McDermott recently launched the second episode of its special edition podcast providing an in-depth discussion of the interplay between State Attorneys General enforcement authority and nonprofit Board of Directors responsibility in the governance and operation of health systems. This special edition of the Governing Health podcast series welcomed four prominent State Attorneys General (AGs) to discuss the transformation of the nonprofit health care sector.

In episode two, our panelists discussed how the evolution of nonprofit health care affects business activities, including M&A, Board of Directors obligations, and state nonprofit law across the health care landscape. Here are four key takeaways:

• Beware the dangers of “mission drift.” Mission drift occurs when a change in corporate purpose conflicts with donor intent. As large health care organizations increasingly take on all aspects of health care, they often acquire nonprofit facilities endowed with gift assets. Health systems must consider how the original donor intended for those assets to be used in the community, said Karen Gano, President of the National Association of State Charity Officials and Assistant Attorney General of Connecticut, Special Litigation Unit.
• Keep beneficiary interests front-and-center when considering a sale or a conversion to a for-profit business model. In New York, there is a statutory requirement that any sale of charitable assets must be for fair consideration and in the best interests of charitable beneficiaries, said Jim Sheehan, Chief of the New York Attorney General’s Charities Bureau. Even if a transaction makes good [...]
  
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