Question

Chapter 6

1. Why is a corporation considered an "artifical person" under the law? What are the consequences of this concept?

2. What are the functions and responsibilities of the governing board of a healthcare corporation?

3. Why is the concept of piercing the corporate veil important to any corporation and its subsidiaries?

4. What are the pros and cons of hospital-physician joint ventures?

5. Describe the advantages of incorporation as opposed to organization as a partnership.

Chapter 7:

1. Why has the defense of independent contractor status declined in importance in recent years?

2. How is corporate liability different from liability under respondeat superior?

3. Why is ERISA preemption an important consideration for MCOs?

4. Explain the doctrine of apparent agency.

5. Explain the "captain of the ship" doctrine.

Answer 1

Ans) 1) Legislation in the United States
It can also sue and be sued and held liable under both civil and criminal law. As well, because the corporation is legally considered the "person", individual shareholders are not legally responsible for the corporation's debts and damages beyond their investment in the corporation.

- This separate legal personality has the consequence that a company has perpetual succession. It just means that the corporate entity is an artificial person that can take the same legal actions as groups of individuals (i.e., it is not a citizen).

2) The governing board is responsible for ensuring that the staff has the support and resources necessary to enable them to fulfill their roles. The board is also responsible for reviewing the quality of medical care delivered in the hospital through the quality assurance program.

- The board of directors' key purpose is to ensure the company's prosperity by collectively directing the company's affairs, whilst meeting the appropriate interests of its shareholders and stakeholders.

3) The concept of the corporate veil is important to the concept of limited liability. In general, if the corporation or LLC is considered completely separate from the individuals who own and manage the business, those owners/managers cannot be held responsible for the company's actions.

4) Pros and Cons of hospital physician joint ventures

Pros:

•The ability to collaborate with other partners when making business decisions.

•Entering related businesses that previously presented high barriers to entry.

•Gaining access to expertise without the need to hire more staff.

•Sharing the financial responsibility of capitalizing the business.

•The parties can share risks and costs.

•Leveraging existing technologies used by the other organization.

•Establishing a presence in new, untapped markets.

•It is only a temporary arrangement between the parties.

•The parties have access to additional resources as they are coming together for a mutual and specific goal.

•The parties can complete a project which they may not have had the finances or staff to complete on their own.

•Increasing opportunities for growth of your business including financial growth.

Cons:

unrealistic objectives that may not be completely clear in advance and not aligned to a common goal.

•Coping with differing cultures, management styles, and working relationships that prevail in each organization.

•Managing communication with physicians, senior managers, and employees in both organizations so there's a consistent understanding of the objectives of the joint venture.

• Setting either of the parties making poor tactical decisions, which may affect the desired outcome of the project. These are usually caused by a misunderstanding of the roles of each organization.

•Lack of commitment to the project by any of the parties.

•There are times when flexibility is restricted.