Interim Compliance Officers Permit Uninterrupted Management Of Their Compliance Program While Seeking The Right Replacement

By James Cottos

I have completed four engagements as an Interim Compliance Officer (ICO), ranging from six months to sixteen months, and each has represented different challenges. Two of them had basically no program and required building the program from the ground up. One assignment was to take a basic program and upgrade it to be a fully effective program. The fourth assignment was to maintain a sound program, but to strengthen the relationship with the senior management and Board. The value in each assignment was being able to quickly evaluate the current state of the compliance program and set objectives for improving the program. The added benefit for the client was to assist them in identifying the right person for the permanent position. This article is designed to report on what I have learned from my personal experience as an ICO.

In today’s challenging environment in an ever changing regulatory and legal changes in a severe economic downturn in the economy, hospitals are struggling with a host of day to day decision making and rely upon continuity in their leadership. Losing a key leader from a sudden departure often creates a near crisis, leading to ad hoc decisions, rather than relying upon a well-thought-out plan. Given the crucial role that leadership stability plays in the performance of an organization, hastily made decisions are usually not the best and often lead to larger problems and issues. Many hospitals are now focusing more on contingency planning to fill and gaps in the key leadership positions. Many hospitals don’t believe they have the necessary time to find the right person with all the necessary experience, technical skills required, proven leadership and personality to properly fit into the senior management team; and as a result settle for less than they really need or desire.

Over the last decade, the Compliance Officer has grown into one of those leadership positions that require careful selection to avoid serious problems and issues downstream. Compliance has grown from an add-on duty to a demanding and sophisticated position that is now an essential part of every hospital’s senior management team. Finding that right executive to oversee compliance is made more challenging by the fact the average tenure for a Compliance Officer is currently under three years. Furthermore, unlike other senior positions such as legal counsel or CFO, it is not anchored in a recognized matriculation program at recognized colleges and universalities. The fact is that the profession is still under development with professionals coming from a variety of educational and professional backgrounds. All this complicates the time and effort needed to replace this position.

The importance of the Compliance Officer is underscored by the increased enforcement activities and focus on recovering funds through Recovery Audit Contractors,new Zone Program Integrity Contractors, and hiring of additional government auditors and investigators. The current health care reform debate has underscored the importance of compliance. In the House of Representatives, the major proposed bill is HR 3200 which would mandate an effective compliance program as a condition of participation in Medicare/Medicaid. It is the one area where there is widespread bi-partisan support and is therefore among the most likely provisions to be passed into law.

In light of these changes, hasty decisions on replacing departing Compliance Officers, or replacing them with personnel without the technical skills or leadership capabilities, is extremely dangerous and will not work. Using properly qualified Interim Compliance Officers (ICO) permits hospitals to have their compliance program to continue operations without loss of momentum or acting upon compliance issues that may arise. It also provides a fresh set of professional eyes examining and testing their compliance program for any deficiencies. The ICO can assist in identifying the education, skills, leadership experience and personality needed in the permanent replacement. The position is too important to have an internal party being placed in an acting role. At best it is awkward for someone to be in that role and then regressing after a permanent compliance officer takes over. Bringing in someone who is overqualified brings a broader perspective and richness of experience to aid the hospital in thinking differently and increase the learning edge needed to take the compliance program to the next level.

There are many other advantages of using an ICO such as:

Independence and objectivity with no preconceived notions about personnel or current processes
Adds value to the program during the transition period
Offers a fresh but knowledgeable perspective to the compliance program
Can assist in identifying qualified candidates for the permanent position
Evidences a serious commitment to the compliance process
Assists in building a firmer foundation for an effective compliance program
Gives the incoming compliance officer with a road map to follow
Provides senior management and Board with independent assessment of the status of the compliance program

Before choosing an ICO, it is imperative to ensure the individual has the knowledge, experience, and demonstrated good judgment to meet the specific needs of the hospital. An effective ICO should possess the following:

Evidence of working at the executive and Board level
Demonstrated sound judgment to deal with sensitive issues
Sound writing and communication skills
Experience at management of staff and projects
Knowledge of the required elements of an effective compliance program
Awareness of applicable laws/regulations (e.g. Anti-Kickback Statute, Stark Laws, False Claims Act, Deficit Reduction Act, HIPAA)
Operations of and resolution of hotline allegations and complaints
Understanding of how to conduct internal investigations/inquiries
Expertise in developing infrastructure including senior management responsibilities and active participation in the compliance program
Experience in conducting ongoing auditing/monitoring of high risk areas
Being able to develop/deliver compliance education and training programs

In summary, replacing a departed Compliance Officer should be a positive well thought out effort, and not rushed to the point of finding the wrong person for the job. Maintaining the compliance program and enhancing it while going through this more diligent process can be achieved by using an ICO. To obtain the full benefits that can be derived by this strategy, the ICO should serve for not less than four months, and preferably not be for more than six months.

James Cottos is Senior VP at Strategic Management (SM), which has been providing specialized compliance advisory services since 1992. SM has been providing interim and outsourced compliance officers for a number of hospitals over the years. For more information, see www.strategicm.com or call him directly at (703) 599-5283