The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (Public Law 111-203), contains a “sweeping series of core provisions” to reform federal oversight of the financial services industry. The Act includes amendments to exiting consumer protection, banking, derivatives and securities industries.
Dodd-Frank was not written with the healthcare sector in mind and does not contain any general provisions applicable to healthcare. However, there may be a “spillover” effect.
This Act was a “one of a kind sweeping endeavor” by Congress to “fix” a facet of an industry that appeared to be broken. Can the same argument be made for the healthcare industry? If yes, Congress may decide to make the same type of sweeping changes to healthcare especially in the not for profit sector which faces similar risk and transparency issues.
In fact, the following four provisions of the Act may be readily transferred to the not for profit healthcare industry at a moment’s notice.
- Enterprise Risk Management (ERM) – Regulate systemic risk; establish risk monitoring committees with independent directors (Financial Stability Oversight Councils), adoption of board-level ERM activity towards “best practices” level.
- Corporate Governance – Regulations promulgated by federal government (traditionally purview of state), promote board independence and decrease conflicts of interest with increased public disclosure; consider views of community and constituent groups on executive salaries (i.e. role similar to shareholders).
- Corporate Compliance – Increased emphasis on whistleblowers and protections (increased rewards, can sue in federal court without having to exhaust available administrative remedies).
- Executive Compensation – Need to consider feedback from compensation committees/ independent advisors/community/constituents and to, publicly, report the “ratio of the total compensation of the CEO to the median employee compensation
Please refer to the law for details pertinent to the four provisions cited.
For more information on the Dodd-Frank Act’s application to healthcare, please contact Linda Mancini at (781) 272-8001.