Basic Responsibilities of a Board and Its Members - ACHE

CHAPTER ONE

Basic Responsibilities of a Board and Its Members

Main Respo n sibi l i ti es of t h e G o v e r ni ng B oar d

All boards, regardless of their organization's focus, share the same traits:

? Board membership is as high as one can get and still be in the organization. It is the ultimate authority.

? Boards only have authority when they meet. Unless boards are in session in person, or have arranged to meet in a conference call, they don't have authority to act. If the board's bylaws allow, an executive committee may meet and act for the board, or the board can vote on issues by mail or email. It is important for the bylaws to detail what is considered a regular board meeting, what kind of special meetings may be called, how much advance notice is required, and any other parameters that must be met for a regular or special meeting to occur.

? No one individual has authority to act for the board. A board member may be given authority by the board to complete a purchase or carry out a specific task, but only the board as a whole has the authority to take any action.

? Boards are not like Congress or the courts. They need to speak with one voice. There should be much discussion, there may be disagreements, and opinions should be expressed. But, in the end, board members need to unite behind a majority decision.

? Time is a precious commodity. Boards need to use their time efficiently because they don't have much of it.

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Although an ideal board functions as a team for the good of the organization, the very nature of a board may preclude the development of teamwork:

? Directors are not full time. Most independent directors have full-time jobs elsewhere, and their primary focus rests with that job, not the board.

? There is only periodic interaction. Board members meet together for relatively short periods of time, separated by weeks or months. This makes it difficult to build continuity or develop as a team.

? Meeting time is limited. Boards have a limited amount of time to spend on board activities or on any one issue. Because they are not in the organization's day-to-day information loop, board members may approach their work with limited knowledge or understanding of the nuances of particular issues.

? Unclear authority relationships may exist. Unlike a hierarchical management structure, board members all have equal authority, adding to the ambiguity under which a board functions.

? Lack of clarity may exist about management versus governance. Sometimes the distinctions between management's role and the governing board's role are not exactly clear, particularly to new board members. When the board gets involved in operations, it loses its governing effectiveness.

The board's work is done in board and committee meetings, making it absolutely essential for those meetings to be effective and productive--teamwork at its best, regardless of the factors that seem designed to prevent it.

The Board and the Organization's Mission, Vision, and Goals

While some may feel it is obvious the board runs the show, that kind of simplistic approach ignores reality. Without a knowledge of and attention to the basic components of a board's reason for being, a board may inadvertently abdicate its responsibilities.

It is the board's responsibility to map the hospital's course through the establishment and periodic review of its mission, vision, and goals. As Lewis Carroll said, "If you don't know where you are going, any road will get you there." Without a clear understanding and agreement of what the organization wants to accomplish (its mission), how it wants to accomplish the mission (its goals), and where it wants to be in the future (its vision), a board can wander countless roads, never knowing when it has accomplished something of value or even what is valued. Strategic planning (discussed later in this chapter) is a function of the board that ties these three components together.

2Healthcare Governance

Once the mission, vision, and goals are established and a strategic plan is developed, the board will be able to reach its decisions. However, experience has shown that board members may not always be truly aware of the hospital's mission.

The simple act of putting the mission statement at the top of the agenda for every board and committee meeting can save time and unnecessary discussion. If board members can readily see the mission statement, their course of action will be more obvious. Some agenda items may even be dispensed with quickly if it is obvious they are not part of the mission.

To focus the entire organization on the mission statement, it should also be printed clearly on the back of all business cards and at the top of agendas for any hospital-related meetings of the board, employees, medical staff, or volunteers.

The Board and Executive Management Performance

When dealing with the hospital's staff, the board should concentrate on the only employee who reports directly to them--the chief executive officer (CEO). Although the chief operating officer, chief financial officer, chief nursing officer, medical director, and any vice presidents are important in making the organization a success, the board does not supervise or evaluate these individuals. Many boards have difficulty staying focused on the CEO, particularly in smaller communities where everyone tends to know each other. However, it is important for that focus to remain clear.

The board does not evaluate anyone but the CEO, does not hire anyone but the CEO, does not set goals and objectives for anyone but the CEO, and does not replace anyone but the CEO. The board also needs to be assured there is management depth in the organization and that succession planning and management development activities are a priority for the CEO. No organization can afford to flounder during a transition from one CEO to another.

The Board Ensures the Quality of Patient Care

The hospital or health system board can and should delegate the design, implementation, and measurement of the quality of care to administration and staff. However, the board is legally and ultimately responsible for ensuring quality care is available and provided to patients. As such, the board needs to be comfortable the systems are in place to make that assurance, and it needs to see indicators that allow a lay board member to understand the hospital's quality compared with the quality at similar organizations (benchmarking).

Chapter One: Basic Responsibilities of a Board and Its Members3

There are many quality-outcome indicators, including

? hospital-acquired infections, ? surgical wound infections, ? neonatal mortality, ? inpatient mortality, ? cesarean section rate, ? unplanned readmissions to the hospital, ? unplanned returns to the operating room, ? pressure ulcers (bed sores), ? patient falls, ? nurse hours per patient day, ? patient satisfaction with pain management, and ? overall patient satisfaction.

The board, through its quality committee, should develop dashboard indicators--the ratios, numbers, or percentages that measure activity--to alert it to unacceptable quality outcomes.

Effective boards raise the importance of quality care to equal or surpass financial matters. This sends a clear message to the administration, the medical staff, the nursing staff, and others about the board's priorities. These boards strive to run hospitals and health systems that benchmark well in all areas of quality measurement.

The Board Ensures the Organization's Financial Health

Most board members feel more comfortable reviewing financial statements than quality indicators, but financial health and high quality are intertwined. An organization rarely achieves quality if its finances are not on solid footing. Oddly, in many instances, experienced businesspeople have a different view of what financial health means in a nonprofit hospital from what it means in the for-profit sector. Some nonprofit boards think nonprofit means not too much black ink, nor too much red ink, but "pink" ink--a kind of a break-even mentality.

For this reason, the use of the term "nonprofit" may do a disservice to hospitals and health systems because it frames the mind-set of the breakeven approach. A more accurate descriptor for "nonprofit" healthcare organizations would be "tax exempt."

Regardless of the board's perspective, however, a 2009 survey of top issues confronting hospitals, completed by CEOs for the American College of Healthcare Executives (ACHE 2010), clearly shows financial challenges to be the number one issue facing hospitals and health systems.

4Healthcare Governance

All boards need to realize how important it is to have excess revenue over expense at least equal to the cost of capital. For example, if the board is to keep the hospital's equipment up to date or replace antiquated or inefficient buildings, it is imperative to have enough revenue/profit available to accomplish these things. As Dr. Leland Kaiser (2011), health administration faculty member from the University of Colorado Denver and nationally recognized futurist, has said, "It is virtuous to help the poor; it is not virtuous to be poor!" A hospital or health system is a business and must have excess revenue over expense to continue to provide quality care.

Hospital Boards Assume Some Responsibility for Their Community's Health

Many hospitals and health systems are required to perform needs-assessment studies to address the health status of their communities. Board members should educate themselves about their community's rates of heart disease, cancer, teen pregnancy, and other issues. It is the board's role to determine how this should be done within the organization's resources. For example, in a city with high rates of diabetes, directors should look for ways in which the hospital can educate the community about the importance of healthy eating, exercise, and regular checkups.

The Board Must Assume Responsibility for Itself

At a minimum, the board has a responsibility for taking care of itself, including

? establishing an effective orientation program for new members; ? conducting a self-assessment process every two to three years; ? creating a continuing education program for all members; ? subscribing to relevant periodicals, such as Trustee; and ? maintaining up-to-date job descriptions for all members and officers.

Job descriptions are perhaps the most important of these. If new board members receive current job descriptions from the board chair, they will be much less confused about the role of the board and their specific roles on that board.

Strategic P l a n n i n g

In recent years, the importance of strategic planning has come to the forefront for boards of both private nonprofit and public companies. The National

Chapter One: Basic Responsibilities of a Board and Its Members5

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