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The Healthcare Industry and Chief Compliance Officers

healthcare cco3The healthcare industry has been an innovative leader in developing compliance tools and strategies.  They have come by it honestly – prosecutors and HHS-OIG have been pounding on pharmaceutical companies, medical device companies, hospitals, skilled nursing facilities, hospices, and doctors for years.

The industry has a target on its back and each year the government extracts more penalties, jail time and Corporate integrity Agreements from industry participants.

Starting in the 1990s and continuing until today, the healthcare industry has been forced to elevate compliance as an important corporate priority.  It has a fantastic record embracing the role of the chief compliance officer and understanding how important a role compliance should play.

At the same time, it appears to me that the industry has stalled a little bit.  Maybe the industry is overwhelmed by the Administration’s expectations for compliance with a large number of new laws and regulations.

Whatever it is, one thing is clear – the rise of chief compliance officers is occurring faster and more effectively in other industries.  Too often compliance offices in hospitals and other health providers companies are short-staffed, under resourced, and buried in corporate minutiae.healthcare CCO

Hospitals and service providers have not responded by elevating chief compliance officers to the C-Suite.  Instead, they are often brushed to a back office, given a fancy compliance title, but little more than a shiny plaque to do their job.

The oil and gas industry, the financial industry and major pharmaceutical and medical device companies have gotten the message and are responding.  It is hard to see the same level of commitment by hospitals, medical care systems, and other healthcare industry participants.

It appears the industry is stuck in the 1990s.  The government pushed for separation of the chief compliance officer from the legal office and many companies did exactly that.  However, when they did so, they failed to give the chief compliance officer adequate resources and authority to get the job done.

We are seeing the consequences of a failure to act every day – look at the HHS-OIG’s enforcement page (here) and review the press releases.  It reads like a daily crime report in New York City in the 1970s.  Company after company settling this and that offense, paying fines and penalties, and individuals being prosecuted for a variety of offenses – most especially, kickbacks and Stark law violations.

health ccoMy questions are very simple:

Where are the chief compliance officers?

What role do they have in these institutions?

Did the Board and senior management make sure the compliance function had sufficient authority and resources?

From what I can tell, healthcare companies have been running along, paying fines and penalties and trying to comply but not asking these basic and critical questions.

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