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The Sibley Hospital case involves several board members taking what any reasonable person might consider to be "questionable" actions. However, "questionable," "unethical" and "illegal" are not the same.
Some of their actions may raise even more serious issues, especially as to a board's responsibilities, specifically the responsibilities for loyalty, care and obedience.
1. Where did the board as a whole fail to carry out those responsibilities?
2. Where did individual board members fail to carry out those responsibilities?
3. Did any actions cross the boarder from the questionable and unethical to the illegal?
The board as a whole failed to carry out responsibilities relating to the proper and profitable investment of the funds of Sibley Memorial Hospital. The board did not invest the hospital funds in a manner that would earn the hospital the highest income. In addition, even though Sibley had enough funds to repay the loan in 1969, the executive committee of the board voted instead for a renewal of the loan. The board failed to carry out its responsibility because it cost the patients $100,000 a year in interest income. In addition, even though the hospital received large funds from the federal government. The hospital placed large sums of money with banks in which Reed and Ernst had personal links. The board failed to carry out its responsibility because the board failed to confirm with ...
American Hospital Association Article XXVIII, Conflict of interest is discussed step-by-step in this solution. The response also has the sources used.