notepad on a tableWhen misconduct occurs within an organization, it is often reported and interpreted as an anecdote involving a few rogue employees who are quickly identified and appropriately disciplined. Misconduct derives, at least in part, from the organizational environment, and studies suggest that pressure from management and the board of directors to meet unrealistic business objectives and deadlines is a leading factor in unethical corporate behavior. The same organizational pressures can lead to compliance failures in the healthcare industry.

For example, in 2010, the former Secretary of the U.S. Department of Veterans Affairs (VA), Eric Shinseki, ordered VA doctors to see new patients within 14 days. Skeptics considered Shinseki’s order to be incredibly unrealistic given the VA’s constrained resources and the outpouring of demands for care. However, Shinseki has said that he managed the VA by setting “bold goals” that looked impossible to achieve but he knew could inspire better performance and bigger budgets from Congress. Nevertheless, many involved in the gaming of appointments reportedly felt pressured to manipulate the data in order to reach the goal. Once the scandal broke, the VA acknowledged not only the intense pressure within the VA to meet the 14-day appointment goal but also that the goal wasunattainable.

To help preclude compliance violations resulting from the establishment of unrealistic goals and inappropriate pressure on employees to meet corporate objectives, healthcare organizations should contemplate the implementation of a number of safeguards, including the following:

  • Consider who appoints or selects the organization’s board of directors to eliminate the potential for board members to be beholden to the leadership establishing the goals.
  • Consider the knowledge, experience and reputation of board members (e.g., can they and will they understand and address compliance issues?).
  • Provide members with access to various sources of information and outside advisors who can provide advice on organizational performance and whether organizational goals and pressures are appropriate.
  • Encourage board members to ask questions and ensure that their questions are answered; and that the board members also question the answers.
  • Ensure that board compliance committees actively engage the full board – boards should not delegate and forget.
  • Ensure that the board holds regularly scheduled executive sessions for compliance discussions outside of management’s presence with a specific director chairing the sessions.
  • Consider whether there are multiple sources of compliance data, and avoid circumstances where a source of compliance data predominates all others.
  • Be wary of a CEO/CFO excluding other members of the leadership from board meetings and compliance discussions, as it can narrow the board’s sources of information and allow the board to be manipulated.
  • Ensure the compliance officer has (1) independence from activities and personnel generating compliance risks, (2) influence, and (3) protection from non-cooperation/harassment. Avoid dual reporting relationships for the compliance officer to management and the board. Compliance officers reporting to management have the potential for diminished objectivity, especially if management controls resources, budgets, appraisals, and compensation.
  • Make sure the appointment and removal of a compliance officer requires prior board approval. Likewise, the board should be actively involved in setting the compliance officer’s compensation and in his or her annual evaluation.