A Framework for Assessing the Permissibility of Academic Leaders’ Outside Activities

Over the past several years, investigative reports from The New York Times, ProPublica, The Boston Globe, and other media outlets have renewed public scrutiny of the practice of academic leaders, such as medical school deans and health system chief executive officers (CEOs) serving on the boards of for-profit health care companies.^1-6 Building on prior academic studies,^7-9 the recent wave of reporting revealed that leaders at many of the country’s top academic medical centers earned—in addition to their institutional salaries—hundreds of thousands of dollars a year as directors of pharmaceutical and device companies. In the wake of these reports, critics have urged academic institutions to rethink conflict of interest policies governing leaders’ outside activities, which are understood to pose not only individual conflicts for leaders themselves but also institutional conflicts for their academic employers.^10-12

Institutional conflicts of interest (ICOI) “arise when an institution’s own financial interests or those of its senior officials pose risks of undue influence on decisions involving the institution’s primary interests.”¹³ The reason academic leaders’ individual financial relationships are seen as having the potential to generate ICOI is that these individuals’ administrative decisions shape institutional policy and processes, often with far-reaching consequences. When an academic leader assumes a board position, it raises the concern that financial incentives and fiduciary duties linked to the outside role may influence the leader to act “in ways that favor the interests of the company but compromise the overall research, educational, or clinical mission of the institution.”¹³ Leaders’ outside roles can also create “conflicts of commitment,” which arise when spending time and effort on outside activities interferes with leaders’ ability to carry out their institutional responsibilities.¹³

Despite calls for reform, limited guidance exists for academic institutions seeking to strengthen ICOI policies. A 2008 report by the Association of American Medical Colleges (AAMC) and the Association of American Universities (AAU) details strategies for managing ICOI arising from leaders’ external activities, and a 2009 report from the National Academy of Medicine (NAM) outlines best practices for establishing an ICOI committee.^13, 14 However, neither of the reports provides a structured approach for determining when and under what conditions it is appropriate for a leader to pursue a particular outside activity. It is unsurprising, then, that responses to the recent critical media coverage reflect continuing uncertainty about the potential risks and benefits of academic leaders’ involvement with outside entities and how those factors should be weighed in specific cases. Whereas some academic institutions have significantly curtailed leaders’ interactions with companies, others maintain permissive policies.¹⁵ The lack of clear standards in this area is concerning because it could result in institutions maintaining or adopting poorly designed ICOI policies and procedures that either underregulate or overregulate leaders’ outside activities.

To address these challenges, we provide a decision-making framework that institutional oversight bodies can use to assess the permissibility of academic leaders’ outside activities. To facilitate use of the framework, we also develop a taxonomy of potential benefits, risks, and management strategies relevant to academic leaders’ involvement with outside entities. Finally, we discuss application of the framework.

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