Question

A new hospital is in the process of developing bylaws. Included in the document will be a description of the composition of its governing board. Who should be on the governing board? What types of factors should be considered?

Apex Hospital is in need of major renovation of its electrical system. One of Apex’s governing board members, Willy Watt, is an electrical contractor who is a partial owner of an electrical restoration company. He would like to bid on the project. May he? If he does, what must he do? What must the governing board do? Is there a problem with Mr. Watt’s fiduciary duty? Is there a problem with the governing board’s fiduciary duty? What would you recommend?

Answer 1

The governing board should be made up of..

*hospital staff

*physician and other 'insider'

along with members of the community leaders.

Mr watt would have to inform the board that his company going to bid on the project.The conflict of interst policy would need to be checked to see if he allowed to offer the services of the company he was past owner of.He would have to take care that he was not privileged to any insider information and possibly excuse himself from the final vote on who wins the contract.The board would need to make sure that a commutative bidding process was not used for the process.