Ireland’s charitable hospitals, hospices and other healthcare providers have formed the vanguard of the country’s response to the COVID-19 pandemic over the past 2 ½ years. Although this work is far from over, we hope that the return to a degree of normality in all our lives may allow for a measure of reflection on healthcare governance and other pressing considerations for the healthcare sector.
Legal structure and registered status
For non-profit entities operating in the Irish healthcare sector, your primary identity will be that of a hospital, a hospice, a healthcare representative body etc. You also need to be cognisant of the legal structure you hold, which is central to your corporate governance. This may be a company limited by guarantee, a trust, a charter corporation or a designated activity company. On top of this, you hold registered charity status, bringing into play a host of corporate governance obligations. In addition, HSE funded healthcare charities are also subject to HSE oversight. This multiplicity of funders and regulators brings with it onerous and overlapping governance obligations, as further explained below.
Section 38 and section 39 agencies
HSE-funded healthcare providers are referred to as section 38 or section 39 agencies. These voluntary organisations include acute hospitals and national disability service providers, as well as hospices, mental health care services, homecare providers and social care services. These providers range from small community-based initiatives to large scale organisations which receive millions of euro in public funding every year. All are registered charities.
For these bodies, their registered charitable status introduces another layer of regulation, which sits in addition to the HSE regulatory framework. There is some overlap between these regimes, but it is two separate sets of regulation that these organisations must comply with.
Responsibilities of the charity trustee
All registered charities, including voluntary healthcare bodies such as those outlined above, are governed by a board of charity trustees. These trustees may be termed directors, governors or committee members and they give of their time and skills to manage and to lead charities to fulfil their charitable purpose by delivering their healthcare services.
The role of a charity trustee carries with it substantial responsibility. It is the board of trustees who are collectively responsible for the governance and oversight of a charity, be it a hospital or any other type of entity. Charity trustees who sit on the boards of healthcare charities are therefore accountable for compliance under their individual legal structure (for example the Companies Act 2014 for companies), the Charities Act 2009 and the HSE Service Level Agreement rules.
Some of the key primary duties of charity trustees under charity law are:
- To apply to have the charity registered in the Register of Charities
- To seek approval from the Charities Regulator for any change of name of a charity
- To keep proper books of account and prepare a statement of accounts in respect of each financial year
- To submit an annual report to the Charities Regulator in respect of the charity’s activities
- To comply with the Charities Governance Code and to maintain a “Compliance Record Form” to evidence this compliance
- To comply with any written statutory direction by the Charities Regulator to provide information or documentation to enable the Charities Regulator to carry out its functions
- To comply with the charity’s governing document
- To oversee and manage the charity
- To act with reasonable care and skill
- To ensure that the charity is carrying out its charitable purposes for the public benefit
On the healthcare front, the primary duties of charity trustees under HSE regulation are:
- To sign and comply with the organisation’s Service Level Agreement (SLA) with the HSE
- To keep in contact with the relevant HSE division or directorate about the organisation’s compliance obligations
- For larger funded organisations, to furnish the HSE with an Annual Compliance Statement evidencing good governance (ACS), and
- To take account of the Code of Practice for the Governance of State Bodies and the HSE Code of Governance, to the appropriate extent applicable to the organisation
The HSE is also currently in the process of introducing a new finance and procurement system, the Integrated Financial Management System, or IFMS. This is intended to be adopted by the entire public healthcare sector including section 38 and section 39 agencies. This will entail an additional system of financial oversight.
Systems and procedures that underpin good governance
In considering their systems and processes around corporate governance, the above-mentioned obligations are the starting point for any healthcare charity. It is, therefore, important that trustees understand their duties and discharge their responsibilities. Charities of a significant scale will invariably need a suite of policies and procedures underpinning their corporate governance framework. This requirement has been thrown into focus since the Charities Regulator imposed its requirement for its Governance Code to be adopted by all charities last year.
Additional governance considerations
In addition, for charities who work directly with children or vulnerable adults, additional compliance obligations may arise in relation to Tusla, as applicable. HIQA standards and regulation is also a reality for the healthcare sector.
Despite the challenges, excellent governance pays off for healthcare organisations. By ensuring effective management and oversight of a charity’s resources and activities, good governance ultimately serves the charitable beneficiaries (your service users), as well as building public trust and confidence in the sector.
If you require support with meeting your charity’s governance obligations, come and speak to us today. With unrivalled depth of experience in the Irish healthcare sector, we advise voluntary hospitals and many other healthcare providers operating in the areas of hospice care, intellectual and physical disability, mental health and non-acute healthcare on structuring, corporate governance and charity law issues. We regularly assist section 38 and 39 (HSE-funded) healthcare providers to meet the governance standards required of them, including obligations arising under their contracts with the HSE.
For more information, please contact a member of our Charities & Not-for-Profit team
The content of this article is provided for information purposes only and does not constitute legal or other advice.