SPRING ISSUE OF GREAT BOARDS IS NOW AVAILABLE, with articles on governance of joint ventures and proper use of board executive sessions. See it now at www.GreatBoards.org.
IRS released its much-awaited report on executive compensation practices in not-for-profit organizations in March. The agency had sent "compliance check" letters to about 2,000 exempt organizations and subsequently, it selected 15 percent for examination. Thus far, 25 exams have resulted in proposed excise tax assessments (under the self-dealing rules for private foundations or the excess benefit transaction rules for public charities) of $21 million. The report found just 51 percent of surveyed organizations would meet the "rebuttable presumption standards" under Section 4958. Only 54 percent rely on an outside comparability analysis when setting executive pay. Some 31 percent amended their Form 990 disclosures or schedules after completing the compliance check to correct errors, omissions or confusion. Health lawyer Michael Peregrine calls the report "a significant development with respect to regulatory oversight." See his analysis and recommendations for boards at http://www.mwe.com/index.cfm/fuseaction/
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Lawrence M. Small, the ex-banker who has led the Smithsonian Institution since 200 resigned under pressure in March, following criticism by members of Congress and the Smithsonian's inspector general for alleged excessive compensation and spending practices. The agency includes 18 museums and research facilities as well as the National Zoo, and receives $615 million in federal funds annually. Although Small reportedly raised record amounts of money and recorded numerous accomplishments including opening two new museums, his salary (which rose from $333,000 a year in 2000 to $884,000 in 2006) and expenses ($2.1 million in housing and office expenses over his tenure) triggered the ire of The Washington Post. In an editorial, the Post praised the board's decision to appoint an independent committee to review the ex-CEO's spending, but it added: "Where's the board been all this time? After all, do we really need a panel of experts to tell us that it's excessive to pay nearly $7,000 to fly Mr. Small and his wife to Las Vegas?" The Senate, at the urging of Sen. Charles E. Grassley (R-Iowa), voted to freeze a $17 million increase to the Smithsonian until better controls are in place. The board also appointed a committee on governance. For more information, go to http://newsdesk.si.edu/ and http://www.washingtonpost.com/.
2. QUALITY
Fairview Health Services has joined other care providers in offering comparative quality-of-care statistics for its hospitals and clinics. Fairview's Internet site, unveiled in March, tracks care for asthma, diabetes, clogging of the arteries, high blood pressure and screenings for chlamydia and breast, colon and cervical cancer. The website, www.fairview.org/patient_safety/, tells consumers what percentage of patients get all the right care for a specific condition. Fairview isn't shy about posting sub-par results: its diabetic patients receive all the right care 22.8 percent of the time, but that bests the 10 percent for diabetic patients statewide.
The Institute for Healthcare Improvement, which has made "getting boards involved" one of its patient safety goals this year, has updated its practical guide to engaging boards. For this and other resources from IHI, go to http://www.ihi.org/IHI/Topics/LeadingSystemImprovement/
Leadership/ImprovementStories/
FSThePowerofHavingtheBoardonBoard.htm.
3. TRANSPARENCY
The Washington State Hospital Association's new transparency page offers access to comparative quality scores for every hospital in the state, as well as information on hospital charges and how to understand bills. Go to http://www.wsha.org/page.cfm?ID=transparency. A new online report card compares more than 200 California hospitals on more than 50 quality measures ranging from maternity care to cardiac treatment and patient satisfaction. Developers say it's the most comprehensive available for making decisions about where to receive health services. Go to www.calhospitalcompare.org.
4. ECONOMIC TRENDS
Heart bypass surgery and artery-clearing procedure rates grew twice as fast in regions where specialty heart hospitals opened, according to a study that raises questions about the operations and hospitals performing them. See the article in the Journal of the American Medical Association at http://jama.ama-assn.org/cgi/content/abstract/297/9/962.
In New York, where Governor Eliot Spitzer proposes to cut $512 million from hospitals and $463 million from nursing homes in fiscal year 2007-08, hospital and other industry groups are mobilizing strong dissent (see http://hanys.org/) . So the governor has taken the unusual tact of appealing directly to hospital trustees, suggesting their fiduciary responsibility requires them to act in the public interest. He also cites high executive pay and questions whether hospitals that pay high salaries would really be hurt by cutbacks. To read this unusual approach, go to http://www.ny.gov/governor/press/0306071.html.
5. HEALTH POLICY
Government now pays 45% of all health care costs (it was 40% in 1990) -- and will pay 50% in 10 years, when the U.S. is expected to spend $4.1 trillion, or 20% of gross domestic product on health, compared with 16% today. Payment reform is no longer a matter of if but when and how. A new Commonwealth Fund analysis of health care reform proposals in Congress shows that many of the bills, if passed, could significantly reduce the number of uninsured Americans and decrease overall health care expenditures. The report examines leading proposals from 2005 to 2007 that are intended to expand health insurance coverage. Go to http://www.cmwf.org/.
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Barry S. Bader, Bader & Associates
12225 Seline Way, Potomac MD 20854, 301-340-0903
www.GreatBoards.org *** bbader@GreatBoards.org