Establishing a conflict of interest program seems relatively easy in concept. You develop some policies, look for annual disclosures and perhaps establish a review committee. Check it off as a completed task and move on to your other priorities.
However, anyone who has actually attempted to manage conflicts in a real organization knows that this is much more complex. People do not always see conflicts when they are in front of them. Situations change throughout the year and not just during the period of annual disclosures. And how quickly does reviewing dozens or hundreds of disclosure forms become a nightmare?
The programs that are effective go far beyond the basic policy obligations. They create a process that makes it easy for individuals to recognize potential conflicts of interest and inform the organization, while also providing the organization with procedures to manage those situations.
Understanding what is and is not a conflict
The greatest challenge that most organizations face is simply helping people express conflicts in the first place. This challenge extends far beyond any financial interest or family member relationship to an obvious conflict – and of course this is important – but we rarely consider the more subtle situations that many organizations have developed that can also interfere with decision making in a way that people do not see it.
Think of a manager of purchasing that regularly plays golf with a sales representative of a vendor. Is this a conflict? What if a board member’s spouse works for the company bidding for a major contract? What if an employee holds stock in a competitor through a 401k plan?
These gray areas often confuse even the most honest person with good intentions. Well-structured programs offer clear instructions and scenarios that enable staff to identify relationships that may pose conflicts of interest before there’s a problem. Eliminating relationships completely is neither possible or even realistic; however, we want to encourage transparency whenever those relationships may present unique potential in the decision making process.
The complexity of this work is heightened for many organizations in the healthcare community, because employees, professionals, and providers typically have multiple professional relationships that can give rise to conflict. Doctors can be members of a vendor’s advisory board, or might conduct research for, or serve as clinical trial principle investigator for, a pharmaceutical company, or have a financial stake in a medical device company. Each of these relationships may represent conflict, but there are simply too many potential conflicts to evaluate every situation at the beginning of the year, or worse, try to track off line.
Building scalable systems
For small organizations, tracking conflicts with simple spreadsheets and regular manual reviews is often sufficient. This becomes much harder to achieve as an organization grows in size or depth. When an organization reaches the stage of having hundreds of employees completing multiple disclosures, or stakeholders whose relationships change multiple times throughout the year, it’s simply inefficient and unreasonable to keep trying to track conflicts manually.
It is at this stage in growth and development that a systematic approach becomes critical. Organizations who are best able to demonstrate attention on conflicts in a systemic way at scale generally leverage systems, conflict of interest software, and services that can manage and facilitate more complex disclosure workflow and historical change (higher purpose). Systems that alert or allow for flagging investigation of discovery offer even more value. The systems do not replace human judgement, but assist with identifying, considering, and resolving potential conflict of interest situations that arise.
Finally, the best conflict of interest systems allow for change that is often a hallmark in this arena. Someone may agree to serve as a consultant in the middle of the year, a family member working in a vendor company may be hired during a calendar year, or a financial interest may change following a stock purchase, sale, or inheritance. Effective conflict of interest systems make allowances for due diligence in change by allowing for continuous disclosure and transaction reporting rather than simply relying on annual reporting.
Simplifying Disclosure
Stakeholders are unlikely to disclose conflicts that they do not understand, or if the disclosure process is made difficult. The best programs allow for disclosure to be as easy and simple as possible, while still obtaining the necessary information for the appropriate review of the situation.
This includes straightforward questions that don’t require legal training to assess. Rather than asking questions about “financial interests that could reasonably be expected to have a direct and significant effect on the employee’s decisions,” effective programs typically ask questions about stock ownership, consulting agreements, board positions, and family relations in language that a regular employee will understand.
The disclosure also needs to have timely purposes. Annual disclosure periods set up artificial deadlines not normally associated with how real conflicts develop. Better programs provide ongoing disclosure whenever the circumstances change, combined with periodic reminders to review and revise present information.
Establish a Good Review Process
Disclosures only have value if someone reads through the information properly, and then takes the appropriate steps when needed. Many organizations ask for lengthy disclosures, then have a general rule to leave it to individuals to list any conflicts they are aware of, then file those disclosures somewhat archive-like without any approach to systematically review disclosure results.
An effective review process starts with a clear definition of manageable conflict versus one that requires recusal or some other action. Not all conflicts will or can be “cured” – many can be made known, known to those who make decisions or build in another level of decision making process.
The review process needs to be timely, also. Urgent situations deserve more immediate attention than sitting in an inbox for weeks while waiting for the quarterly management committee meeting. External urgent business situations require conflict reviews that have more of an immediate cadence than just quarterly or annual needs.
Training That Makes A Difference
Most compliance training focuses on what not to do. Conflict of interest training should help people recognize the nuanced situations and to understand how to deal with them. The best kinds of training involve realistic scenarios that align with employees roles.
This type of training cannot be a one-off. New employee onboarding is one time, but existing employee must have periodic training as business relationships change and regulatory needs may change as well. Periodic training reinforces the message that managing conflict when it arises is part of a person’s responsibilities, not simply a one-time annual effort just to check a box.
Technology and Workflow Integration supports the Conflict Process
Modern conflict management include integrating technologies with business processes to provide better oversight and diminished administrative burden. For example, integrating with Human Resource systems to flag when an employee transitions to another role, or to flag the new reporting relationship. Vendor management systems to help identify whether an employee should have a current or potential customer relationship with business partners. These integrations serve to identify issues somewhat objectively and will capture what may be missed and or burdensome to maintain accurate documentation and records regarding conflicts.
Again, the aim of the conflict process is not to complicate normal business processes, rather, the goal is to build transparency and ownership into performance decision making. The conflict process should ultimately enhance business performance beyond compliance metrics. If implemented correctly, these integrations will serve to streamline normal business processes by enabling the identification of pre-emptive actions to eliminate conflict from escalation or occurrence.
Measure Success and a Path towards Continuous Improvement
An effective Conflict program will track meaningful metrics beyond compliance stats; conduct people report conflict resolution? When? how often? Is the review process timely? Are there patterns in the types of conflict the organization needs to address? Data should guide the organization to improve their program, let alone determine if they are on track.
The best run programs will incorporate and establish their conflict management process as an emergent, versus a well establish, static process the organization will turn to or conduct on time to time basis.
Establishing a conflict of interest program that works requires planning, right technology, and, support and leadership engagement. Those organizations that dedicate and understand the efforts by instilling and maintaining these strategies will find that good practices and enhance both their organization reputation and decision making in a manner basic compliance cannot afford.
