Sunday, May 15, 2016

New Jersey Confidential: the Almost Secret Membership of the RWJ Barnabas Health Board

A Hospital System Tries to Hide its Board of Trustees

The US Internal Revenue Service mandates disclosure of the membership of boards of trustees of non-profit corporations.  Nonetheless, as reported by New Brunswick (NJ) Today, the leadership of the newly formed RWJ Barnabas Health system has been doing their best to keep the membership of its board of trustees secret.

The new organization created to function as the state's largest hospital chain is refusing to tell the public who serves on their Board of Trustees,...

To elaborate,

The two hospital networks officially combined to form a new conglomerate, the state's second largest employer, in a deal that was finalized on March 31.

But since then, the new group has refused to identify its board members, after stalling for nearly two weeks.

'Thank you very much for your interest. It is a policy at RWJBarnabas Health not to share the names of the Board of Trustees" read a peculiar April 12 email response from an anonymous address affiliated with Barnabas,

The anonymous email address has not responded to follow up inquiries from this newspaper, including one urging them to make the 'smart choice' and 'be transparent.'

This goes against at least the spirit of the law.

'If the organization has been recognized by the IRS as tax-exempt under one of the subsections under 501(c), there are a number of documents that organizations must make available that would include board lists,' said the leader of the Center for Non-profits.

The initial application, and the three most recent annual filings, must be made available for inspection or copying by members of the public at their place of business, according to the IRS.

In general, any organization that files a Form 990... must make its three most recent Form 990's and its Form 1023 available for public inspection without charge at its principal place of business,' reads the Center's website.

'All parts of the return, schedules and attachments must be made available during regular business hours at the organization's principal office and at any regional offices having 3 or more employees.

There is an exception to the requirement if a non-profit chooses to make the documents widely available by posting them on the internet.

The anonymous email address that cited the policy of having a secret board, and the media contacts listed on the press release announcing the merger between RWJ and Barnabas, have not responded to questions about whether their healthcare organization is in compliance with the IRS rules regarding making the forms available to the public.
This obviously also is a remarkable rebuff to those in health care who advocate maximum transparency.

A Futile Attempt at Secrecy

Some good investigative reporting by New Brunswick Today penetrated the flimsy veil set up by hospital system leadership. The system chairman turns out to be one Jack Morris:

Documents provided by the NJ Department of Treasury show that controversial developer Jack Morris was made the Chairman of the RWJ Barnabas board.

Morris is a close friend and ally of former State Senate President and convicted felon John Lynch, Jr., who ruled New Brunswick as Mayor from 1978-1990, and some contend still is a key player in statewide politics.

Morris had previously served as Chairman of the Robert Wood Johnson University Hospital (RWJUH) Board of Directors. Morris is also tied to Cooper Hospital Chairman George Norcross, the state's most notorious unelected political boss.

The vice-chairman is actually Marc Benson.

another real estate mogul was named the RWJ Barnabas board's Vice Chair, according to the documents, which were filed with the State Treasurer in November 2015, nearly half a year before the merger was finalized.

Marc Berson founded the Millburn-based 'Fidelco Group' in 1981, a 'private investment owner-developer of residential, commercial, retail, and industrial properties in New York, New Jersey, Florida and Ohio,' according to a press release announcing his election as Chairman of the Barnabas Health Systems board in 2014.

As for the rest of the board, they are,

The other 18 secret board members are:

Robert L. Barchi, (Rutgers University, New Brunswick)
 James C. Salwitz, MD (Robert Wood Johnson University Hospital, New Brunswick)
Murdo Gordon (Bristol-Myers-Squibb, Princeton)
Susan Reinhard (AARP Public Policy Institute, Washington, DC)
Nicholas J. Valerani (West Health Institute, La Jolla, CA)
John A. Hoffman (Wilentz, Goldman, & Spitzer, Woodbridge)
Alan E. Davis, Greenbaum (Rowe, Smith & Davis LLP)
Robert E. Margulies, Esq. (Margulies Wind, Jersey City)
Kenneth A. Rosen (Lowenstein Sandler PC, Roseland)
 Lester J. Owens (J.P. Morgan Chase, New York, NY)
James Vaccaro (Manasquan Savings Bank, Wall)
Albert R. Gamper, Jr. (Caliber Home Loans, Inc., Far Hills)
Anne Evans-Estabrook (Elberon Development Corporation)
Gary Lotano (Lotano Development, Inc., Toms River)
Steve B. Kalafer (Flemington Car and Truck Country, Flemington)
Brian P. Leddy (former Chairman of RWJUH Rahway, Cranford)
Joseph Mauriello (formerly of KPMG, Chester)
Richard J. Kogan (formerly of Schering-Plough Products, Inc., Short Hills)
Why the Futile Effort to Make Board Membership Secret?

It is certainly striking that a big non-profit hospital system would try to conceal the membership of its board of trustees.  One might think the leadership should be proud of the board members, and the board members would be happy to advertise their community service.

This did not seem to be the case here.  Once more we see how the new overlords of health care reflexively seem to choose secrecy over transparency, deliberately creating the anechoic effect which we have frequently discussed.

Perhaps the board wanted to avoid undue attention to the political connections of its new chairman, one of which  was to a"convicted felon," and another of which was to Mr Norcross, whose apparent conflicts of interest in his role in the governance of a former UMDNJ hospital were discussed here. Parenthetically, an article in on the merger noted that this new hospital system is a descendant of the now dissolved University of Medicine and Dentistry of New Jersey, UMDNJ (look here), an organization whose extensive troubles kept Health Care Renewal very busy in past years.

Perusing the list of the members of the board reveals two people with pharmaceutical connections that could be conflicts of interest, a few people with health care affiliations, but no obvious affinity for the patients and public in New Jersey whom the new hospital system is supposed to serve, and many lawyers and business people with no obvious affinity for the values of health care professionals.

However, as summarized by the National Council for Nonprofits,

the board of directors have three primary legal duties known as the 'duty of care,' 'duty of loyalty,' and 'duty of obedience.'


In sum, these legal duties require that nonprofit board members:

Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will; and provide oversight for all activities that advance the nonprofit’s effectiveness and sustainability. (legal 'Duty of due care')

Make decisions in the best interest of the nonprofit corporation; not in his or her self-interest. (legal Duty of loyalty')

Ensure that the nonprofit obeys applicable laws and acts in accordance with ethical practices; that the nonprofit adheres to its stated corporate purposes, and that its activities advance its mission. (legal 'Duty of obedience')

So it is not obvious that these board members are particularly familiar with the nuances of the mission of a large academic hospital system, which includes delivering excellent patient care that puts individual patients first, particularly ahead of board members' self interest, and of its academic role, seeking and disseminating the truth.  One wonders what sort of governance this sort of board will provide.  Maybe the hospital leadership wanted to forestall such questions by keeping board membership as obscure as possible.

Speaking of the anechoic effect, while the new RWJ Barnabas Health system will be a very major player in NJ health care, and while trying to keep the board members of a non-profit health care system is rather a remarkable action, so far, only one local newspaper, and now your humble blogger seem interested.  This is yet another example of the anechoic effect.


We have been writing now for a long time about the tremendous and growing dysfunction of US health care.  Some now obvious reasons for its problems are poor leadership of ever larger and more powerful health care organizations, and failure of existing governance bidues to exercise stewardship over these organizations.  We have discussed numerous previous problems with boards of trustees of non-profit health care organizations here.  We have noted that board member may have conflicts of interest, and are often rich business executives who may be more interested in preserving the power and wealth of their fellow executives, including those generic managers who know often run large health care organizations, than defending vulnerable patients.  These problems are compounded by the anechoic effect: information and opinions which might offend those currently in power and who stand to benefit most from the current system is kept very quiet, treated as a taboo subject, that is, made to have no echoes.  This new case again suggests that these problems are not going away.

How many times must we say this?....   True US health care reform would vastly increase transparency, not just of prices, but of leadership and governance.  True US health care reform would put the operation of US health care organizations more in the hands of people who have knowledge and experience in health care, and are willing to be transparent and accountable to support health care professionals' values.  Furthermore, oversight and stewardship of these organizations should represent the patients and public which the organizations are supposed to serve. 

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