to obtain the information neces- sary to satisfy their duty of care.

This educational resource is designed to help health care organization direc- tors ask knowledgeable and appropriate questions related to health care quality requirements, measurement tools, and reporting requirements. The ques- tions raised in this document are not intended to set forth any specific stan- dard of care, nor to foreclose arguments for a change in judicial interpretation of the law or resolution of any conflicts in interpretation among various courts. Rather, this resource will help corporate directors establish, and affirmatively demonstrate, that they have followed a reasonable quality oversight process.

Of course, the circumstances of each organization differ and application of the duty of care and consequent

1 The other two co-sponsored documents in the series are Corporate Responsibility and Corporate Compliance: A Resource for Health Care Boards of Directors, The Office of Inspector General of the U.S. Department of Health and Human Services and The American Health Lawyers Association, 2003; and An Integrated Approach to Corporate Compliance: A Resource for Health Care Organization Boards of Directors, The Office of Inspector General of the U.S. Department of Health and Human Services and The American Health Lawyers Association, 2004.

reasonable inquiry by boards will need to be tailored to each specific set of facts and circumstances. How- ever, compliance with standards and regulations applicable to the quality of services delivered by health care organizations is essential for the lawful behavior and corporate success of such organizations. While these evolving requirements can be complex, effective compliance in the quality arena is an asset for both the organization and the health care delivery system. It is hoped that this educational resource is useful to health care organization directors in exercising their oversight responsibili- ties and supports their ongoing efforts to promote effective corporate compli- ance as it relates to health care quality.

II. Board Fiduciary Duty and Quality in the Health Care Setting

Governing boards of health care organizations increasingly are called to respond to important new devel- opments—clinical, operational and regulatory—associated with quality of care. Important new policy issues are arising with respect to how quality of care affects matters of reimbursement and payment, efficiency, cost controls, collaboration between organizational providers and individual and group practitioners. These new issues are so critical to the operation of health care organizations that they require attention and oversight, as a matter of fiduciary obligation, by the governing board.

This oversight obligation is based upon the application of the fiduciary duty of care board members owe the organiza- tion and, for non-profit organizations, the duty of obedience to charitable mis- sion. It is additive to the traditional duty of board members in the hospital setting

to be responsible for granting, restricting and revoking privileges of membership in the organized medical staff.

Duty of Care The traditional and well-recognized duty of care refers to the obligation of corporate directors to exercise the proper amount of care in their deci- sion-making process. State corpora- tion laws, as well as the common law, typically interpret the duty of care in an almost identical manner, whether the organization is non-profit or for-profit.

In most jurisdictions, the duty of care requires directors to act (1) in “good faith,” (2) with the care an ordinarily prudent person would exercise in like circumstances, and (3) in a manner that they reasonably believe to be in the best interests of the corporation.2 In analyz- ing compliance with the duty of care, courts typically address each of these elements individually. In addition, in recent years, the duty of care has taken on a richer meaning, requiring direc- tors to actively inquire into aspects of corporate operations where appropriate – the “reasonable inquiry” standard.

Thus, the “good faith” analysis nor- mally focuses upon whether the matter or transaction at hand involves any improper financial benefit to an indi- vidual and/or whether any intent exists to take advantage of the corporation. The “prudent person” analysis focuses upon whether directors conducted the appropriate level of due diligence to allow them to render an informed decision. In other words, directors are expected to be aware of what is going on around them in the corporate busi- ness and must in appropriate circum- stances make such reasonable inquiry as would an ordinarily prudent person under similar circumstances. The final criterion focuses on whether directors act in a manner that they reasonably

believe to be in the best interests of the corporation. In this regard, courts typically evaluate the board member’s state of mind with respect to the issues at hand.

When evaluating the fiduciary obliga- tions of board members, it is important to recognize that “perfection” is not the required standard of care. Directors are not required to know everything about a topic they are asked to consider. They may, where justified, rely on the advice of executive leadership and outside advisors.

In addition, many courts apply the “business judgment rule” to determine whether a director’s duty of care has been met with respect to corporate de- cisions. The rule provides, in essence, that a director will not be held liable for a decision made in good faith, where the director is disinterested, reasonably informed under the circumstances, and rationally believes the decision to be in the best interests of the corporation. In other words, courts will not “second guess” the board members’ decision when these criteria are met.

Director obligations with respect to quality of care may arise in two distinct contexts:

• The Decision-Making Function: The application of duty of care principles as to a specific decision or a particu- lar board action, and

• The Oversight Function: The applica- tion of duty of care principles with respect to the general activity of the board in overseeing the operations of the corporation (i.e., acting in good faith to assure that a reasonable infor- mation and reporting system exists).3

Board members’ obligations with respect to supervising medical staff credentialing decisions arise within the context of the decision-making

2 American Bar Association, Section of Business Law, Revised Model Nonprofit Corporation Act, Section 8.30 (1987).

3 In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996).

function. These are discrete decisions periodically made by the board and relate to specific recommendations and a particular process.

The emerging quality of care issues discussed in this resource arise in the context of the oversight function—the obligation of the director to “keep a finger on the pulse” of the activities of the organization.

The basic governance obligation to guide and support executive leadership in the maintenance of quality of care and patient safety is an ongoing task. Board members are increasingly expect- ed to assess organizational performance on emerging quality of care concepts and arrangements as they implicate is- sues of patient safety, appropriate levels of care, cost reduction, reimbursement, and collaboration among providers and practitioners. These are all components of the oversight function.

This duty of care with respect to qual- ity of care also is implicated by the related duty to oversee the compli- ance program.4 Many new financial relationships address quality of care issues, including pay-for-performance programs, gainsharing, and outcomes management arrangements, among others. State and federal law closely regulate many of these arrangements. Given that directors have an obligation to assure that the organization has an “effective” compliance program in place to detect and deter legal violations, they may fairly be regarded as having a concomitant duty to make reasonable inquiry regarding the emerging legal and compliance issues associated with quality of care initiatives, and to direct executive leadership to address those issues. The board may direct executive

staff to provide periodic briefings to the board with respect to quality of care developments so that the directors may establish a proper “tone at the top” in terms of related legal compliance. In other words, it is the role of the execu- tive staff to brief the board concerning new developments in the law and re- lated legal implications, and it should be the ongoing obligation of the board to reasonably inquire whether the organi- zation’s compliance program and other legal control mechanisms are in place to monitor the associated legal risks.

Duty of Obedience to Corporate Purpose and Mission Oversight obligations with respect to quality of care initiatives also arise—for non-profit boards—in the context of what is generally referred to as the fiduciary duty of obedience to the cor- porate purpose and mission5 of health care organizations. Non-profit corpora- tions are formed to achieve a specific goal or objective (e.g., the promotion of health), as recognized under state non-profit corporation laws. This is in contrast to the typical business corpo- ration, which often is formed to pursue a general corporate purpose. It is often said of non-profits that “the means and the mission are inseparable.”6

The fundamental nature of the duty of obedience to corporate purpose is that the non-profit director is charged with the obligation to further the purposes of the organization as set forth in its articles of incorporation or bylaws.7 For example, the articles of incorporation of a non-profit health care provider might describe its principal purpose as “the promotion of health through the provision of inpatient and outpatient hospital and health care services to

residents in the community.” Given that the board is responsible for reasonably inquiring whether there are practices in place to address the quality of patient care, it is fair to state that the concept of quality of care is inseparable from, and is essentially subsumed by, the mis- sion of the organization.

In the hospital setting, various pro- visions of the law dealing with the relationship to the medical staff also provide a link to the duty of obedience to corporate purpose. These include, for example, traditional provisions that confirm the responsibility of the board for (a) the conduct of the hospital as an institution, (b) ensuring that the medi- cal staff is accountable to the governing board for the quality of care provided to patients, and (c) the maintenance of standards of professional care within the facility and requiring that the medical staff function competently. The “duty of obedience” concept with re- spect to assuring compliance with law also might be considered to incorporate a duty to assure compliance with those state laws (and perhaps accreditation principles as well) that require the governing board to assume ultimate responsibility for organizational perfor- mance, which includes the quality of the provider’s medical care.

Summary In exercising his/her duty of care (and, as appropriate, duty of obedience to corporate purpose and mission), the governing board member may be expected to exercise general supervi- sion and oversight of quality of care and patient safety issues. This is likely to include (a) being sensitive to the emergence of quality of care issues, challenges and opportunities, (b) be- ing attentive to the development of

4 Id. 5 In some states, this duty is subsumed within the definition of the broader duty of loyalty. 6 Daniel L. Kurtz, Board Liability: Guide for Nonprofit Directors 84 (Moyer Bell Limited, New York,

1988), citing Commonwealth of Pennsylvania v. The Barnes Foundation, 398 Pa. 458, 159 A.2d 500, 505 (1960); In re Manhattan Eye, Ear & Throat Hosp., 715 N.Y.S.2d 575 (1999).

7 Kurtz, supra.

specific quality of care measurement and reporting requirements (including asking the executive staff for periodic education), and (c) requesting periodic updates from the executive staff on organizational quality of care initia- tives and how the organization intends to address legal issues associated with those initiatives. Board members are expected to make reasonable further inquiry when concerns are aroused or should be aroused. These expectations increasingly are becoming more sig- nificant with the increased attention to quality of care issues from policy mak- ers, providers and practitioners, payors and regulators. Board members must be, and must be perceived as, respon- sive to this changing environment.

III. Defining Quality of Care and the Critical Need to Imple- ment Quality Initiatives “The American health care deliv- ery system is in need of funda- mental change. Many patients, doctors, nurses and health care leaders are concerned that the care delivered is not, essentially, the care we should receive … Quality problems are everywhere affecting many patients. Between the healthcare we have and the care we could have lies not just a gap, but a chasm.”8

In Crossing the Quality Chasm, the Institute of Medicine (IOM) provided a six-part definition of health care quality that some view as the emerg- ing standard. According to the IOM, health care should be: safe – avoid- ing injuries to patients from the care that is intended to help them; effective – providing services based on scientific

knowledge to all who could benefit and refraining from providing services to those not likely to benefit (avoiding underuse and overuse, respectively); patient-centered – providing care that is respectful of and responsive to indi- vidual patient preferences, needs, and values and ensuring that patient values guide all clinical decisions; timely – re- ducing waits and sometimes harmful delays for both those who receive and those who give care; efficient – avoid- ing waste, including waste of equip- ment, supplies, ideas, and energy; and equitable – providing care that does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, and socio-eco- nomic status.9 Because this definition of quality increasingly is being adopted by payors, providers and regulators, health care organizations and their boards will need to be mindful of its implications.

The U.S. health care system is at a challenging point in its history. It is, for many important historical reasons, a mixed public-private system, and there is no foreseeable dynamic on the horizon suggesting a major change to this reality. The health care system also arguably is driving the U.S. economy. A recent federal forecast predicts that over the next decade, U.S. health care spending will double from today’s level to $4.1 trillion and will represent 20% of the gross domestic product.10 We have a health care system that is extraordinarily advanced, yet