Governance for Health Care Providers

The Call to Leadership

David B. Nash, William J. Oetgen, Valerie P. Pracilio, David B. Nash, William J. Oetgen, Valerie P. Pracilio

• Publisher: Productivity Press
• Year: 2008
• Print ISBN: 9781420078534
• eBook ISBN: 9781439885864
• Topic: Business
• Subtopic: Business generale
• Index: Business

Medical professionals who serve on the boards of private, nonprofit institutions often do so with much more diligence than knowledge. Very little material exists to cover the range of issues that are so vital at a time when health care institutions face patient overloads, budget shortages, and calls for reform. Written by leading health care adv

Chapter 1

Welcome to the Board

Valerie P. Pracilio, David B. Nash, and William J. Oetgen

Contents

Executive Summary

Learning Objectives

Key Words

Introduction

Health Care Boards of Directors

Board Composition

Board Structure

Board Function

The Board's Role in Health Care Governance

Governance Issues

Core Dimensions of Governance

Assessment

Cultural Competence

Need for Board Education

Key Issues Facing Boards Today

Educating Health Care Providers

Book Organization

Conclusion

Suggested Readings and Web Sites

Readings

Web Sites

Reference

Executive Summary

Physicians, nurses, pharmacists, and other health care providers are increasingly accepting positions at the board’s table. While these professionals are well versed in the clinical aspects of medicine, the business side of health care is often unfamiliar to them. Education to prepare providers to become active members of the board is essential. Basic governance principles as well as the board’s role in decision making are crucial to the success of the organization. As a health care provider and board member, you are called to learn about your role on the board as a decision maker and steward. You have been called to leadership.

Learning Objectives

1. To gain a better understanding of the role of a health care provider serving on a governance board.
2. To identify key governance issues.
3. To identify cultural differences between the clinical and business aspects of health care.
4. To understand how this book can be an educational tool for trustees.

Key Words

• Board of directors
• Governance Institute
• Center for Healthcare Governance
• Trustee education
• Disruptive governance

Introduction

Congratulations, you have been appointed to the board of directors of a health care organization. You have been selected in the hopes that you will be a committed leader for the organization. The fundamental question is: Are you ready? While your clinical or administrative training is complete, you may not be familiar with the intricacies of the health care business. This book is your answer. Health care providers enter into a position on a board of directors with minimal or no training in governance. In this role, providers are being asked to make decisions that determine the future of the health care organization. There is a cultural gap that exists between clinical practice and the business of health care. Providers as board members must find a balance between these clinical and business cultures in order to govern effectively. This book was written as a primer for providers about to enter or currently fulfilling a term on a board of directors. While providers’ clinical knowledge is an asset to the board, it needs to be paired with an understanding of health care governance in order to comprise an exceptional board.

Leadership is a team sport. However, problems arise when board members assume that being a physician, nurse, or pharmacist is qualification enough to lead a complex organization.¹ Education of incoming trustees is important preparation for the role, but it is not a common practice. There is simply not enough room in professional curricula for elective courses in health care governance. As a result, health care providers who enter into a role on a board during their careers frequently assume the position unaware of the expectations. So how can you be prepared for your role on the board? Some organizations such as the Governance Institute in San Diego, California, and the Center for Healthcare Governance in Chicago, Illinois, have developed tools to prepare trustees, but health care professionals are often overlooked. The expectation is that providers are aware of the issues and concerns facing the board. Clinical training prepares you for practice, but what prepares you for the boardroom? This book will provide you with information necessary to understand your role on a health care board of directors. Chapter 1 is organized to provide background information on health care governance and the board’s role in facing key issues at the board table. This chapter is the gateway to tools and resources that will help you make well-informed decisions as a board member. It describes your call to leadership in this role.

Health Care Boards of Directors

Health care governance has entered an era of heightened scrutiny. Expectations are on the rise because of external forces shaping the work of the board.² As pay-for-performance creates a stronghold in the marketplace, provider participation on boards will also contribute to the organization’s economic growth. Boards are entering an era of disruptive governance, where refocusing on new ways to govern and changing existing governing practices are the goals.³ Becoming an exceptional board requires a good relationship among board members, strategic partnerships with management, and nurturing a team-based approach. How the board chooses to spend its limited time together and where to focus its efforts define the difference between a good board and an exceptional board.³ Building strategic partnerships with hospital and health system leadership can be accomplished by engaging providers as members of the board. The participation of health care providers on a health care organization’s board of directors will arguably be the most crucial element defining the success of health care boards in the twenty-first century.

In the United States, there are 5747 registered hospitals.⁴ The board of directors of each of these hospitals has the fiduciary responsibility for its respective institution. More than half of these organizations are nonprofit; less than 16% are for-profit, and the remainder are governmental organizations.⁴ The common link among these organizations is the inevitable presence of providers on the board of directors.⁴ While composition of a health care board of directors is often diverse, the presence of physicians, nurses, pharmacists, and other trained medical professionals is the common link between hospital and health system boards. Generally, each board member enters the role with a different background, some related to health care and others unrelated.

A typical health care board is comprised of stakeholders who have a common interest in the organization. These stakeholders often include payers, clinicians, and other employees of the health care organization, accreditors and regulators, in addition to members of communities and the public.⁵ It is difficult to concisely define governance given its complexity, but most agree that it is the process of making important decisions about the services the organization provides, to whom, and the cost of providing those services.⁵ There is a distinction between single organization and system governance. The defining characteristic of the system board is that it is comprised of multiple boards of its subsidiaries with a hierarchical structure.6 There are three main components of any governance model that determine the success of the health care organization: board composition, structure, and function.⁵ These components tend to vary according to status as a for-profit or nonprofit institution. In order to make decisions of this magnitude, you should understand how the three components of the governance model determine a board’s effectiveness.

Board Composition

Every organization, upon its inception, develops a mission that guides the work of that entity. It is the work of the board of directors to carry out the organization’s mission through the decisions that are made. But before the organization can define its direction, the “right people need to be on the bus.”7 Jim Collins is not simply describing the importance of the team overshadowing the vision of the organization; rather, he is pointing out that the organization that realizes the “who” questions must be answered before the “what” questions is on the way to becoming a great organization.⁷ The average board is composed of 13 members5 of various disciplines, and it has been cited that fewer than 20 members is most effective.³ Health care providers are increasingly playing an important role on health care boards as discussions about patient safety and quality of care are enhanced by a clinical perspective. Up to this point, we have not made any distinction among hospital, long-term care, acute care, and home health agencies. The common link among these organizations is the presence of physicians, nurses, pharmacists, and other medical professionals on the organization’s board.

Board Structure

The financial status and ownership of a health care organization determine its...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• Foreword
• Preface
• Contributor
• 1 Welcome to the Board
• 2 Governance Back to Basics
• 3 Defining a Great Board: Duties and Responsibilities
• 4 Bringing Quality to the Table
• 5 The Board’s Role in Building Healthy Environments
• 6 Professional Affairs
• 7 The Bottom Line
• 8 Auditing and Compliance: The Conscience of an Enterprise
• 9 Gavel of Governance: Legal Considerations
• 10 The Compensation Committee
• 11 Dealing with Donors
• 12 Successful Strategic Planning: The Board’s Role
• 13 Community Benefit: The Nonprofit Community Health System Perspective
• 14 Culture, Ethics, and the Board
• 15 The Future of Health Care Boards
• Editors
• Index