Key Nonprofit Corporate Law and Governance Developments in 2013

By: James R. Schwartz
– Bloomberg BNA's Health Law Reporter

For a year seemingly dominated by Affordable Care Act topics, 2013 nevertheless included a substantial number of corporate law and governance developments of great significance to nonprofit hospitals and health systems. In the midst of consolidation, enforcement and other health-care industry pressures, corporate governance remained a key legal feasibility consideration for nonprofit organizations.

As might be expected, the leading 2013 trends reflected an industry in transition, with health systems responding to Affordable Care Act implementation issues, the reshaping of competitive forces, and the broader consolidation of the nonprofit health provider sector. Within that context, the 2013 trends speak to (a) new and fundamentally different governance challenges (and opportunities) confronting the health system board; (b) correspondingly more complex board agendas (and pressures on the level of director engagement); (c) heightened expectations of board oversight on risk and compliance matters; (d) enhanced scrutiny of the board's exercise of business judgment and good faith; and (e) continued close oversight from federal and state charity regulators.

As in the past, certain 2013 judicial decisions, enforcement actions and similar events arising from other elements of the nonprofit sector (e.g., higher education, disease-focused charities) also proved relevant to nonprofit hospitals and health systems.

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