The Business Ethics Blog

Healthcare is a big business. There’s lots of money being spent, and hence (analytically) lots of money being made. That makes financial conflicts of interest pretty likely to occur.
The latest group to come under fire in this regard is hospital executives. See, for example, this NY Times story: Hospital Chiefs Get Paid for Advice on Selling (by Walt Bogdanich)

Here are the opening paragraphs of the story:

One recent sun-splashed afternoon, executives who run some of America’s leading nonprofit hospitals met at a stately Colorado resort for an unusual mission: to advise companies confidentially on how best to sell their drugs, medical devices and financial services to hospitals.
The hospital executives were rewarded with more than a chance to indulge in a “harmonic” hot stone massage or mountainside golf.
They were also paid thousands of dollars for the advice they offered to dozens of companies, like Eli Lilly, Johnson & Johnson, Morgan Stanley and Citigroup.

Just to put the issue into stark, black-and-white terms, here are two spins on this activity:
Positive: Companies need information on hospitals’ needs. No one understands a hospital’s needs better than hospital executives. So, companies turn to hospital execs for advice. Providing such advice is not a usual part of a hospital exec’s job, so it has to be done after hours, on weekends, etc. If the execs’ advice is worth something, so is their time: if they’re spending time advising companies, they ought to be compensated for it.
Negative: Hospital execs work for hospitals, and have fiduciary (i.e., trust-based) duties to the hospital’s patients and to the foundations that fund the hospitals (remember we’re talking about nonprofit hospitals, here). Hospital execs (depending on their precise job title) are typically going to have some influence on purchasing decisions; patients and foundations need to be able to trust that those decisions will be made so as to best use foundation money to serve patients. If executives are personally receiving non-trivial compensation from suppliers, then there’s grounds to think that they’re facing a conflict of interest.

Instead of comments, how about some questions:

• Just how much is each executive being paid by the various corporations (the second half of the story gives some indication of that), and is that amount sufficient to make us worry about its influence on decision-making? (Most large companies have rules about accepting gifts or other benefits from suppliers; typically such rules stipulate that “token” gifts — such as pens, calendars, etc. — are fine, but larger gifts are not.)
• Has each executive disclosed that he or she is in a fiancial relationship with the various corporations (i.e., disclosed it to his or her boss, the hospital’s Board of Directors, etc.)?
• When Executive A is faced with making an on-the-job decision about the products of Corporation X (a corporation to which Executive A has provided consulting services as described in the NY Times Story), is Executive A consistently disclosing the conflict of interest, and recusing him- or herself from the decision-making?
• Is the information supposedly being gleaned by companies at these events information that could not be provided by various hospitals’ Purchasing Departments, in their official capacity and in a professional manner? (That is, is there some other way that companies could acquire information that they legitimately need, without risking putting hospital executives into a conflict of interests?)

Relevant Books:
Conflict of Interest in the Professions
Ethics in Health Administration: A Practical Approach for Decision Makers
An Ethics Casebook for Hospitals: Practical Approaches to Everyday Cases