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Conflicts of Interest in the Hospital Sector: A Q&A with Rina K. Spence

By Chloe Reichel

Brigham and Women’s Hospital recently made headlines when the Boston Globe reported that the hospital’s president, Dr. Elizabeth Nabel, held a seat on the board of Moderna, a Cambridge biotech company that is working to develop an mRNA COVID-19 vaccine. The hospital has a major role in a national study of the vaccine.

The hospital maintained that safeguards were put in place to protect against conflicts of interest during the collaboration. Nevertheless, amid public outcry, Nabel stepped down from the board.

But this story is just one high-profile case of what is commonplace in the hospital sector. A 2014 research letter published in the Journal of the American Medical Association found that 40 percent of pharmaceutical company boards of directors had at least one member who also held, at the same time, a leadership role at an academic medical center.

Reflecting on the Moderna-Brigham controversy, Rina K. Spence said, “I think it’s just representative. It’s an issue that boards have had to consider, and CEOs have had to consider, for a long time.”

Spence served as the president and CEO of Emerson Hospital in Concord, MA from 1984 through 1994. Currently, Spence is an advisor to the Precision Medicine, Artificial Intelligence, and the Law Project at the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School.

Spence spoke with the Petrie-Flom Center to offer her perspective on the conflicts of interest that can arise when hospital administrators take positions on for-profit advisory boards.

We’ve lightly edited and condensed the interview.

CR: Can you describe what’s at stake here, when hospital executives take positions on corporate boards?

RS: The CEO of a hospital is essentially a CEO of a not-for-profit. They are CEOs in the same way that somebody running a private company is – in terms of management, leadership, skills – but they run for the benefit of patients and the community.

So the whole area of conflicts comes up in what their role is and what their mission is.

As a CEO of a private company, I would have to think about what boards are appropriate [to serve on] or not. If I’m the CEO of a bank, I can’t be on the board of another bank. There’s an example of a corporate situation, which would be a conflict.

The same holds true for somebody running a hospital. They need to think about, what boards can they be on that enable them not to have conflicts?

CR: What kinds of conflicts can arise when hospital leaders take on board positions?

RS: Let’s start with conflicts of time and attention. I’m on a board. Maybe nothing goes wrong and every quarter I have a three-hour meeting, and that sounds fine.

But as a board member, you also are there in times of trouble. In a troubled board or corporate setting, it could take a lot of time. So you have to think about what kind of board, or how many boards, can I be on?

The other is, do I have conflicts with the integrity of research and patient care? It’s like the banker who has information on his bank, can’t sit on another bank board. Somebody who is running a hospital then goes on a pharma board, pharma wants to do business with that hospital, it becomes harder and harder to draw lines around, well, I’ll let them do research, but I won’t be involved with that. The line for pharmaceuticals and hospitals is maybe not quite as direct as with a bank CEO and another bank, but it comes close.

CR: Is it possible that these situations might look like a conflict in the court of public opinion, but in reality no conflict exists?

RS: Let’s talk about perception versus reality. When you’re in a leadership role, a lot is perception. If I am one of 10,000 employees of your institution, if I perceive you to be doing something that is a conflict that isn’t, that’s going to affect the morale of the institution. Perception and your standing as an institution is a lot in a community. If you’re tainted with the idea that you might have a conflict, that taints your reputation. And you’re in a public setting. Hospitals are public institutions, so perception counts, in my book.

CR: So, do you think that the best approach would then be just for hospital leaders to avoid any sort of board positions?

RS: No. I think just like the bank-to-bank example, they should consider board positions that are not in the realm of their business, and also that are, in a sense, positive for their community.

CR: Do you think there’s a potential benefit to letting hospital leaders serve on these boards, in terms of recruiting or retaining better talent?

RS: I would say if you’re going to be a hospital CEO, you maybe should make the decision that you’re there in more of a community service role. And maybe it doesn’t come with all the benefits of a corporate CEO.

CR: What about the potential benefit of research collaboration? Let’s say that the hospital is interested in some sort of research collaboration with pharma.

RS: Then you could develop a business relationship between the institutions, not a private relationship with a CEO. They’re two different things. One is, we, as a hospital, want to have a relationship with a pharma company. The institution invests, or what have you, and then the institution benefits. That is different than the CEO having a relationship with the company – the CEO makes the money. It goes into their bank account.

CR: Are there any rules governing the external board positions that hospital leaders take?

RS: No. In a sense, the board of a hospital takes on that responsibility. The board of a hospital is aware if their CEO is on an external board. So they have to make that decision – they have to say that board won’t take time and attention away, and that board doesn’t have a conflict. But I think you first have to consider whether the situation should have even come up.

CR: Why aren’t conflicts of interest in the health care sector as regulated as in the financial sector?

RS: The financial sector is very regulated around investment decisions. They don’t want anything that smacks of a conflict or an encouragement to invest. In that sector, it’s been thought through to detail. In the hospital sector, it has not been thought through to that detail where regulators get involved.

CR: How do you think these conflicts could be better regulated?

RS: I think it would be easier if there were regulatory standards around this, so that a board doesn’t have to be the one to make its own decision with its own CEO.

And I don’t know what that regulatory body would be. But it would be easier if there were rules around it.

Most of the CEOs who sit on these boards have not done anything illegal or done anything wrong. But the potential – it’s always there.

Chloe Reichel

Chloe Reichel

Chloe Reichel is the Petrie-Flom Center’s Communications Associate. She serves as Editor-in-Chief of the Bill of Health blog and supports the Center's broader communications efforts.

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