Best Practices Process

Best Practices Selection Criteria:
Vendor Relations
Summary
Effective communication with an organization’s vendors and business partners regarding the ethical guidelines, internal policies and government regulation related to gifts and business courtesies (including entertainment) helps establish an environment where business decisions are guided by quality, effectiveness and price rather than being influenced by inducements.
Definition
An essential element of an effective compliance program is the establishment of appropriate policies regarding vendor relations, communication of these policies to employees, vendor and business partners, mechanisms to monitor adherence and procedures for intervening when policies are not followed.
Achievement to Warrant Finding of Best Practice
In evaluating whether a program has achieved a “Best Practice” in this element, look for the existence of the following criteria:
1. Policies and Procedures. There should be written policies and procedures that establish:
  1. guidelines that define in specific terms what is acceptable and not acceptable with respect to gifts and business courtesies. Guidelines should reflect current standards in the industry (e.g., AMA Guidelines for physicians). It is preferable for terms like “nominal” to be specifically defined as they may have different meanings to different individuals;
  2. definitions of the types of individuals and entities included under organizational policies and procedures on vendor-related issues;
  3. policies should be consistent with related policies dealing with issues such as: contracting with third parties, company assets, political activities and public affairs, grants and sponsored trips, sales and marketing practices, conflicts of interest, prohibition of bribes and other corrupt practices;
  4. an approval process for both the offering and accepting of gifts and gratuities;
  5. communication mechanisms for employees to report violations of policy or to ask questions or for guidance;
  6. effective communication mechanisms for vendors and business partners to report violations of policy or to ask questions or for guidance;
  7. a process for distributing the policies to vendors and business partners and for them to acknowledge their understanding and agreement to abide by the policies as a requisite condition for their doing business with the organization;
  8. processes for checking vendor misconduct or exclusion/debarred status prior to entering into contractual arrangements;
  9. processes to disclose and to mitigate potential conflicts of interests (e.g., Board, senior executives; employees);
  10. education and training regarding the policies and procedures related to vendor relations is provided to all employees and is documented;
  11. clarification on the roles of each department (such as legal counsel, audit, finance, compliance and human resources) with regard to oversight and enforcement of policies related to vendor relations;
  12. Agreed processes for relationships between vendors and fundraising foundations which are part of the health care organization. Donations given to foundations should not influence contract decision making processes.
2. Documentary evidence. There should be written evidence of the following:
  1. disciplinary actions taken against employees or staff for violation of policies and procedures. This evidence should support that disciplinary action is applied consistently across all job roles and functions within the organization;
  2. integrity/compliance training of employees which reinforces the company’s commitment to integrity in all its business and financial transactions and the importance of employee compliance with company policies and procedures. This education to include the policies regarding vendor relations and methods of reporting concerns;
  3. checks of vendors against the debarred contractor list or for records of prior misconduct;
  4. targeted technical compliance training of appropriate individuals to reinforce the compliance obligations of Board members, senior management, and employees endowed with discretionary authority or fiduciary responsibility or who have responsibility for areas of significant compliance risk to the organization;
  5. discipline-specific training for employees performing internal audit and internal control review functions;
  6. concerns reported to the Hotline or other appropriate mechanisms are investigated and appropriate action is taken as needed.
3. Role of Compliance Function. The Compliance/Integrity Officer should be able to demonstrate that:
  1. the organization establishes and updates compliance training courses relating to vendor relations and the offer and acceptance of business courtesies or gratuities;
  2. the Compliance Office resolves employee and supplier questions and/or concerns relating to vendor relations and business courtesies or gratuities;
  3. the Compliance Office or other relevant staff function investigates and resolve allegations of misconduct concerning vendor or supplier relationships and compliance with organizational policy relating to business courtesies or gratuities.
  4. relevant compliance risk areas such as strategic procurement agreements and business courtesies or gratuities policy compliance are included in the organization’s annual audit plan;
  5. the organization has policies and procedures governing procurement, supply chain management and/or vendor relations as well as for the offering/accepting of business courtesies or gratuities that are updated to reflect changes in relevant laws and regulations such as the Anti-Kickback Act;
  6. the organization has a policy or process governing disclosure(s) to relevant U.S. Government agencies of violation(s) of such laws as the Anti-Kickback Act;
  7. the organization has a process for ensuring that no current or candidate supplier or vendor is barred or suspended from participating in or receiving any U.S. Government funds in the performance of a procurement and/or contract action;
  8. the organization has a process for periodically (e.g., annually) reminding vendors or suppliers of relevant laws, regulations and policies governing vendor or supplier relationships, including permissible business courtesies or gratuities, and the penalties for violating them.