Tuesday, July 17, 2007

Another Species of Conflicts of Interest: A Board Interlock Between a Managed Care Organization and a Medical Device Company

On the Wall Street Journal Health Blog, this post notes that Jack Lord, who is a Senior Vice President at Humana, just resigned from the board of NeuroMetrix, a small medical device manufacturer. The post focused on whether the resignation has to do with NeuroMetrix's current legal problems.

I wondered (and asked in a comment) whether Lord's position on both boards was yet another species of board-level conflicts of interest. After all, Humana is a managed care organization/ health care insurer which promises an approach which "makes health benefits affordable, easy to administer and use, and instills confidence in both employees and employers." Presumably, one component of making health care more affordable would be negotiating fair prices with providers and suppliers, including medical device manufacturers. In fact, wasn't a major rationale for the managed care movement that managed care would lead to more rationale pricing. Yet wouldn't a degree of board interlocking make it unlikely that two companies would negotiate fairly with each other?

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