AHLA's Speaking of Health Law
AHLA's Speaking of Health Law
Conversations on Health Care Governance: Duties of Nonprofit Board Members
In the first episode of this three-part series focusing on health care governance issues, Rob Gerberry, Senior Vice President & Chief Legal Officer, Summa Health, speaks with Michael Peregrine, Partner, McDermott Will & Emery LLP, about the nature and scope of the fiduciary responsibilities facing board members within nonprofit health systems. They discuss standards of conduct, expectations, and the line between governance and management. From AHLA’s Business Law and Governance Practice Group.
Listen to the second episode, which discusses issues facing nonprofit board members, here.
Listen to the third episode, which discusses advising nonprofit board members, here.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
This episode of ala Speaking of Health Law is brought to you by ALA members and donors like you. For more information, visit american health law.org.
Speaker 2:Uh, thank you everyone. And welcome. Uh, I'm Rob Gerber. I'm a board member of the American Health Law Association, uh, the Chief Legal Officer at Summa Health, and I'm proud to welcome Michael Perrin. Michael is a partner at the firm of McDermott will in Chicago, and an expert in the field of corporate governance, and appreciate him doing this series. We'll have three parts to this series. I will be sharing part one today, where we'll review the nature of fiduciary duties, the elements to scope, the obligations that fiduciaries have and their board service. The second podcast will present on current developments in the healthcare sector that are implicating the exercise of those fiduciary duties. And then our third podcast will present ways that our HLA membership can best advise their clients as these duties continue to evolve. So, for today, we're gonna look at current events that are implicating the exercise of healthcare boards, uh, fiduciary responsibilities. As we know right now in the industry, health systems are facing substantial losses, and their financial pressures are putting new challenges around hospital operations. Boards are also being presented with updated corporate crime enforcement guidelines, recently introduced by the Department of Justice. They're facing oversight responsibilities around workforce culture issues. As we look at the great resignation, quite quitting and low job participation rates, and the use of temporary labor. We're also looking at mission related issues. As we've seen in the media recently, uh, health systems are being challenged related to their mission based services. And lastly, as we look at the governments antitrust enforcement issues, what it will be, the consolidation in our industry as health systems face these financial pressures in particular today, though one observation recently from the healthcare financial management, uh, association around how does an all volunteer governance model that dominates our non-profit sector continue to engage the right talented experts as their board responsibilities become more complex and demanding? So, with that, I look forward to engaging with Michael today in a conversation around some of those responsibilities. So to start, Michael, maybe you could share, um, your perspective on the role of board fiduciary duties within the organizational hierarchy of a nonprofit health system.
Speaker 3:Thanks, Robin. Thanks to you and to HL a for having me, uh, with you and the membership today. You know, on the hierarchical issue, I always use the example of the step ladder, uh, that we keep in our kitchen closet. Never, can't ever pull out when we need it. Uh, it always gets stuck with the broom and the mop and things of that nature, but it's got five steps, uh, to it. And from a governance persp, if we look at the overall leadership level of, of the, uh, uh, of the organization, and we look at it in the context of that, uh, kitchen, uh, step letter, uh, the, the membership of the organization, uh, and the, the beneficiaries of the organization, uh, are the top two ladders. Uh, who do we work for? And we'll be talking about that more later on. But, you know, that very top level is the corporate mission, the purposes of the organization. The next level down, uh, with membership corporations is, are the members of the organization. And, and some, many of our members, uh, represent corporations that do have corporate members. Uh, then the third level is the, the step down is the board of directors. And I think that's interesting, uh, for people to, if you can, again, Ima uh, visualize it. We're on the third level of leadership, uh, on the ladder as we go down from the, that third level where the, uh, boards sits. We have executive management, and then appropriately, the last two levels are auditors. And finally, the legal counsel come in at the very end, but all with rules and corporate governance. The issue with respect to the board of directors, I suspect that in just about every state in which our members may, uh, practice law, the both the Business corporation law and the not-for-Profit corporation law indicate that the business of the organization is, is the responsibility of the Board of directors. Period, end of story. Then if you go to the second sentence, in that statute, it says, But the board of directors may delegate their duties, uh, to competent management whom, uh, whose operation they must supervise. And I think that's really the statutory grounding of a board of directors that, uh, ultimately the responsibility is theirs in terms of supervision of the day-to-day operations of the business. Uh, but the law doesn't expect them, uh, uh, directors to, to manage the business. That's why we have a management team. But the board does ex, excuse me, the law does expect the board to supervise management and to monitor the succession process and things of that nature. So when we look at it from a hierarchical perspective, think of the latter, think of the top rung of the ladder being the mission, the second run being the members who may, uh, serve, uh, as our members of our organization in the third level, being the board of directors.
Speaker 2:Great, Mike. And while we're talking about organizational hierarchy, I often get asked, what is the role of a subsidiary board member vis-a-vis a parent board member? And would you mind commenting on that as health systems get more complex?
Speaker 3:I think it all depends on the bylaws, uh, and in the organizational structure. Um, the, as as we're gonna be talking about again, a little bit later in our conversation, board members owe their duties to the, to the mission of the or in the not-for-profit sense to the mission of the organization is set forth in the articles of incorporation. Many, uh, not-for-profit health systems have unified, uh, corporate purposes. And by that I mean, they basically say the same thing. All organizations are united in terms of their duties, uh, and their duties to serve the corporate mission of the parent organization. So I think that a, to answer your question, the dr the duties of a subsidiary director are to exercise and perform, uh, do his duties of care and loyalty as they are prescribed by the bylaws of the organization for the benefit of the charitable mission of that corporation, which hopefully is the unified mission of the organizations. A lot, a lot of things have to come in place, but again, you look to the bylaws first, the do their duties are to, to perform the responsibilities under the bylaws. And hopefully those are cons. The mission is consistent with a system-based mission, which makes life a lot easier for this chief legal officer.
Speaker 2:Great. So for those new to this, the space, um, what exactly is a fiduciary? How would you explain that, uh, to someone new to the industry?
Speaker 3:Well, I think you need to envision if you can, uh, that old white guy with flowing long white hair in, in a robe, kind of like, uh, uh, Arnold Schwartzenegger and Aze outfit. Um, uh, there was, I believe, and this is, you know, I'll don't quote me on this, but I do believe that back in the Roman and Greek times, there was some guy named fiduciary who went around with this, you know, stone tablet preaching wisdom and advice to the, uh, to, to everybody else hanging around the Acropolis. But I think in, from a, the law's perspective, and this goes back to, you know, judge, learn at hand and all that stuff that we learned at law school and quickly forgot, the role of fiduciary is to act, uh, in, in the context of extraordinary loyalty to an individual or to an organization, a, a special role of trust that exists between that person and the organization or another person. So the, the concept of fiduciary duty relates to something truly special, Something re u unique, a relationship that goes beyond a contractual relationship, a relationship in which the recipient of that duty, i e a corporation, can expect to receive special loyalty, special consideration, and special duty.
Speaker 2:Great. And for that new board member, if he asked you, how do you delineate, you know, those fiduciary duties, what would be your response?
Speaker 3:I don't think this is one of those areas where it doesn't really make too much of a difference. With sophisticated not-for-profit corporations code, the duties are gonna be pretty much the same whether you're serving as a for-profit director or a not-for-profit director. The business corporation rules and the common laws of most states kind of speak of the duties in a consistent way. Ultimately, it's the, it's the prism through which those duties are exercised. That's a key issue. But we're talking about the duty of care, the duty of loyalty, and, and I want to mention the duty of obedience in a second, but the duty of care, uh, you know, it, uh, is that, uh, doing your best job with respect to two fundamental tasks, making business decisions and exercising oversight, uh, the business judgment rule, uh, is involved with the business des uh, making business decisions aspect of the duty of care. Uh, but it doesn't apply to the oversight factor of the duty of care. And so we're talking about essentially in most states, using the prudent man rule in decision making and using a a a a attended the standard with oversight. I will add, and I think a lot of our listeners are aware of the fact that, uh, a year ago, just about this time, the, uh, Delaware courts ruled, uh, in on the Boeing share shareholder's derivative suit from that case came what we now know as a, uh, as a, uh, de facto if, uh, if not the jury, uh, obligation of management to provide the board with formal reporting on mission critical risks to support that oversight obligation. So think of the duty of care split into two different aspects, uh, decision making and oversight. The duty of loyalty is split into at least three obligations. A, um, don't try to go out and enter into relationships that create conflicts of interest, uh, and disclose them when you've got'em. Number two, keep confidential, uh, information that comes your way regarding proprietary information in the organization. What, uh, what you hear in Las Vegas stays in Las Vegas. And number three, um, appropriation of corporate opportunity. And I, I think we're going to have a test for all people listening to this podcast if they can spell appropriation on one try blindfolded. Uh, but that applies to essentially don't cut ahead in line of the corporation with respect to an opportunity that, you know, the, uh, the corporation itself is interested in. I mentioned the duty, uh, of, of obedience to corporate mission. Rob, in the context of what you mentioned at the top of the presentation, uh, there is all of a sudden quite a bit of focus, uh, media focus, hopefully not state charity official focus on, um, charitable mission, not-for-profit status. And, uh, acting and, and making it clear, uh, there's that, there's, you are operating with a not-for-profit mission in mind. I think that the, the most modern perspective say that this, oh, there is an obed of directors have an obedience to the, to uphold the mission of the organization. And, and it's compliance with law in most states, that's kind of pulled within the duty of loyalty generally. But any way you cut it, I think in terms of our, uh, members who are listening to this podcast and are, are being asked to advise their board and their leadership on mission related issues, uh, and someone says, Well, why does the board have to know the board absolutely has an obligation to secure and protect the charitable mission of the not-for-profit organization?
Speaker 2:Great. So when we think about the unique, uh, role that a non-profit health system plays in its community, a lot of time it's the largest employer. It's the safety net entity that serves all that need. Healthcare. Um, it also provides a lot of community service as a board member looks at who ultimately they owe their fiduciary duties too. Who should they serve in those different contexts?
Speaker 3:Well, two parts to that question. There's the technical legal question, and then there's, where's the laws going a little bit in this regard. Um, I, I think the technical legal question is, unlike the for-profit corporation directors of a not-for-profit corporation, oh, their duty to the stated purpose, notfor profit purposes, uh, set forth in the articles of incorporation. And as you know, that's typically tied into a section of the state not-for-profit code, which says a corporation can be formed, uh, in the non-profit model for a variety of, you know, 10, 15 different not-for-profit purposes. But the purposes clause, uh, in the articles is, is where the action is. And it's unfortunate to a sense that a lot of times that that's the clause, it hasn't been changed or even looked at in 50 years or so, but it, it is essentially, it's, the concept is the board member owes a duty to a thing, to a theme to the concept of what the organization was set up for, and to preserve the non-profit purposes, Uh, that exists. That corporation was formed for providing health to the community, supporting a particular charitable organization's or religious organization's healthcare mission, whatever it is, your job is to make you exercise your duties in the best interests of what you perceive to be in the best interest of that mission. You raised some issues that are kind of now being popular from the ESG area and from what the business round table has called the reexamination of the purposes of the organization. You know, the, the common, the basic background of all this is that, that corporations will be more profitable, and this is in the business corporations, and it's more profitable if they pay broader attention to the multiple constituents of an organization. And as the business round table looked at it, those are not only the shareholders of a for-profit corporation, but as you've indicated, their workforce, uh, their communities, their vendors and, and other, uh, constituents, uh, in, in terms that the organization interacts with. Uh, is that a controversial concept? Uh, you know, it depends who you talk to. Uh, is it a statutory concept? Actually, I think in some states, and I believe Rob your state has a provision of this in its not-for-Profit Corporation code, uh, that actually authorizes the not-for-profit board to take into consideration those kinds of factors, social, political, community, vendor, workforce in its decision making. So, uh, you know, but the bottom line is ultimately even those broader constituent interests would need to be exercised within the context of what is best for the charitable mission of the organization.
Speaker 2:So, Michael, maybe to probe a little deeper on that, if a board member was conflicted, if they were trying to, uh, balance the continued financial viability of an organization and evaluating potentially shutting down services versus a code section saying they need to preserve community access to care, how could they look at that in this current climate?
Speaker 3:Boy, they need to talk to their general counsel, that's for sure. Uh, you know, I think that the conflict of mission is, you know, I think I would come down and, and, and say that generally speaking, uh, that we need to air on the side of, of the long term viability of the organization. Um, so that I think that the, or the financial stability, the organization, uh, is going to be the predominant theory. Your creditors and bond holders will be interested in that. If it gets to be a super tight issue, uh, you know, you need a, uh, uh, uh, jump ball here, you would go to the Attorney general and start to walk that through. Uh, but I think the financial viability of the organization is critical. I, I, I will say, as in the side, Rob, that you've just touched on something that is so political these days, closing facilities, um, which, you know, obviously has to be done as a matter of financial prudence, the mechanics of that, the politics, that the, the decision, uh, to do that has not only legal considerations is has political considerations that has social considerations. The social considerations in this environment can drive, uh, a government response that could be, uh, extraordinarily unfortunate. My general advice is, uh, if you think you are going down this road, give some consideration to working it out in advance with the state charity officials in your state. Don't surprise them.
Speaker 2:So, as board members now are facing these difficult decisions, what are the standards of their conduct that they'll be evaluated based upon? Uh, I know there's a reticence for some to serve on these non-profit boards in light of, uh, some of these challenging decisions they face.
Speaker 3:Well, Rob, I go back to your, your quote from H F M, uh, which I think is, was so important. And again, I'm gonna quote it because it's, it's, we need to hear it. Uh, essentially the standard of conduct right now, while from a legal enforcement perspective, we're talking about gross negligence, but it's really, uh, board members of not-for-profit health systems have to work harder, faster, longer. I, I, I think that we have come out of the pandemic, uh, with the law and those interested in what directors do, expecting board members essentially to be on, uh, keeping their finger on the pulse of the entirety of corporate operations, including, and I wanna underscore this, including its diversified portfolio. Uh, I, I get concerned with, with executives who want to steer the parent board away from oversight of the, uh, let's say the non-health care, not inpatients, uh, provider side of the business. Uh, that, that makes me worried. Uh, they need to be focused on the entirety of the organizational portfolio. They need to be focused on the oversight of the entirety of the business of the organization. H F M A said, the all volunteer governance model that dominates not-for-profit health systems and hospitals is losing adherence as the role of the board of directors becomes more complex and demanding. And I would say amen. Uh, we, we are asking more of our board members, uh, in terms of their attentiveness, their attention, their focus, uh, uh, and this be because that's the nature of our business. Now, um, this is entirely a different model, uh, than when I started practicing health law, uh, in 1980 with the leadership of, uh, uh, the late Ed Bryant, the great, uh, founder in many cases of, of, well is now our health law practice, uh, in the United States. And back then it was, you know, strictly community members. You were going to a meeting, Uh, these were un unsophisticated businesses. These were well hearted folks. Some people paid, uh, you know,$10 a year and became members of the organization. The tasks, the duties were not that, uh, enormous. And the, uh, you know, it was a great place to have a meal and talk with friends and talk, share pictures of your vacation and things of that nature. We're an environment now where our, our, our member organizations are losing billion, a billion dollars a year, or are also making upwards of multiple billions in terms of annual revenues. These are enormous businesses. They serve huge Wawas to the community. Um, and the e expectation of a board member is to act in a manner commensurate with the size of the organization and it's responsibilities. It's, you know, it may be a not-for-profit organization, but it is a large, sophisticated, uh, in many cases, regional, if not national business. And you, your expectations must be up to snuff. So I think what we're seeing in terms of conduct, Rob, is that we're asking more of our board members in terms, again, as I said, of their attentiveness, their, their expectation, their homework, their engagement. We're ge, you know, and I think it's also being impacted on the number of outside boards that our directors can truly serve. If you are a board member of a, a healthcare not-for-profit healthcare system, uh, it is, uh, or or large community hospital, it's gonna be tough for you to serve on many other boards simply because the end to do it well, if you spread yourself too thin, it's gonna be a problem. And I think that there is an increasing expectation, uh, in the law and of tho and of governance observers, that it's important that board members, uh, treat board service as a, as a privilege and not a right. And it's a privilege that could be terminated if they're not performing well. Uh, this is gonna mean that some people say, I'm out of there. I'm not, you know, I don't need this ex, you know, I, I, I wanna sit on multiple boards as a community leader, but it's the reality of the situation now that simply that, um, so much is expected of the healthcare system board member that it may be difficult for, uh, him or her to serve on a lot of other boards simply because of the duties that she or he may have at the, at the nonprofit corporation level.
Speaker 2:So, as health systems have become more complex and the expectations of evolved, you know, past, you know, maybe just generally philanthropy and serving on that board to really being a subject matter expert at, we look at populating our boards with people with different core competencies. How would you describe, you know, the current primary duties of board members, um, and expectations around attendance board education on all the important topics they cover?
Speaker 3:Well, lemme start with one issue, and this kind of goes back to something we raised at the beginning of the podcast. I think one of the most significant governance issues we've got right now is to maintain the, the appropriate board management dynamic coming out of the pandemic. Um, you know, I, I, again, we have the, we have greater responsibilities, uh, uh, oversight responsibilities of the board of directors, which sometimes, uh, which, which all the time makes them busier, sometimes gets them in deeper into to, uh, homework on the organization, and sometimes pushes them more closely into traditional areas of management responsibility than they'd like, and that management would like it. It is a great line. It is not a black line between the roles of the board and the roles of management. And I think it critical to the success of an organization from a corporate governance law perspective is both parties understand, stand the other's basic duties and pressures. The board is a resource to management. The board is a partner, collegial partner to management. The board needs to understand that ultimately management is responsible for the day to day operation of the business, and they need the slack. They don't need the board leaning down on them. And micromanaging on the other hand, it's extremely important that the management understand the role of the board, That the board is on the hook ultimately for so many of these issues and has liability for them. And the board needs to know enough to do its job. So managing that dynamic, which ain't easy, believe me, as you know, is I think job number one when we talk about this, uh, you know, but then you kind of go a step down. What are the principal duties of the board? I, uh, several times a month I'm called upon to write a memo that says, X, Y, or Z is a, that is amongst the most principle, uh, and critical fiduciary responsibilities. A governing board is called upon to make. And what are those, You know, it's number one. I, I think it would be this, uh, selecting and monitoring the ceo. And number two would be developing a, a succession process for the ceo. And I think, as you mentioned now, Rob, with a great resignation. I think that really extends to the whole talent, the executive talent retention selection process in itself. It's just, you know, that pushes up against the old, uh, uh, concept that the CEO selects his or her senior management team. But I think the board has to be more involved in that in terms of are we keeping our good people? Uh, I think the, the board is also traditionally responsible for, uh, getting the strategic planning process moving. Uh, and, uh, not that that management prepares for strategic plan. The board reviews it, the board makes sure that that strategic plan is implemented over time. A very challenging issue. Now, if you think that most strategic plans that were, that are about two years old are probably out of date, uh, the board has the responsibility to, uh, maintain oversight of the, uh, financial, uh, condition of the institution to assure the financial transparency, uh, uh, of its financial statements, um, and, and, and address its solvency issues, which of course, are an enormous issue right now. And the board is responsible for, uh, its oversight of corporate compliance. It's an interesting thing, Rob, Again, going back to what you mentioned at the beginning, our conversation, uh, as we know, on September 15th, the Department of Justice issued with their latest, uh, uh, statement on corporate, uh, crime and enforcement with some very heavy duty statements about expectations of all corporations in terms of, uh, their, their, uh, commitment to compliance, uh, the cultural they expect in compliance. Uh, and they don't provide an exception for not-for-profit corporations. And then I would also say that the, uh, an additional new and critical responsibility of the board is, as you referenced, is the oversight of workforce culture, Uh, which is particularly challenging right now in an era where we are seeing such crazy things as, uh, quiet, quitting, um, the great resignation, um, the low job participation levels, things of that nature. So, uh, those are the key duties. But I think the, the basic issue is, and the board and management need to, are both responsible. Do we have the right dynamic? Are we at an equilibrium? Do we both understand where the other side is coming from in terms of the laws, expectations of them?
Speaker 2:With all these important duties that are in front of boards currently, Mike, are you seeing boards continue to stay lean? Uh, when I started in this role, our board in 2014 had 40 plus board members. Now we're at 13. Are you continuing to see that trend towards leaner boards, uh, despite all the important obligations they have?
Speaker 3:Totally. But I think they're, they're doing that, they're getting leaner, Rob, but they're also, uh, and their advisors are telling them that they, they need to get lean, and they need to lean in more. Uh, by that again, I mean that they need to be totally dedicated to this po particular position. When you get smaller, uh, that, and you have fewer board meetings, that doesn't mean you, you pull back, uh, hard, you work, you have to work harder. Um, so I, I think that the question of the level of the board size may become smaller, but the level of engagement comes up. Uh, and I think that's the trade off. And, and again, getting away from large boards is critical. If boards are gonna be able to function, have quorum, have serious meetings, that's offset by the critical factors. And I think we'll be talking about this in our next podcast. Uh, it board turnover, uh, onboarding, things of that nature, uh, refreshment mechanisms to keep the board fresh and to keep the, uh, conversation up to date and to keep, uh, the levels of, uh, the composition with the right kind of people on the board.
Speaker 2:So as we look at these important fiduciary responsibilities, who enforces these or evaluates whether they're occurring correctly, we've seen how important in our board, the role of the chair is, it's almost a full-time job. Are you seeing the chairs enforce these responsibilities, the governance committee or others?
Speaker 3:Well, I think there are two, two levels of concepts. And I, and I, I have an ABB appreciation, I I use with clients, P P P, which stands for potentially off people who cares about how we perform our duties. Uh, do I think that the, uh, the, within the organiz at the organization level, is the board chair ultimately responsible? No, I, I don't think he's ultimately responsible for their performance. I think he's ultimately responsible together with the CEO and the Chief legal office for setting an agenda and for keeping that agenda serious. Uh, in terms of engaged directors, I believe management, including the chief legal officer, as the primary governance advisor of the board, uh, have significant, uh, obligations, significant obligations in terms of keeping the board informed, uh, and that that's, you know, the whole care mark line of cases. Uh, so I think that internally it's, it's a unified front to working for the ultimate goal. The board has to be informed if they're going to make, uh, proper decisions and exercise proper oversight externally, multiple levels of, uh, organizations. In most states, it's gonna be the state char, the, the, the, the state charity officials, the, the dedicated long-term full-time employees dedicated to reviewing and, and monitoring the affairs of not-for-profit charitable corporations in their state. The Attorney General has the, essentially is the person that's responsible for, uh, evaluating director conduct for shepherding and safeguarding assets of a not-for-profit, for the benefit of the constituents. Uh, they're the party that will, that has extraordinarily broad, equitable powers to, uh, bring an action, uh, against, uh, uh, a director or against a not-for-profit corporation itself. They are right there. Uh, the Internal Revenue Service, even though we don't hear from them a lot, and that's at their choice, is still maintains a very active evaluation of corporate governance. Uh, that is a, going to be a bigger deal as we come back to that, you know, it's like, seems like at every five years or 10 years or so, uh, the pressure on removing tax exempt status for not-for-profit hospitals. So the IRS cares, uh, the Federal Trade Commission cares. Uh, we see them looking from their antitrust oversight perspective into the role of boards in a lot of the anti-competitive, allegedly in a competitive activity that, uh, goes on in our industry. Uh, they will zoom in on that. Uh, I think you will see that, uh, the FDC and the doj, uh, get, uh, focused on board composition with respect to the concerns they have about, uh, director overlap between competitors, which is about to ignite again, in terms of a healthcare and trusts and governance issue. The Department of Justice absolutely cares about corporate governance because as you could see, uh, board members and, and the role of the board, uh, referenced throughout the Deputy Attorney General's, uh, speech on corporate crime on the 15th, uh, then you drop down to a level where I think frankly, the greatest risk to an individual director arises from. And that's from the media. Um, I'm a particular, um, observer, uh, uh, of the, what I call the new media, the, the stats, the ProPublic coast, the politicos that have I, you know, have done a real, uh, stomp on a number of non-profit healthcare organizations this year. Uh, but certainly the major national papers will, um, also cover, uh, maybe not as fairly and as accurately as we would like, uh, issues and developments in the not-for-profit healthcare space. I think the reputational damage to institutions and to individual board members are rising out of, um, newspaper stories, uh, new media stories that especially those are our unfair or poorly sourced or, uh, lack, um, uh, thoughtful research, uh, is the single biggest practical threat to a board and the corporation's, uh, reputation. And then we have, uh, and I say this as a former debt collector for co uh, Continental Bank of Fort Worth, Texas in the mid seventies where I would yank your car loan or your furniture loan or your mobile home loan. There are, there is no more interested, uh, organization or body of people and how fiduciary duties are formed than, uh, creditors who will be, uh, unstoppable in their quest to grab every last penny from a insolvent not-for-profit healthcare system. Uh, they are, uh, very, they care very much about director conduct and frankly, uh, if you are concerned about personal litigation, uh, uh, that risk goes, increases as the organization approaches, uh, insolvency.
Speaker 2:Great, Thank you. So lastly, as directors look at legal theories of, uh, liability and enforcement trends, is there any current trends that you would share with, uh, potential directors that they should be most concerned around?
Speaker 3:I'd, let me flip that, Rob. I would have them not focus on the negative, and I would have them focus on what the good they can do. Um, to answer your question specifically, yes. I think that they should be focused on the quality of information they're getting from the management team and make sure it's sufficient to put them in a position. So they are comfortable being good partners to management, being a good resource to management, um, and being able to make informed decisions and, and, uh, oversight. Uh, but ultimately I would encourage, and I do encourage to think in a positive vein about the value they can bring to this industry at this particular time, at this extraordinary time. Uh, they, uh, at a well supported board, a well-informed board, a committed board can make an extraordinary difference in the vitality and long-term sustainability of a healthcare organization. I would want them to focus on that.
Speaker 2:Excellent. Well, Michael, you've given us a great start to our series today. We thank you for all your insights. We look forward to our audience being able to hear our next session, just some recent issues in the healthcare sector. Uh, Michael's published some very strong papers that have given board members advice on how to navigate the turbulence we're seen in this industry. So we look forward to sharing that in our next session.
Speaker 3:Thank you, Rob. And thanks for the ALA and their support.
Speaker 1:Thank you for listening. If you enjoy this episode, be sure to subscribe to a HLA speaking of health law wherever you get your podcasts. To learn more about ALA and the educational resources available to the health law community, visit American health law.org.