American Association of Healthcare Executives

Considerations for Healthcare Executive-Supplier Interactions

Approved by the Board of Governors Dec. 6, 2021.

Statement of the Issue

Healthcare executives share a fundamental commitment to improve the cost, quality and outcomes of care and to create an equitable, effective, safe and efficient healthcare delivery system for those needing healthcare services. To accomplish these fundamental objectives, healthcare executives must rely on an intricate network of professionals that includes professionals within the supplier community.

The realm of healthcare executive-supplier relationships involves both the purchase of goods and services and the mutual provision of information and advice that facilitates the informed decision-making for the benefit of patients and organizations.

In interacting with current and potential suppliers, healthcare executives must act in ways that merit trust, confidence and respect, while fulfilling their duties to the public, their organizations and the profession. Further, it is important to avoid even the appearance of conflicts of interest that may seem to unduly advantage the healthcare executive, the organization or the supplier. Thus, healthcare executives must demonstrate the utmost integrity and embrace the need for transparency in interactions with suppliers.

Policy Position

The American College of Healthcare Executives believes that healthcare executives may interact with company representatives who sell products and services to their organizations in a way that:

Advances patient care or improves healthcare delivery.
Is fully disclosed to and reviewed by the executive’s organization.
Does not damage the reputation of the organization, the healthcare executive or the profession.
Does not violate policies of the executive’s organization.
Does not violate applicable law.

In determining whether the nature of specific executive-supplier interactions meets each of the above guidelines, organizations should have an established mechanism to review the appropriateness of such relationships to ensure that a potential conflict of interest is avoided. The mechanism should carefully consider the issues detailed below.

1. The interaction between an executive and a supplier should enhance patient care or improve healthcare delivery when one or more of the following conditions are evident:

It furthers the executive’s knowledge of products or services that may improve patient care or health system operations.
It furthers the supplier’s knowledge of the specific needs of, or challenges facing, the executive’s health system, and enables the supplier to propose options for consideration and/or produce improved, revised or updated products and services.
It facilitates the efficient and cost-effective delivery of products and services to the executive’s organization.
Examples of reasonable interactions that could enhance patient care, improve healthcare delivery or health system operations are attendance by executives at trade show exhibits of supplier products or seminars or demonstrations produced by suppliers.

2. Full disclosure and review of the supplier-executive relationship to the executive’s organization should be made to the party within the organization to whom the executive reports and through the organization’s compliance program officer and/or conflicts committees. To prevent misunderstanding, it is advisable that disclosure include all remuneration arrangements. Organizations should have clear guidelines regarding whether the acceptance of any reimbursement and/or gifts for the executive’s interactions with suppliers is acceptable.

3. Even with full disclosure and review, damage to the reputation of the executive, the organization or the profession may occur. The executive should avoid interactions with suppliers when this risk is present or perceived.

Executives should avoid interaction with suppliers that could result in undue influence by suppliers in the decision-making process.
As with any position of public trust, avoiding even the appearance of wrongdoing, conflict of interest or interference with free competition is important. Executives should take care that interactions with suppliers not result in perceptions of undue influence or other perceived impropriety.

4. Healthcare executives are subject to the federal anti-kickback statute, which makes it a criminal offense to knowingly and willfully offer, pay for, solicit or receive any remuneration to induce referrals of items or services reimbursable by federal healthcare programs.

The anti-kickback statute interprets remuneration very broadly, including the transfer of anything of value, in cash or in kind, directly or indirectly, covertly or overtly.
The anti-kickback statute provides a basis to prosecute if an executive receives any remuneration in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service or item for which payment may be made in whole or in part under a federal healthcare program.
The Patient Protection and Affordable Care Act clarified that each violation of the anti-kickback statue was also a violation of the False Claims Act.
The healthcare executive should be aware that other statutes, which may vary from state to state, may also be applicable. If the application of a law to a proposed interaction is unclear, the executive has a duty to seek guidance from the appropriate party, who may be the person to whom the executive reports or the organization’s legal counsel.

5. In addition to applicable laws, healthcare executives have a duty to be familiar and comply with their organizational policies governing interaction with suppliers. If the application of an organization’s policy to a proposed interaction is unclear, the executive has a duty to seek guidance from the appropriate party, who may be the person to whom the executive reports, the organization’s legal counsel, compliance officer or ethics adviser.

Executive-supplier relationships may raise significant questions. The context and nature of the relationship can be more significant than the specific setting or type of interaction. Therefore, in addition to the above criteria, there are a number of questions healthcare executives and their organizations should consider when assessing the nature of arrangements with suppliers and evaluating if a real or perceived conflict of interest is likely:

Will the relationship affect your professional judgment, the judgment of your colleagues or the organization?
Who will benefit from the relationship? Who might suffer?
Would you be comfortable with the relationship if it were known to your patients, stakeholders and the general public?
Can you defend the relationship to your colleagues and superiors?
Does it represent a positive model for managerial, professional or organizational behavior?
Does the relationship potentially represent a conflict of interest or other adverse situation because of other parties involved?
Would you expect other organizations or individuals to behave similarly?
Is it fair to all parties?

When considering these questions, the healthcare executive should be cognizant of the need for public trust and the avoidance of even the appearance of impropriety.

Furthermore, to foster knowledge and sensitivity to potential issues associated with supplier interactions, healthcare executives should promote the dissemination of this Policy Statement to appropriate managers within their organizations and to relevant suppliers.

Policy created: November 2007
Last revised: November 2016