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Considerations for Healthcare Executive-Supplier Interactions

November 2007

Statement of the Issue

Healthcare executives share a fundamental commitment to enhance the quality of life and well being of those needing healthcare services, and to create a more equitable, effective and efficient healthcare delivery system. To accomplish these fundamental objectives, healthcare executives must rely on an intricate network of professionals that includes professionals within the supplier community.

The realm of healthcare executive-supplier relationships involves not only the purchase of goods and services, but also the mutual provision of information and advice.

In interacting with current and potential suppliers, healthcare executives must act in ways that merit trust, confidence and respect while fulfilling their duties to the public, their organizations, and their profession. Further, it is important to avoid even the appearance of conflicts of interest that may seem to unduly advantage the healthcare executive, the organization or the supplier. Thus, healthcare executives must demonstrate the utmost integrity, as well as embrace the need for transparency in interactions with suppliers.

Policy Position

The American College of Healthcare Executives believes that healthcare executives should interact with company representatives that sell products and services to their organizations in a way that:

• advances patient care or improves healthcare delivery;
• is fully disclosed to the executive’s organization;
• does not damage the reputation of the organization or the profession;
• does not violate applicable law; and
• does not violate policies of the executive’s organization.

In determining whether the nature of specific interactions meet each of the above guidelines, healthcare executives should carefully consider the issues detailed below.

1. The interaction between an executive and a supplier can be considered to enhance patient care or improve healthcare delivery when one or more of the following conditions are evident:
   
   
   • It furthers the executive’s knowledge of products or services which may improve patient care.
   
   
   
   • It furthers the supplier’s knowledge of healthcare needs, so that the supplier can produce better products and services.
   
   
   
   • It facilitates the efficient and cost effective delivery of products and services to the executive’s organization.
   
   
   
   Examples of types of interactions that could enhance patient care or improve healthcare delivery are attendance by executives at trade-show exhibits of supplier products, seminars or demonstrations produced by suppliers, and participation in supplier advisory councils, supplier surveys, or one-on-one visits with suppliers to exchange ideas.



2. Full disclosure of the supplier-executive relationship to the executive’s organization should ordinarily be made to the party within the organization to whom the executive reports (e.g., a supervisor, the CEO, or the Board/Chairman) or through the organization’s compliance program officer. To prevent misunderstanding, it is advisable that disclosure include all remuneration arrangements, including reimbursements or perquisites (e.g., airfare or meals).



3. Even with full disclosure, damage to the reputation of the executive, to the organization or to the profession may occur. The executive should avoid interactions with suppliers when this risk is present.



• Executives should avoid interaction with suppliers that could result in undue influence by suppliers in the decision-making process.



• As with any position of public trust, avoiding even the appearance of wrongdoing, conflict of interest or interference with free competition is important. Executives should take care that interactions with suppliers not result in perceptions of undue influence or other perceived impropriety.



4. Healthcare executives are subject to the federal anti-kickback statute which makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration in order to induce referrals of items or services reimbursable by federal healthcare programs.



• The anti-kickback statute interprets “remuneration” very broadly, including the transfer of anything of value, in cash or in kind, directly or indirectly, covertly or overtly.



• The healthcare executive should be aware that other statutes, which may vary from state to state, may also be applicable. If the application of a law is unclear to a proposed interaction, the executive has a duty to seek guidance from the appropriate party, who may be the person to whom the executive reports or the organization’s legal counsel.



5. In addition to applicable laws, healthcare executives have a duty to be familiar and comply with their organizational policies governing interaction with suppliers. If the application of a policy is unclear to a proposed interaction, the executive has a duty to seek guidance from the appropriate party, who may be the person to whom the executive reports, the organization’s legal counsel, compliance officer or ethics advisor.

The same type of relationship, such as participating in a supplier produced seminar or a supplier advisory council, may be appropriate, or alternatively, may raise significant questions. The context and nature of the relationship can be more significant than the specific setting or type of interaction. Therefore, in addition to the above criteria, there are a number of questions healthcare executives should consider when assessing the nature of arrangements with suppliers, and evaluating if a real or perceived conflict of interest is likely:

• Will the relationship affect your judgment, the judgment of your colleagues or the organization?
• Who will benefit from the relationship? Who might suffer?
• Would you be comfortable with the relationship being known to your patients, stakeholders, and the general public?
• Can you defend the relationship to your colleagues and superiors?
• Does it represent a positive model for managerial, professional or organizational behavior?
• Would you expect other organizations or individuals to behave similarly?
• Is it fair to all parties?

When considering these questions, the healthcare executive should be cognizant of the need for public trust and the avoidance of even the appearance of impropriety. Furthermore, to foster knowledge and sensitivity to potential issues associated with supplier interactions, healthcare executives should promote the dissemination of this policy statement to appropriate managers within their organizations, as well as to relevant suppliers.

Approved by the Board of Governors of the American College of Healthcare Executives on November 12, 2007.