What you need to know before hiring a surveyor
Surveyors as consultants OK, but watch the rules
Hiring consultants to help you interpret Joint Commission on Accreditation of Healthcare Organizations standards and get your program in shape before a survey is a common practice, and some quality professionals go a step further by hiring an off-duty Joint Commission surveyor as a consultant.
The arrangement works well for some, but for others it raises questions about the propriety of such an arrangement.
As far as the Joint Commission is concerned, you’re allowed to hire a surveyor to help you improve your program, but only if you follow some very strict rules.
Getting your hands on those rules, however, is not so easy. In a bit of a Catch-22, you have to rely on the Joint Commission surveyor you’re trying to hire as a consultant to tell you if the arrangement is above board. Hospital Peer Review obtained a summary to make that assessment easier.
The practice is not uncommon, though no one seems to have a good idea just how many Joint Commission surveyors work on the side as consultants. Some quality professionals such as Barbara Hocking, RN, BSN, MPA, CHE, senior clinical director of medical, surgical, and outpatient services at the Evanston (IL) Northwestern Healthcare system in Illinois, say it’s a great way to get your program in shape.
Hocking says her group hired a Joint Commission surveyor to consult on some special projects aimed at improving compliance with standards.
She says the arrangement worked out well and seemed to make sense. Who better to tell you how to interpret Joint Commission standards and get a better survey score than a Joint Commission surveyor?
Other hospital leaders tell HPR that they have used the same arrangement but don’t want to publicize it because they are uncertain about how appropriate it is.
Ann Kobs, MS, RN, president and CEO of Type I Solutions in Cape Coral, FL, a well-known consultant who is not affiliated with the Joint Commission, says the practice is "very common, but a lot of people think it’s a gray area as far as whether it’s right or not."
She advises quality professionals to inquire about the surveyor/consultant’s credentials and to explicitly discuss the propriety of the arrangement. Kobs notes that the situation can work well for health care organizations if the surveyor is good, but she cautions that you should not automatically assume that any Joint Commission surveyor would make a great consultant.
Some aren’t so great at their surveyor job, so they won’t be much help as consultants either, she says.
No matter how well it works for the accredited providers, some appear to think they’re operating in a gray area by hiring a surveyor to consult. Not so, according to the Joint Commission. That is, if you’re following some very strict rules.
Harold Bressler, JD, general counsel for the Joint Commission, says it is acceptable for accredited organizations to hire surveyors as consultants as long as certain rules are followed. But until HPR asked, the Joint Commission had not publicized those rules to anyone but the surveyors themselves. That could explain why some providers thought they were cheating the system, even if they weren’t.
"As long as they’re following the rules, we don’t see a problem with this arrangement," he says. "Otherwise, it’s a serious problem when the situation comes to light. It’s the surveyor who’s going to be held responsible for crossing the line, since it would be difficult to show that the accredited organization knew the arrangement was improper. But if there were evidence of that, I suppose there could be some repercussions in terms of the accrediting process."
Uncovering the rules you need to know
Bressler says surveyors have worked on the side as consultants for years, and there always have been strict rules about what is and is not allowed. Those rules are not easily available to providers because the Joint Commission has depended on the surveyors to follow them and not lead providers astray.
This is the summary that HPR obtained from Bressler:
- Only part-time Joint Commission surveyors may work as consultants. Full-time Joint Commission surveyors are strictly prohibited from consulting on the side.
- A surveyor cannot consult with an organization that he or she surveyed in the past three years.
- A surveyor cannot survey an organization that he or she consulted for in the past three years.
- The surveyor cannot suggest in any way that the accredited organization would benefit from the consulting "other than doing a better job at standards compliance. There can be no suggestion that there will be favored status of any kind."
- The surveyor, or any consulting firm with which he or she works, must not have any financial interest in the accredited organization.
- Surveyors are restricted in how they may solicit consulting business. In short, Bressler says, they may not solicit business during the survey process or use their association with the Joint Commission to pressure potential clients.
The Joint Commission does not require surveyors to report consulting arrangements, but it expects surveyors to speak up if they are assigned to survey an organization they recently consulted. If an accredited provider is uncertain whether an arrangement is acceptable under these rules, it can call the Joint Commission’s legal affairs department for an opinion, Bressler says. But the Joint Commission will not refer providers to surveyors who consult on the side.
"These rules are rigorous and very, very clear to the surveyors," Bressler says. "Anyone who violated these provisions would have very significant problems here. [That person] would not be able to survey here any longer."
JCAHO and JCR
The ongoing Enron scandal has raised questions about how Joint Commission surveyors and consultants work with health care providers accredited by the organization. While different from hiring off-duty surveyors as consultants, another practice still is raising questions about whether it is similar to some of the wrongdoing in the Enron scandal.
The question involves consulting services obtained through Joint Commission Resources, the consulting arm of the Joint Commission. Joint Commission Resources operates separately from the Joint Commission, and offers a variety of consulting services to help providers comply with the Joint Commission standards. The consulting services are not required in any way, and providers must pay a substantial fee for the service.
So where does Enron come in? Some observers have compared the consulting services offered by the Joint Commission to consulting services that the accounting giant Arthur Andersen provided to Enron.
Once Enron collapsed, Arthur Andersen came under fire for providing both consulting and auditing services to the company. Providing both services to a single client created a conflict of interest, critics said, and now some are saying that the Joint Commission/Joint Commission Resources arrangement poses the same conflict.
That description might sound like a conflict of interest on the surface, Bressler says, but in practice, there is no such problem.
"The most obvious difference between us and the accounting profession is that there is an absolute separation between the business operations of Joint Commission Resources consulting efforts and the Joint Commission’s auditing or surveying. There’s a firewall there that you didn’t see with the accounting industry."
The separation is so complete, Bressler says, that the two groups cannot share information. If a hospital hires Joint Commission Resources to improve its operations and wants to show the consultant its accreditation history, the hospital must provide that information.
The Joint Commission will not give that information to Joint Commission Resources, even if the hospital asks.
The issue is addressed, at least indirectly, in a warning issued recently by David M. Walker, comptroller general of the United States and head of the General Accounting Office (GAO). In response to the Enron scandal, Walker issued a statement announcing "significant changes to the auditor independence requirements under Government Auditing Standards."
These standards, which were first published in 1972 and are commonly referred to as the "Yellow Book," cover federal entities and those organizations receiving federal funds. Various laws require compliance with the comptroller general’s auditing standards in connection with audits of federal entities and funds.
Furthermore, and perhaps most significantly for health care institutions, many states, local governments, and other entities have voluntarily adopted these standards.
While the new standard deals with a range of auditor independence issues, the most significant change relates to the rules associated with non-audit, or consulting services that might be compared to the services offered by Joint Commission Resources.
"Auditors have the capability of performing a range of services for their clients. However, in some circumstances, it is not appropriate for them to perform both audit and certain nonaudit services for the same client," Walker says. "In these circumstances, the auditor and/or the client will have to make a choice as to which of these services [the auditor] will provide."
New rules aim to avoid conflict of interest
Walker announced a new independence standard for nonaudit services, with these two main principles:
- Auditors should not perform management functions or make management decisions.
- Auditors should not audit their own work or provide nonaudit services in situations where the amounts or services involved are significant/ material to the subject matter of the audit.
Some nonaudit services could be provided by an auditor, Walker explains, as long as certain requirements are met.
For instance, nonaudit services could be provided if handled by personnel who are precluded from performing any related audit work, if the auditor’s work could not be reduced beyond the level that would be appropriate if the nonaudit work was performed by another unrelated party, and if certain documentation and quality assurance requirements were met.
The Joint Commission’s consulting work meets those criteria, Bressler says. There is no similarity to the way Arthur Andersen provided both consulting and auditing to Enron, he says.
"The accounting firms were saying during an audit, Hey, why don’t you use our consulting service?’" he says. "We don’t do anything like that. It does not happen."
New standard takes effect Oct. 1
The new standard includes an express prohibition regarding auditors providing certain bookkeeping/record-keeping services, and limits payroll processing and certain other services, all of which presently are permitted under auditing standards of the New York City-based American Institute of Certified Public Accountants. At the same time, the standard recognizes that auditors can provide routine advice and answer technical questions without violating these two principles or having to comply with the supplemental safeguards. The standard also provides examples of how certain services would be treated under the new rules.
Though they were released on the heels of the Enron accounting scandal, the revisions contained in the new standard have been in the works for a while. The changes were developed over a three-year period, including extensive public comments and input from the comptroller general’s Advisory Council on Government Auditing Standards. The council includes 20 experts in financial and performance auditing and reporting drawn from all levels of government, academia, private enterprise, and public accounting, who advise the comptroller general on Government Auditing Standards.
Because of the breadth of changes in the new standards, they are applicable to all audits for periods beginning on or after Oct. 1, 2002. "However, early implementation is encouraged," Walker says.
The new audit standard is available on GAO’s web site at http://www.gao.gov/govaud/ybk01.htm.
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