Compensation for Nonprofit Health Care Board Members: The Right Path or a Minefield?

Source: Panel Discussion, Inquiry, Vol. 49 No. 1, Spring 2012
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From the abstract:
In summer 2011, Massachusetts Attorney General Martha Coakley publicly challenged the appropriateness of the board compensation practices of the state’s four major nonprofit health plans, and promised to seek legislation that would grant her the authority to approve or deny future board compensation practices of these plans. In response, the board of one of those plans, Blue Cross Blue Shield of Massachusetts, considered seeking a change in its ownership status from a public charity to a member-owned mutual company to avoid such regulatory intervention in the future. It ultimately decided against seeking such a change because of more pressing issues, and it indefinitely suspended board compensation. At about this same time, down the Atlantic Coast, local media were questioning the board compensation practices of the nonprofit Blue Cross Blue Shield of South Carolina.

In fall 2011, the Governance Institute released the results of its most recent compensation survey showing that 15% of the 660 nonprofit hospital and system respondents were compensating some or all of their board members, up from 10% in 2009. Government-sponsored respondents were found to be the most likely to compensate some or all of their board members; nonprofit health system respondents were found to compensate their board chairs more than others (25% at $30,000 to $50,000 and 25% at more than $50,000).

Are there circumstances under which it is appropriate for a nonprofit health care organization to compensate, or to consider compensating, some or all of its board members? Would board members receiving some level of compensation tend to take their board assignments more seriously? If compensation is deemed appropriate for some board members, should all be compensated to at least some degree? Where a board decides that all its members should receive some compensation, should individual board members be permitted to opt out?

These are among the issues explored in the following discussion, another in Inquiry’s ongoing Dialogue series, co-sponsored by the Alliance for Advancing Nonprofit Health Care to provide a variety of voices on important nonprofit health care issues.

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