The Case for a Health Care Benefit Corporation

• Author: Terry L. Corbett
• Position: A former health care executive and consultant, Terry L. Corbett has practiced law in Phoenix, Arizona since 1990
• Pages: 1-157

THE CASE FOR A HEALTH CARE BENEFIT CORPORATION

TERRY L. CORBETT*

TABLE OF CONTENTS

I. INTRODUCTION ................................................................................. 187

II. CORPORATE LAW IN THE AMERICAN TRADITION ............................ 190

A. The Legacy of the Berle-Dodd Debate ......................................... 191

1. The Continuing Shareholder-Stakeholder Debate ................... 192

2. A Pox on Both Your Houses ..................................................... 196

B. The Corporation’s Existential Nature––The Fiction, Aggregate &

Real Entity Views ................................................................................. 197

C. American Corporations––Limited to a “Binary” Choice of

Form….. ............................................................................................... 199

III. MORAL AND SOCIAL CONSIDERATIONS ...................................... 202

A. The Need for a “Broad New Composite Reality” ........................ 207

1. Corporate Social Responsibility .............................................. 208

2. Social Entrepeneurship/Social Enterprise ............................... 209

Copyright © 2019, Terry L. Corbett, MHSA, MBA, JD, LLM, SJD. All writings are the

author’s own.

* A former health care executive and cons ultant, Terry L. Corbett has practiced law in

Phoenix, Arizona since 1990. His practice currently emphasizes civil litigation, general

business, health care, and administ rative law, including the licensing and regulation of

health care professionals and institutions. His other legal experience includes service as an

Administrative Hearing Officer for the Arizona Department of Health Services, a court-

appointed Arbitrator, and a Judge Pro Tem Mediator for the Maricopa County Superior

Court.

Mr. Corbett received his Juris Doctor from Arizona State University in 1990, where he

was a member of the Order of Barristers. He also received a Bachelor of Science, magna

cum laude, in 1974, a Master of Health Services Administration in 1979, and a Master of

Business Administration in 1989. In graduate school, Mr. Corbett was elected to

membership in Beta Gamma Sigma Business Honor Society. He returned to ASU as a

visiting professor in 1996–97, teaching health care law in the MHSA Program.

To update a nd strengthen his health law background, Mr. Corbett obtained a Master of

Laws (LLM) in Biotechnology and Genomics from ASU i n 2011, and an LLM in Health

Law from Loyola University Law School in Chicago in 2013. In 2017, Mr. Corbett was

awarded a Doctor of Juridical Science (SJD) in Health Law and Policy from Loyola

following successful presentation of his dissertation––from which this article is derived.

Mr. Corbett is a member of the State Bar of Arizona, the Maricopa County Bar

Association, the American Health Lawyers Association, and the Arizona Society of Health

Care Attorneys. He is admitted to practice in Arizona and in the United States District

Court for the District of Arizona.

184 CAPITAL UNIVERSITY LAW REVIEW [47:183

3. Constituency Statutes ............................................................... 212

a. Critics of Constituency Statutes ........................................... 215

IV. DEVELOPMENT OF THE “BENEFIT CORPORATION” CONCEPT ...... 216

A. The Origin and Mission of B Lab ................................................ 216

1. Distinguishing a “Certified B-Corporation” from a “Benefit

Corporation” ................................................................................... 218

2. B Lab Lobbying ........................................................................ 220

a. B Lab Critics ........................................................................ 221

B. The Beneefit Corporation––Overview and Rationale .................. 222

C. Growth of Benefit Corporations .................................................. 225

D. The Model Act .............................................................................. 226

1. Criticisms of the Model Act––“General” versus “Specific”

Public Benefit ................................................................................... 228

E. State Adaptations of the Model Act .............................................. 230

1. Delaware and Colorado .......................................................... 230

2. The Minnesota “Specific Benefit Corporation” ...................... 236

V. HEALTH CARE DELIVERY TODAY ................................................... 238

A. The American “Health Care Sector” Broadly ............................. 239

B. Why Hospital Governance is Different from Other Business

Corporations ........................................................................................ 240

C. The Current “Deontology” of Health Care in America .............. 243

1. Health Care as a Commodity ................................................... 245

2. Health Care as a Public Good ................................................. 248

3. Health Care as a Right ............................................................ 250

D. “Social Responsibility” in Health Care Delivery ........................ 253

E. Health Care Reform ..................................................................... 254

1. The Drivers of Reform ............................................................. 255

a. Escalating Cost .................................................................... 256

b. System Fragmentation ......................................................... 258

c. Compromised Quality .......................................................... 262

2. System Integration––The Current Focus of Reform ................ 264

a. Hospitalist Programs ........................................................... 266

b. Clinical Co-Management ..................................................... 267

c. Patient-Centered Medical Homes (PCMH) ......................... 268

d. Provider Clinical Integration .............................................. 269

VI. ACCOUNTABLE CARE: FROM CONCEPT TO IMPLEMENTATION ... 271

A. The Concept ................................................................................. 272

B. Accountable Care Organizations (ACOs) ................................... 274

1. Essential Features, Requirements, and Rationale ................... 274

2019] THE CASE FOR A HEALTH CARE BENEFIT CORPORATION 185

2. ACOs Under the MSSP (Medicare Shared Savings

Program)…… .................................................................................. 277

3. Tax Considerations in ACO Organization ............................... 280

VII. THE NEED FOR MISSION PRIMACY, FIDUCIARY DUTY, AND

MEDICAL TRUST ...................................................................................... 284

A. The Concept of Mission Primacy ................................................. 285

B. American Fiduciary Law ............................................................. 290

1. The Particularized Fiduciary Obligations of Physicians ........ 293

2. The Evolving Fiduciary Obligations of Institutional Healthcare

Providers .......................................................................................... 296

a. The “Fiduciary Medicine Model” ....................................... 303

C. The Singular Importance of “Trust” in Health Care .................. 306

VIII. THE “HEALTH CARE BENEFIT CORPORATION” (HCBC): A NEW

CORPORATE FORM FOR INSTITUTENTIAL HEALTH CARE DELIVERY ...... 310

A. Overview ...................................................................................... 310

1. The Intersection of Health Care and Business in American

Corporate Law ................................................................................. 313

B. Greater Specificity––State “Adaptations” of the Model Act ....... 318

C. Premises Underlying the HCBC .................................................. 321

D. Proposed Structure, Features, and Benefits of the HCBC ........... 326

IX. CONCLUSION ................................................................................ 337