Navigating Health System Governance and Board Fiduciary Duties in Distressed Transactions

Across the United States, nonprofit health systems are facing a convergence of financial pressures. Rising labor costs, inflationary headwinds, shifting payer mixes, and lingering operational disruptions have placed many hospitals in a state of financial distress. For health system boards charged, this raises critical questions about fiduciary duties, strategic decision-making, and legal exposure when considering affiliations, restructurings, or closures. Understanding the scope and application of these duties is essential for any health system board navigating turbulent waters.

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