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Tuesday, May 31, 2011

Skimming the Surface of Health Care Reform and Nonprofit Organizations - Kevin

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act of 2009. Seven days later, he signed into law the Health Care and Education Reconciliation Act of 2010. While there has been, and continues to be, great debate regarding issues associated with both Acts, I have no desire to participate in those activities. However, I do believe that the issues should be recognized as having great implications for nonprofit organizations. These implications will not be discussed with antagonism or protagonism, as that is best left to others. Instead, I purposely limit my discussion to the introduction of some key issues relating to the passage of the Acts that will significantly affect the governance of nonprofit organizations and must be addressed by board members.

On July 27, 2007, the United States Government Accountability Office (GAO) released a report titled, Nonprofit Sector: Increasing Numbers and Key Role in Delivering Federal Services. In the report, the GAO stated that “U.S. nonprofit organizations have a significant role both in the economy as a whole and as providers of services.” Evidentiary data can be found in the 990 forms NPO’s submit to the IRS. Compilations indicate that in 2004, NPO’s collectively held $3 trillion in total assets and brought in $1.4 trillion in revenues (GAO 3). Also of great importance is the fact that NPO’s employ a significant number of Americans, specifically 13% of the 116 million employees in both the private and public sectors. As such, NPO board members must understand the limitations that government reports such as The Economic Effects of Health Care Reform on Small Businesses and their Employees have. The report, released by the White House Council of Economic Advisers (CEA) completely disregards the 15 million people employed by nonprofits when discussing the economic impacts of health care reform on small businesses (Delaney 2009).

Surely there exist some similarities between for profit and nonprofit organizations. However, assumptions that both sectors share the same political, economic, and social ideologies cannot be made. Therefore it would be unreasonable for one to believe that the Acts affect both sectors similarly, and resultantly, limit discussions of the Acts’ repercussions to one sector exclusively. Conceivably, any such solitary discussion of the for-profit sector would prevent considerations of the complex ideologies of the nonprofit sector. Board members should not be convinced that the content of government publications, such as the CEA report, is representative of their organizations. Instead, board members must be cognizant of the affects that the Acts will have on the NPO’s they serve. NPO board members must not stop there. Instead, they must advocate for their organizations’ interests through the various networks that they are associated.

Board members are ultimately responsible for the performance of the organization in which they have volunteered to serve. Among the many roles and responsibilities that the board members must perform are: procuring financial resources, and soundly managing the organizations financial resources. Certainly, the emphasis placed on these roles by board members will differ among the various theory based approaches they seem to fit. For example, those that align with resource dependency theory will concur that these roles are very important and will therefore address the Acts with upmost diligence. Other board members, perhaps those aligning with organizational theory and institutional theory, will react differently. In the midst of differing theoretical views, board members must somehow realize their “duty of care” and come to the concurrence that they are required to be advocates who represent the best interests of the organization they have been entrusted to lead, regardless of how formidable the task may be.

Certainly the Act will impact organizations differently. Many of the differences will be determined by the number of full time employees that an organization has. Board members must be aware that the costs associated with the provision of health care as required by the Act will be expensive. Unable to reap the benefits that large organizations have in providing health care to a large number of employees, the small organizations will need to make some tough financial decisions. Unlike the for-profit sector that can increase the costs of goods or services in order to afford the mandatory health care, NPO’s cannot do the same. With limited financial resources, nonprofits will face the possibility of reducing staff and services. In order to prevent this from happening, board members must be prepared to aggressively pursue the allocation of additional financial resources. Some decisions concerning health care reform which must be made, may conflict with those beliefs personally or professionally held by board members. Regardless, board members must realize their “duty of loyalty” which requires them to be able to set aside their personal beliefs in order advance the interests of the NPO’s they serve.

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