Overview
First in a series of updates on how the pandemic is implicating basic governance topics.
Healthcare providers facing emergency requests from government agencies in response to the Coronavirus (COVID-19) crisis — including critical issues such as transfers of COVID-19 patients, opening closed facilities and increasing bed capacity — should clarify their internal lines of authority (i.e., CEO v. Board) for authorizing extraordinary decisions regarding delivery of care.
In Depth
Healthcare providers and their board and executive leadership may want to clarify their internal lines of authority for authorizing exceptional Coronavirus (COVID-19) decisions regarding the delivery of care in their facilities.
Many providers are facing, or may soon face, extraordinary emergency requests from governmental agencies relating to critical issues such as accepting transfers of COVID-19 patients, opening closed facilities, increasing bed capacity to address anticipated inpatient flow needs and other fundamental issues regarding the allocation of scarce resources. Responding to these requests casts the board and executive leadership team into uncharted waters in terms of organizational decision making.
From a governance perspective, the key legal question involves determining the appropriate leadership level(s) at which the decision is most appropriately made: (i) solely by the chief executive officer; (ii) by the CEO in consultation with the board chair, a board committee or the board of directors; (iii) by a special committee of the board; (iv) by formal decision of the full board of directors; or (v) though some other means. Presumably, medical and nursing staff leadership will be consulted in whatever process is decided upon. The answer should be the byproduct of board and/or CEO discussion (with general counsel input) reflecting the particular circumstances.
For these unique, COVID-19-related issues, there is no “one size fits all” answer, no “best practice.” Multiple factors may be taken into consideration when clarifying where the decision-making responsibility falls: the materiality of the pending decision, applicable state law, the scope of the provider’s statement of corporate purposes, federal tax exempt status, corporate social responsibility considerations, corporate reputation, etc.
Every organization’s approach is likely to be different and reflective of expectations based on past practice for the allocation of authority between the board and executive leadership.
The ultimate goal is a decision-making protocol for these critical yet novel issues that reflects thoughtful discussion between executive management and the board and demonstrates an informed board exercising its fiduciary responsibilities in a manner it deems appropriate for the circumstances. In other words, ensuring that the question — “Who makes the call?” — is raised, and considered, in a timely manner.
Click here to access the second article in the series, The Executive Committee in Times of Crisis.
Click here to access the third article in the series, Virtual Board Meetings in Times of Crisis.
Click here to access the fourth article in the series, Emergency State Action Affecting Board Processes and Corporate Filings.
Click here to access the fifth article in the series, Assuring Appropriate Information Flow to the Risk and Compliance Committees.
Click here to access the sixth article in the series, Revisiting Executive and Board Succession Planning in Response to the Pandemic.
Click here to access the seventh article in the series, Board Financial Oversight Responsibilities During Pandemic-Driven Distress.
