Source: https://oag.parliament.nz/2007/auckland-dhbs/part4.htm
Timestamp: 2020-07-11 14:47:21
Document Index: 432099401

Matched Legal Cases: ['art 4', 'art 4', 'art4', 'art 6', 'art 2', 'art 6', 'art 6', 'art 6']

Part 4: Dealing with conflicts of interest in practice — Office of the Auditor-General New Zealand
Part 4: Dealing with conflicts of interest in practice Management of conflicts of interest in the three Auckland District Health Boards. https://oag.parliament.nz/2007/auckland-dhbs/part4.htm https://oag.parliament.nz/@@site-logo/logo.png
In this Part, we describe how well the policies and procedures of the three Auckland DHBs are implemented and complied with in practice.
We discuss some general findings that apply to the three DHBs, and then discuss matters that relate to each of the DHBs.
General findings for all the Auckland District Health Boards
General approach to dealing with conflicts of interest
In our view, administrative staff and staff in high-risk areas in the DHBs who were likely to consider conflict of interest issues most often had a good understanding of conflicts of interest.
The understanding of members, and of other managers and staff in operational departments we spoke to, was more variable. We consider that the understanding of others throughout the organisation (who may think about conflicts of interests infrequently) is likely to vary even more widely.
Administrative staff took conflict of interest issues seriously when such matters came to their attention. However, because of the size of the DHBs, it was difficult for staff to be confident that they were aware of all issues that might arise throughout the organisation, or that all people within the organisation actually complied with the relevant policies or expectations when a conflict of interest issue arose. Therefore, people we spoke to did not think it was possible to have complete assurance that all conflicts of interest were being identified and managed properly.
However, two mitigating factors were often mentioned in our interviews. One was that, although the organisations are large, in another sense the health system is an intimate one. People in each particular part often tend to know each other and have a range of dealings with each other. This may mean that unusual or improper behaviour is not likely to remain hidden for very long, if at all, and also that people are likely to value their own reputations highly (which may deter improper behaviour).
The second was that, because large organisations tend to be somewhat bureaucratic, most major decisions are likely to involve a lot of different people, at a range of levels. This is likely to increase the level of internal scrutiny of decisions and reduce the likelihood of a single individual being able to exert improper influence (or being improperly influenced by someone else).
We learned of a large number of anecdotal examples of the sorts of conflicts of interest that can arise (or that are at risk of arising). Administrative staff, in particular, were sensitive to risks to the organisation, and we saw examples of cautious and sensible judgements about conflicts of interest.
We found very few examples of serious breaches of rules or expectations, or other matters that had involved formal complaints or suspected misconduct requiring investigatory or disciplinary action, or that had caused major legal, financial, or reputational risks.
Where the DHBs required interest or conflict of interest forms to be completed at certain times (such as for registers of members or senior staff, or for people closely involved in an evaluation for a major contract), we gained the impression that these requirements were generally complied with. However, we did not review files to verify the extent to which all people involved in a major contract completed such forms when they were expected to do so.
Particular conflicts of interest can arise at any time. Other than routine written declarations of interests, we found that conflicts of interest were often dealt with orally. There was usually very little documentation1 (of either disclosures or decisions about how to manage them), unless the relevant discussions had occurred by email. To some extent, this is perhaps natural, especially if it is quickly and easily decided, without any dissent, that the conflicted person is simply not going to be involved in the matter (for example, by not being considered for appointment to an evaluation panel or working group). Nevertheless, we expected to see more documented examples of how particular conflicts of interest were managed. Good record-keeping, as well as being prudent business practice, is an important element in risk management of issues that have the potential to cause problems if not well handled. Also, the DHBs’ policies expect conflicts of interest to be documented.
Sometimes, after an interest or conflict of interest was disclosed, people did not always consider whether and how the situation should be assessed and managed (see paragraphs 4.21-4.26 and 4.28 for the individual DHBs, and Part 6). Many of the conflict of interest issues that are inherent in, or common across, the DHB sector (as outlined in Part 2) were well known but were often considered to be “too hard” to deal with.
Availability and awareness of policies
People we spoke to during our audit were all generally aware of the need to be alert for conflicts of interest. They expected their DHB to have a policy on the topic.
Many of the people we spoke to were not familiar with the details of their relevant policies. That was not, in itself, of great concern to us. Large organisations commonly have extensive sets of policies. It is more important that people have an understanding of the broad expectations of them, know generally what sorts of matters the relevant policies are likely to cover, and know how to find the policies when they need them.
The DHBs’ policies were all available to staff. Almost all clinical and administrative staff used computers as part of their day-to-day work, and the policies were usually accessed electronically, through an intranet.
All of the policies relied, at least to some extent, on the manager of the affected individual to decide how to deal with conflicts of interest, rather than having all matters referred to a single or central decision-maker. This is necessary, given the large size of the organisations, but it also means that the people who may need to make many of the day-to-day decisions about staff will be managers who work in operational departments (for example, Service Managers and Clinical Heads, and some managers who report to them), rather than in a DHB’s administrative centre.
Such managers may not be familiar with the relevant policies, and may not even necessarily be aware of them unless the policies are drawn to their attention. For this reason, we consider that the DHBs could do more to raise awareness of how to manage conflicts of interest under their policies, especially among managers in operational departments. Training and support for these people is especially important. The DHBs may find it useful to promote awareness of the contents of their policies, and how to use them, through such methods as occasional articles in staff newsletters and targeted training sessions for managers in operational departments.
We recommend that the three Auckland District Health Boards take further steps to enable managers in operational departments to understand and apply the organisation’s conflicts of interest policies.
Use of the statutory waiver procedures
The DHBs did not generally use the statutory power to formally grant permission to a conflicted member to participate in discussions (but not vote).2 We were told that the DHBs considered that procedure too difficult, cumbersome, or risky to use. (We discuss this further in Part 6.)
The DHBs did not generally do much ongoing or periodic monitoring of how well their conflict of interest policies were understood and used, and how effective they were.
At the time of our audit all the DHBs had started, or were intending to start, a review of the contents of their policies and procedures.3 They are likely to await our report before finalising their reviews.
At the Auckland DHB, it was common to encounter an attitude that mere disclosure of interests was enough to deal with any potential issues. This applied to both staff and members.
Once a person’s interest had been identified and disclosed, there was sometimes little consideration of:
whether the interest gave rise to a conflict of interest in connection with a particular matter (that is, the question, decision, project, or activity that the person is or may be involved in); and
if so, how serious it was and what to do about it.
This may indicate some uncertainty over how or where to draw the line in some areas. However, it is not appropriate to simply ignore the question of whether a conflict of interest exists. A general disclosure of a personal interest is not the same as a disclosure of a conflict of interest (that is, making a disclosure when a personal interest overlaps with a particular matter that is before the DHB). Moreover, disclosure is an important starting point, but it cannot be assumed that mere disclosure is enough to manage a conflict of interest.
It is not enough to simply declare a general interest, but never consider whether it creates a conflict of interest in particular matters (nor to acknowledge a conflict of interest but proceed without considering what further action may be necessary). It is important to consider the next steps:
The statutory rules for members are clear, and need to be applied deliberately, rigorously, and conscientiously. If a member has a conflict of interest in a particular matter, they must declare it and then abstain from participating in that matter (or, alternatively, the board or committee could formally grant them permission to participate in discussions but not vote).
For staff, the relevant manager should assess the seriousness of the conflict of interest, and then decide what steps to take to manage it.
In particular, it was extremely rare to see examples of a member declaring a conflict of interest in a particular matter at a meeting and withdrawing from participation in the matter. This was surprising, given the range of interests that members have. We formed the view that some people considered that, because most members have a range of interests, everyone was conflicted to one degree or another and that, so as long as members’ interests were well known, nothing more could or should be done about it. In other words, that any conflicts of interest would be too widespread or too difficult to deal with.
We do not agree. Members are not all conflicted. Conflicts of interest need to be considered case by case. For any given matter before the board or a committee, it may be that the decision could affect one or two members particularly, because of their other interests and roles. The normal expectation ought to be that their conflicts would be identified, and those members would not participate in those particular matters (unless the formal waiver procedures are used).4 We discuss this issue in Part 6.
We recommend that the Auckland District Health Board identify and record conflicts of interest of members for particular matters that arise at meetings, so that it is clear when a member should not participate in a specific matter (or when the formal waiver procedures may need to be considered).
At the Counties Manukau DHB, it was common for members to orally declare interests (and changes to them) at meetings. These were frequently noted in the minutes. We formed the view that members were generally careful about this.
It is important to always be alert for when an interest may give rise to a conflict of interest in particular cases, and to document those instances (see paragraphs 4.23-4.26 and Part 6). However, it was not always clear that members considered whether their declared interests gave rise to conflicts of interest for particular matters (either at that meeting or subsequently) that warranted their withdrawal. It was not common for a member to withdraw from participation in a particular matter.
We recommend that the Counties Manukau District Health Board identify and record conflicts of interest of members for particular matters that arise at meetings, so that it is clear when a member should not participate in a specific matter (or when the formal waiver procedures may need to be considered).
The Waitemata DHB generally took a cautious approach to conflicts of interest, especially at board level. The board was careful to record actual conflicts of interest for particular matters before the board. We found that it was common for a member to declare a conflict of interest in a matter and to withdraw from participation. The DHB had sought legal advice on a number of occasions about particular matters.
Occasionally, this cautiousness may even have meant that a person had withdrawn from participation in consideration of a matter when it may not have been necessary to do so. Although it is often wise to err on the side of caution, it is also possible to be too cautious. This can create frustration if people are being excluded who legitimately feel that their input is warranted and that the effectiveness of the organisation’s work is being unnecessarily hindered.
1: Except for matters that arise in board or committee meetings, which are usually recorded in the minutes.
2: We are aware of one example of this power being used, at the Waitemata DHB.
3: Some of this work was in response to the Diagnostic Medlab case, but some of the work predated it.
4: The Auckland DHB largely operates by consensus, and so it very rarely votes on any matter. But the prohibition on participation is not limited to voting; it also applies to deliberations. And it is not relevant that the outcome may have still been the same regardless of the person’s participation.