Ten New Year’s Resolutions for Boards

A former health system board chair from New York wrote this to me on his holiday card: “Best wishes for 2011: Looks like this will be the year of governance.”

He may be right.

The past year has brought the most sweeping change in the healthcare payment system since the enactment of Medicare and Medicaid, including the long sought goal of near-universal insurance coverage.  Yet, instead of a precise road map  to the future, healthcare leaders will need a GPS to chart their future amidst the uncertainties ahead, including the fate of health care reform in the courts and in Congress; what happens when the Medicare physician payment fix expires; how hospital-physician integration arrangements pan out; and whether the economy recovers.

Here are ten New Year’s resolutions to make 2011 a successful one for governance:

  1. Recruit someone who’ll add a new dimension to the board. Use a competency-based succession planning process to identify someone who’ll add a new, needed competency, fresh perspective and critical thinking to the board. Be willing to look in new places such as among minorities and women leaders, outside the local community, and in the ranks of accomplished healthcare industry leaders, physicians and nurse leaders from non-competing organizations. (Read how Presbyterian Healthcare Services in Albuquerque, NM transformed its board in a terrific article by Mary Wicker in the November issue of Trustee.)
  2. Name the directors who are your board’s future chairpersons. If  the board or its Governance Committee can’t name two or three (of about 15) current directors who have skills, temperament, time and inclination to rise to the top spot during their tenure, then board chair succession planning should vault to this year’s board development priorities. While you’re at it, be sure every major board committee has a vice chair who can take over if the chair is absent and has the skills to chair the committee in the future.
  3. Lose some weight. Cut the size of the board packet by 20 percent by ditching reports of questionable value and by making sure that the dashboard and decision support information contain key information needed for boards to understand the issues, spot red and yellow flags, and act appropriately. If you’re not using a board portal, investigate and adopt one this year. Consider giving every director a customized IPad or other tablet or laptop to access the portal and do board business more efficiently. And while you’re streamlining, if the board has more than 18 or 20 members, or is a health system with lots of subsidiaries who don’t have much meaningful work to do, form a task force to redesign governance to be sleeker, more nimble and more effective.
  4. Trim management presentations. Directors commonly complain that executives talk too long, recite facts that directors could have read in advance, and consequently allow too little time for board discussions. Adopt a 20-80 guideline: a management presentation should not occupy more than 20 percent of the time an agenda item requiring action is expected to take. So if 30 minutes is allocated for approving the annual budget, the CFO should plan on no more than six minutes for introductory remarks to set the context. Senior executives: think of  at least one policy- or strategy-level question you would pose to the board on which you genuinely want input or feedback.
  5. Abolish your committees. Yes, all of them. Then decide which ones you really need, and write new charters and annual goals for them.  Consider rotating committee chairs and members every few years to get fresh thinking into committee work.
  6. Really evaluate your CEO. Not in a perfunctory way to merely determine his or her bonus, but using a thoughtful, candid and mutually supporting process that engages directors in a discussion of the CEO’s past performance and future goals.  Without a dynamic feedback process, the board and CEO risk drifting apart on organizational priorities.
  7. Hold executive sessions. Board meetings typically include a lot of executives and invited guests. A board needs to take time for candid “directors only” discussions of matters unlikely to be raised in more public settings. Consider holding executive sessi0ns including the CEO at every board meeting, plus at least one executive session  a year without the CEO to discus his or her evaluation.
  8. Approve a written top management succession plan.  Hiring a great CEO is the board’s number one responsibility, and 14% to 18% of hospital CEO jobs turnover every year — yet fewer than one in four hospitals and health systems has a current, written CEO succession plan, according to The Governance Institute. Don’t be caught unprepared. Engage the CEO in a succession planning process of what would happen in case of an unexpected vacancy at the top: Who would assume the reins immediately? Who would perform their job in the interim? Is a permanent successor on the senior leadership team? If not, which search firm would we use? Organizational anxiety rises when a CEO unexpectedly leaves. The board should be ready to assert timely, definitive leadership.
  9. Use provocative education to challenge the board’s thinking about the future. With healthcare reform looming, 2011 is a good time to revisit not only the near-term (3-4 year) strategic plan, but also the long-term (10-20 year) strategic vision for the organization and its physicians. For example, one of the toughest problems in extending health care to millions more Americans is the shortage of primary physicians. Hospitals need innovative strategies to address this, and boards should be evaluating whether their plans are sufficient. They could read a very good article by Geri Aston on best practices to “recruit, reward and retain” primary care physicians in the November issue of Trustee.  And they could expand their thinking by reading and discussing David Lawrence’s article in Physician Executive. The former CEO of Kaiser argues that there are plenty of physicians but their talents are poorly deployed.  “Health care delivery needs to be reconfigured,” Lawrence writes, citing a Health Affairs report, from a “physician-centric hierarchical model” to a constellation of multidisciplinary “care platforms” — divisions of medical services united by common work and work-flow, such as, for example, chronic stable disease care, acute life-threatening illness care, prevention and health screening, palliative care, rehabilitation, pregnancy and childbirth …rather than being diced up according to organ systems or particular medical specialty.”  These steps will free physicians to “focus on critical work where ambiguity is greatest, and where diagnostic and therapeutic judgments require their unique preparation and skills. More predictable work can be shifted to non physicians.” You can use these articles and others to preface the board’s strategic discussion of primary care in its community.
  10. Hold your board to a higher standard.  Here are two benchmarks that could provide a more challenging framework to spice up the board’s usual self evaluation discussion.  In articles in the Wall Street Journal and Harvard Business Review, corporate director Robert Pozen argues that that corporate boards should be smaller, have directors who are experts in the company’s industry, and expect directors to spend two days a months on board work including visiting company sites.  Meanwhile, in a new report from Moody’s Investors Services (for subscribers only), “Governance and Management of Not-for-Profit Healthcare Organizations: A Key Driver of Ratings,” the ratings agency restates its belief that “effective governance and strong management are both necessary for the continued viability and competitive positioning of not-for-profit hospitals as they make critical capital decisions, restructure operations for healthcare reform and compete for patients, physicians and other skilled professionals.” The report identifies five broad factors and 30 practices it looks for when assessing governance and management. Among them:
    • Board and senior management team leadership capability in stable and stressful times
    • Oversight and disclosure processes to reduce risk and enhance operational effectiveness
    • Execution of long- and short-term strategy to reduce resource use
    • Commitment to self assessment and benchmarking
    • Effective management of governance relations.

Perhaps a few of these resolutions will be applicable to recharge your board for the New Year.  If not, create some resolutions of your own to make 2011 “the year of governance.”

Governing Board’s Role in Mergers and Alliances: New Issue of Great Boards

Healthcare reform is expected to drive a new round of mergers, acquisitions, and strategic alliances among hospitals and other providers.

As a white paper last summer from The Governance Institute noted, “Since the recent passage of healthcare reform, nonprofits have demonstrated much more interest in achieving scale. Also, a number of free-standing hospitals and small hospital systems are questioning whether they can thrive post-healthcare reform, without becoming part of a large system.”

A consolidation strategy goes to the core of a governing body’s fiduciary duty to preserve the organization’s long-term viability to sustain its mission. Directors should ask whether consolidation will strengthen the organization’s finances, operations, market position, growth potential, and core values, and thus support its mission. Or conversely, will consolidation dilute resources and damage stakeholder relationships?

The new issue of Great Boards is designed to orient directors to the key governance issues involved with mergers and strategic alliances. It includes the steps boards should take to prepare for a consolidation strategy; the seven key questions at the heart of almost every deal; and the right timing for engaging a small task force and the full board.  Read and download it now at http://greatboards.org/.

Hospitals Taking Initiative to Be Accountable for Care

If health care reform fails, it won’t be for lack of trying by many of the nation’s leading health systems and their physician partners.  Although many hospitals are still trying to determine what the Patient Protection and Affordable Care Act means for them, those on the leading edge are forging ahead.

One example: Fairview Health System in Minnesota.  Writing on the Action for Better Healthcare blog, Mike Stephens, former CEO at Hoag Memorial Presbyterian in Los Angeles, calls attention to Fairview’s efforts in six areas:

  1. Redesigning primary care around multi-disciplinary teams, patient engagement, and technology in Fairview’s 42 clinics
  2. Following “care packages” of best care practices designed by Fairview and University of Minnesota physicians
  3. Delivering care virtually over the Internet without a face-to-face interaction
  4. Collaborating with payers
  5. Collaborating with employers
  6. Using new technology to increase efficiency and improve outcomes.

Fairview has posted a summary of its efforts including a video on its public website.

Fairview is one of several systems profiled November 28  by the Wall Street Journal in an article entitled “Embracing Incentives for Efficient Health Care.”  Among the others, Tucson Medical Center is forming a company that the hospital will own jointly with local physicians’ practices to act as an Accountable Care Organization (ACO). The Billings Clinic in Montana, an integrated physician and hospital organization, is also preparing to take steps to become an ACO. The clinic hopes to build on lessons from an earlier Medicare pilot program in which the the clinic says it reduced hospital admissions for around 500 heart-failure patients by 35% to 43%, saving Medicare more than $3 million over three years. The efforts focused on close monitoring of patients who called in daily to provide measures like their weight.

We’ve written in the past about innovations at Advocate Physician Partners in Chicago. Advocate Physician Partners’ Clinical Integration Program unites over 3,600 independent and employed physicians and the eight Advocate hospitals in a nationally recognized program with improved clinical outcomes and reduced health care costs. Now, Advocate has announced a new educational symposium on February 24th that explains how its Clinical Integration Program works.  This is a pragmatic, practitioner-led symposium that can help others move forward to take accountability for value and outcomes.

Other sources of information include the Commonwealth Fund, American Hospital Association, and Great Boards.

The early adopters aren’t waiting for certainty from Washington. They are moving forward with integrated, accountable care, and many are sharing what they’re learning along the way. Other hospitals and health systems would be well-advised to take advantage.