Senior Living Business Interactive: Governance: Legal Problems Your Board Can Avoid

Is your board good, or is it lucky? Increased litigation against senior living providers and senior care facilities poses a financial risk to those organizations and, in certain cases, may expose board members to claims of personal liability.

What conduct/actions/decisions are appropriate for board members, and what might make them—and their organizations—vulnerable? How do you protect the organization’s assets? Against what types of risk must the board—and top management—protect the organization? Our panel of experts shed light on these issues and explained how your board—and your organization—can set policies that effectively mitigate risk.

Every governing board needs to understand where the organization is vulnerable and take steps to protect its assets and earn the public trust. Even the most well-intentioned organizations can slip up, though, and board structure and behavior actually plays an important part in the organization’s—and individual board member’s—exposure to legal risk. “Board members need to be diligent in understanding and practicing their collective and individual responsibilities,” said Deborah Cloud, Vice President & Senior Editor at Leading Age. “If they do that, their legal risk will be minimized and their board service can be richly rewarding—which is what it’s supposed to be.”

 

Fundamental Board Principles

 

Conceptually, boards set policies, while risk management/risk mitigation is the work of management; but there’s a shared space where both the board and management are active players with regard to legal responsibilities, according to Rick Stiffney, President and CEO at Mennonite Health Services Alliance (MHS) in Goshen, Indiana. MHS consults with its member organizations and others on board governance issues.

He described four fundamental principles or dynamics of governance that need to be in place if boards and executive management are going to effectively navigate this shared space:

 

1. Shared knowledge. There needs to be a shared knowledge base between management and the board with regard to the nature of the industry, the service lines, and the scope of the legal and regulatory issues that are relevant for that particular industry. 

2. Clear delegation of duties. There must be a very clear articulation of the responsibilities and scope of authority of the board and those responsibilities and scope of authority that are delegated to the executive staff.

3. Transparency. The need for transparency in communications between management and board has become even more apparent over the last several years. No surprises!........Want to read more? Click here for a free trial to Senior Living Business Interactive  and download the current issue today