Sarbox Requirements Useless in Non-Profit Health Care?

Lora Bentley

It's no surprise to most that the majority of the Sarbanes-Oxley Act only applies to publicly traded companies. But we've also noted before that many non-profit organizations and private companies have applied Sarbox-like internal controls or independent audit committee requirements to their organizations voluntarily -- because doing so is just good business.


One of the first non-profits to demonstrate Sarbanes-Oxley compliance was the University of Pittsburg Medical Center. In 2006, UPMC representatives said they decided to comply with Sarbanes-Oxley voluntarily as a means of maintaining accountability with the hospital's contributors.


More recently, non-profits have also imposed requirements on their boards of directors -- from minimum donations to term limits. However, a new study has revealed that making such requirements -- at least where health care organizations are concerned -- doesn't do much to improve financial management or patient care.


Miller-McCune reports:

University of Michigan professor Jeffrey Alexander led a team searching for a correlation between the structure of a board and the community benefits of the hospital it advises....What they found might make would-be regulators cringe: There was only a weak correlation between the boards' structures and how well their respective hospitals functioned for most benefits they measured.

Most of the evidence that board structure changes and the like affect the way hospitals operate are anecdotal, the story says.

Add Comment      Leave a comment on this blog post
Apr 10, 2008 8:21 AM lokenpal lokenpal  says:
I think the study is flawed as it only applied one aspect of SOX. Was SOX 404 internal controls applied on key processess; for e.g how its non-profit funds are managed, Is operational cost optimized, Is there dual control in its purchasing policies, etc. Reply

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