Conflicts of Interest

&

Vendor relations

Philip Boyle, Ph.D.

Vice President, Mission & Ethics

www.CHE.ORG/ETHICS

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Goal for today’s conversation

• Construct a theory of conflicts of interest

• What moral problems are we trying to solve?

• What are the practical responses?

What is the problem?•

How is an employee to identify which gifts, meals, and social events to accept, and where to limit, or refuse?

• If there are boundaries in each of these cases, what is the rationale for where to set them, and what practical considerations should guide employees in limiting their actions?

Should any of the following scenarios have limits to employees accepting things of value?

• Nancy, an executive assistant, accepts quarterly spa gift certificates given by the hospital's hotel conference partner as a sign of appreciation for the long, fruitful business relationship.

• Luke, a senior labs manager, accepts a pharmaceutical-sponsored all-expense-paid educational event for him and his wife that consists of a short seminar during a weekend cruise.

• Audrey, a pediatric nurse, begs a pharmaceutical representative for free samples of an expensive drug for her very sick child.

• A representative of My Bank offers World Series skybox tickets to the hospital's business development office.

Conflicts of interest• In healthcare institutions a conflict of interest

occurs when employees, who have a fiduciary responsibility to make choices based on the interests of the institution, instead base choices on personal-self, family, or friend-interest. Personal gain is commonly thought of in monetary terms. However, it is easy to image a non-monetary gain in value, such as special access.

Conflicts of interest:What’s the problem with them?

• Might compromise an employee's judgment. • Other business partners perceive that the

institution does not have a fair playing field in contracting.

• Business partners who may provide equal or better services or products than the one chosen, are in fact discriminated against.

Appearance of conflicts of interest:What’s the problem?

• Appearance of the conflict can have a corrosive effect.

• Established reputation can be lost. • Appearance of a conflict sends a signal that

institutional decisions are made on criteria other than the quality and value of the service.

• To assure institutional integrity, institutions promote disclosure of real or potential conflict.

Nancy’s Case

• Nancy could accept a spa gift certificate as long as it is infrequent; • However, if accepting one or several from the same business

partner exceeds the institution's maximum threshold, she would need to put it in her annual disclosure, a common feature used by institutions to promote transparency in employees' activities.

• Nancy would be advised to speak to her supervisor about the gifts, and if she would have decision making authority with this business partner, then she would need to remove herself from the process.

• In an ideal world, after the institution had explained its policy to both employees and business partners about accepting things of value, it would be important for employees like Nancy to consider whether the pattern of accepting gifts, meals, and entertainment from business partners.

Luke’s Case •

Accepting an invitation to a vendor sponsored event: Is the venue of the trip principally educational or recreational? – Healthcare institutions need employees to be trained in the

use of services, and certainly educational events sponsored by business partners are valid opportunities for such education to take place if the event's setting and content is primarily and truly educational.

– Is there any other way to accomplish the educational goal.– If an event was a bona fide educational conference, then

under no circumstances should Luke accept travel money for his spouse, a clear case of personal gain and hence a conflict of interest.

World Series tickets• Is accepting World Series tickets similar to

Luke's cases? – Will business will be transacted? – Employees should keep in mind that if the value of

attending exceeds the institution's maximum annual threshold, then they will need to indicate that fact on an annual disclosure form.

– If there is pending or current business with a partner, employees would be required to excuse themselves from any decisions involving the business partner.

Audrey's case

• Audrey is an agent of the healthcare institution and should be acting in its interests, not hers.

• If the business partner is willing to donate expensive therapies it should do so for the benefit of the healthcare institution.

• Employees who work for the institution's foundation or who are authorized to solicit gifts for the institution's interests are the only individuals who can rightly do so.

ApplicabilityApplicability

• Anyone with significant decision making authority

• Anything of value: gifts, meals, events, etc.

• Personal benefit: family and friends• Any 3rd party with business interests in

institution• May not exceed maximums

Prohibited CircumstancesProhibited Circumstances• No employee as paid consultancy without

permission

• No employee may accept cash gift

• No employee may solicit for self

• No offers to government representatives

• No board participation without permission

General ConsiderationsGeneral Considerations• Anything of value

• Avoid pattern of acceptance

• Avoid appearance of conflict

• Avoid acceptance is it creates expectations

• Decisions based on institution’s interest

General Considerations (cont’d)

• Not all gifts are prohibited

• Recurring gifts approved by supervisor

• Disclose annually anything that exceeds maximum

Goal of policyGoal of policy• Integrity in business decisions• Decisions based on institution’s interests• Avoid appearance of conflicts of interest• Disclosure and recusal

Gifts and MealsGifts and Meals

• $??? annually

• Acceptable if given to department

• Infrequent

Social or Entertainment EventSocial or Entertainment Event

• Business discussion will occur

• Less than $??? per employee

• If it exceeds maximum, disclose annually

Vendor Sponsored EventsVendor Sponsored Events• More educational than recreational

• Approved by supervisor

• No payment for spouse travel expenses

Charitable EventsCharitable Events• Offered through Philanthropy/Fund

Development

• Should not exceed $???

• Rotate attendance

Disclosures and RecusalDisclosures and Recusal• Disclose real and appearance of conflict of

interest

• Remove from decision making anyone with interests

• Report those that exceed the maximum

• Provide notice of policy to employees and vendors

Ways to avoid conflicts of interest• Acceptance of gifts is generally not a problem if

several of the following conditions: – The employee does not make decisions regarding the gift

giving business partner;– The acceptance is unlikely to create expectations for the

business partner. – Acceptance is infrequent;– The gift is of nominal value;

• When it comes to gifts use common sense.• Consider:

– Refusing the gift – Suggesting that a donation be given to the institution's

charitable foundation, – Never accept if the acceptance of a gift will create

expectations or be a barrier for future decision making.