Health Care Corporate Governance: Effective Board Committee Practice

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AHLA's Speaking of Health Law 31 min 2 speakers 6 chapters transcribed 1 month ago
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Unknown 0:05
This episode of AHLA's Speaking of Health Law is brought to you by AHLA members and donors like you. For more information, visit AmericanHealthLaw.org.
Rob Gerberry 0:17
Hello, everyone. This is Rob Gerberry.

Why are board committee practices the ‘nuts and bolts’ of health care corporate governance?

Rob Gerberry 0:18
I'm the president-elect of the American Health Law Association, and I'd like to welcome you to the latest in our continuing series of corporate governance issues affecting healthcare organizations. Today's episode has had us digging into one of the real essential nuts and bolts elements of corporate governance, the structure, organization, and operation of board committees. It's a topic to which we health lawyers and governance professionals sometimes maybe give short shrift, yet the functioning of our boards and the decisions they make depend in large part on the effectiveness of our committee process. Indeed, the care and maintenance of the committee process is often kind of like the cars we drive.
Rob Gerberry 0:56
It's something that we just assume will run well until the famous warning engine light comes on. It flashes and it demands that we pull over to the curb right away. And it's kind of the same way with our corporate governance and committee processes. The functioning of our boards and the decisions that they depend in large part on the effectiveness of the committees for are something that's crucial to board success. And when the process is well maintained, the governance engine runs smoothly. But if it's not properly maintained, and if the committee ignores those warning red lights, we better pull over to the curbs quickly because it could become a pretty treacherous process. And to help us look today under the hood of our committee process, we're going to turn to our favorite mechanic and HLA colleague, Michael Peregrin, who's both an HLA fellow and a fellow of the American College of Governance Council.
Rob Gerberry 1:44
So, Michael, I'll bet you our audience takes one look at you in today's bow tie and says that's a guy that has to know his way around a good car engine.
Michael Peregrine 1:52
Oh, absolutely, Rob. I'm a real gearhead in every sense of the word. You know, and perhaps for the next episode, we can ask our wonderful producer, Matt Oslos, to post a photo of me in my set of boss wheels, my old 1970 Riviera with the brown roof, vinyl tilt steering wheel and reclining front seats. in front of my fraternity house at TCU. I think that would get me banned from AHLA for life probably, but it would be fun nevertheless.
Rob Gerberry 2:21
So I'm sure, Michael, that was back in a day gone by. Maybe the price of gas was a little differently for us in that time period.
Michael Peregrine 2:28
Yeah, I think 30 cents a gallon. Can't we get gas that way right now?
Rob Gerberry 2:31
It would solve a lot of the world's problems. But in all seriousness, Michael, committee maintenance is a big governance issue and it's August when our podcast will go live. So is this the perfect time of the year for boards to consider looking at their committee practices?
Michael Peregrine 2:46
I think so, Rob, because in August, we're just on the cusp of those big September and October board meetings where so much of the board's work for the year gets done And the utility of committees really comes into play. I think it's a great time to make sure everything from a committee perspective is working well before the agendas get set out. And by working well, I mean tracking the state corporate law, following the bylaws, acting in a manner consistent with the committee charter, and making sure that we haven't created a committee structure that, whether it's too big or too small, just isn't able to support the full board in the manner intended. And I do think it's important to state at the top of our conversation today that the risks of messing up the way the board uses its committee are really significant, like ineffective actions, void or voidable decisions, unsupportable reliance, and presumptions of ineffective governance, the kind of things that board chairs and CEOs don't want to hear about from their lawyers.
Michael Peregrine 3:55
but the risks are real, and I'm not sure that we emphasize them enough.
Rob Gerberry 4:01
So Michael, we said today we're going to do this deep dive into committee practice and committee process.

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