Nonprofit boards being held more accountable


In the wake of colossal corporate scandals involving companies like Enron, the federal Sarbanes-Oxley Act raised the bar for corporate compliance and corporate responsibility.

But many in the healthcare industry think the rules that were initially aimed at publicly traded, for-profit companies may be extended to apply to nonprofits, including hospitals.

The country's most highly regulated industry may be saddled with even more red tape. The act, passed in 2002, likely will force volunteer trustees at county hospitals to retool their management strategies and shoulder more responsibility for the community assets of which they are stewards.

The Memorial Hospital's management company, Quorum Health Resources, has already sent a representative to Craig to address the implications of the law. During a presentation last week, the hospital's Board of Trustees heard stern warnings that nonprofits could face stricter requirements and trustees will be held to higher performance standards.

Although some TMH trustees said they had heard the buzz about the topic at a January management retreat, it clearly was a concept that is very new to nonprofit thinking.

Sue Lyster, chairwoman of TMH's board, declined to comment on the topic. Lyster said she needs more time to research the issue and develop an informed opinion.

During the meeting, however, Lyster said she believed TMH trustees already go to great lengths to keep their fingers on the pulse of the hospital's business.

Aside from attending a monthly board meeting, trustees participate in committee meetings that are more narrowly focused. Trustees report back from committees, including the finance committee, the building committee and the hospital foundation board.

Trustee Jack Bonaker said he thought the board already was fulfilling the responsibilities discussed in Quorum's presentation. By meeting regularly, discussing financial issues and perusing fiscal reports, Bonaker thought the board was doing enough.

Trustee Gene Bryant said perhaps improvements could be made in terms of financial reporting. Although the board receives a monthly packet with numerous pages of financial spreadsheets, Bryant worried that trustees may get mired in the financial minutia.

Bryant advocated a "plasticized version of key indicators" to supplement the monthly reports. The key indicators could serve as a red flag for financial mismanagement, sounding the alarm for the board to act.

Chief Financial Officer Roger White took notes while board members discussed the issue.

The Quorum presentation stressed that while some boards meet regularly, they simply rubber-stamp most decisions and leave most of the work to the managers they should be overseeing. Instead, boards need to foster open, freewheeling discussions that probe data and ask tough questions of department heads, Quorum officials advised.

Jeremy Browning can be reached at 824-7031 or

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