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Role of the Board of Directors in Healthcare

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The role of the board of directors in publicly-held companies is governed in part by the Sarbanes-Oxley Act of 2002 and is generally to serve as a check on management to protect shareholders. Directors on health care company boards have an added complexity to their roles due to specific regulations on health care.

Establishing Direction

The CEO/management generally is responsible for establishing the strategic direction of the company but should do so in conjunction with the board of directors. The board’s role is to approve or suggest revisions to the strategy.

Compliance

In addition to the rules established for public companies by the Securities and Exchange Commission (SEC), health care companies may have specific regulations to which they are subject. The board of directors oversees compliance with these regulations.

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Shareholder Interests

The board of directors oversees how management serves the long-term interests of shareholders.

Advice and Expertise

Board members can be invaluable to management in providing guidance and expertise from their own backgrounds in the health care field.

Long Term Vision

One of the most important roles board members have is to provide long-term visionary direction for the health care companies on whose boards they serve.

About the Author

K. Sue Redman is President of Redman Advisors, a private consulting firm specializing in the areas of enterprise risk management, corporate finance, accounting and strategy. She is also an executive professor in the accounting department of Mays Business School at Texas A&M University. She has been writing business articles for five years and her articles have appeared in "Compliance Week", "DIrectors and Boards" and "Business Officer." She is a former partner of PricewaterhouseCoopers and is a CPA licensed in Texas, Arizona and California.

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