Does a problem exist when a voluntary board member also owns a business that does not do business with the hospital group?
According to Partners HealthCare, New England's largest healthcare company, there is a problem, and this issue has been tested against Jack Connors, the chairman of Partners HealthCare for the past 13 years.
Accordingly, Connors has the ultimate authority over which business ventures his company must disclose to government officials who regulate nonprofit organizations like Partners. What makes issues more complicated are when the private interests of its board of trustees – a group of Boston's power elite – intersect with the interests of the company, an occurrence that happens quite regularly.
However the real issue for some former board members at Partners is that Connors sold a leading medical education firm in 2004, for a nice profit. But why is a five-year-old business dealing important now?
Consequently, the board also notified public officials of Connors's ownership of a fledgling home healthcare firm that directly solicited Partners' hospitals for business. Conversely, according to the Boston Globe:
“Connors and top Partners officials defended the decision not to publicly disclose Connors's potential conflicts because Partners did not directly contract with either of Connors's firms. Connors also defended his right to be an entrepreneur in the healthcare business while also chairing Partners' board, and strongly denied ever using his position for personal or financial advantage.”
Moreover, although the larger company, M/C Communications, benefited financially from millions of dollars in sponsorship revenue paid it from major pharmaceutical firms eager to play to this professional audience, these fears are exaggerated.
In response to such criticisms, Connors asserts that he was under no obligation to disclose his ownership of M/C Communications to the Partners board because there was no formal contract between Harvard Medical School and the two Partners hospitals (Brigham and Women’s). In fact, executives at M/C Communications determined that Connors ownership of M/C Communications did not warrant disclosure to the full Partners board. Moreover, state and federal law only require nonprofit organizations to report annually those instances – officially called "related party transactions" – in which a director of the nonprofit is doing business with the nonprofit.
Still, three former members of the Partners board told the Globe that Connors's ownership needed to be reported to the Internal Revenue Service and the state attorney general's office, and other specialists agreed. Specifically, the Globe quoted W. Michael Hoffman, executive director of the Center for Business Ethics at Bentley University and a specialist in corporate conflicts of interest, who noted that:
“Partners officials should not have unilaterally decided to forgo the board's guidance on how to deal with Connors's ownership of M/C,” and that “M/C's relationships with Harvard Medical School and the pharmaceutical industry were close enough that Partners trustees should have discussed it.”
Mr. Hoffman is clearly forgetting and choosing to loosely interpret state and federal law: there was no ‘related party transaction,’ or in other words, a contract.
Former Massachusetts attorney general Scott Harshbarger had similar concerns, specifically with the large number of Partners trustees who have financial ties to the company. In fact, although a 2007 study by the Center for Healthcare Governance, an affiliate of the American Hospital Association, recommended that healthcare nonprofits ideally should prohibit board members from having financial ties to the company, nine of the Partners' 16 trustees in 2007 were executives for firms that do business with Partners.
The former prosecutor did not consider comments from Partners spokesman Rich Copp, who explained that “The Partners board is entirely volunteer, and composed primarily of individuals who are trustees of our hospitals and as well as physicians.” Mr. Copp further stressed that these members "are civic and business leaders of consequence” who do not make purchasing decisions for the organization, and manage potential conflicts through our disclosure process."
Connors firmly established that no one on the board has ever personally solicited business from Partners or any of its affiliates on behalf of the companies they represent.
Ultimately, to regurgitate a story like this after five years is not only ridiculous but serves as an attack on the character of a charitable and civic businessman. The contributions and investment Connors and Partners, along with his other ventures have helped numerous patients, employed numerous staff, and helped further progress health care.
Critics need to focus less on those individuals who are actually changing health care in the proper manner—using disclosure and consulting numerous parties involved—and instead find some kind of mechanism for board members to make money, otherwise why would anyone serve on boards?
There needs to be some sort of trade off, since board members can make millions, but Partners doctors both on and off those boards are limited.
In the case of Partners their Physicians have been put under sever restrictions by those same board members who don’t have a problem with making money themselves.
The Globe article should remind the board members that their friends are the practicing physicians and not the local media that they long to placate, in the end they suffer the same fate as those they seek to regulate.
Martha Coakley, when are you going to do something about Partners Healthcare before the people in New England have no choices in their healthcare? They are not a non profit entity and are ruthless thugs.