Board members, C-level execs at risk from going bare

In addition to risking financial calamity for the hospital, going bare or self-insured can put individual board members at risk, says James W. Satterfield, president and CEO of Firestorm, a financial and risk management consulting firm in Roswell, GA. Satterfield worked for many years as a hospital administrator. Board members often are misled by the idea that they are serving their community and will not be held personally liable, he says.

“If board members are under the impression that good Samaritan laws will protect the personal liability of the board, I would feel they are largely mistaken,” Satterfield says. “Board members and the C-level officers in all likelihood will end up with personal liability. It will be their homes, their checking accounts, their IRAs that are indemnifying them in this area.”

When hospitals go bare as the last resort short of closing the doors, the reasoning often is that they will just take the risk of a big malpractice verdict, and if the hospital cannot pay it, the hospital will be forced to close, Satterfield notes. That situation would be a regrettable outcome for any facility, but administrators and board members often do not realize that closure would not be the end of the story, he says.

“Yes, they will close, but the leadership in that hospital has a very high likelihood of being held personally accountable within it,” he says. “We saw the same thing in the banking industry when financial institutions closed down but the key players there were still responsible because they had a fiduciary and governance responsibility.”


• James W. Satterfield, President and CEO, Firestorm, Roswell, GA. Telephone: (770) 643-1114. Email: