Governance: Critical Issues for Hospital CEOs and Boards

Abstract

THERE CAN BE no question that hospital and healthcare environment has become increasingly complex and promises to become more complicated in future. For hospitals and health systems and their boards of directors, this challenging environment will lead to much greater transparency and accountability to their community and to government. Having served as a chief executive officer (CEO) of a hospital and health system for 30 years, I have had great pleasure of knowing and working with many community leaders who serve on health system boards. The quality of individuals that I have been associated with in this capacity has been consistently exceptional. OVERALL OBSERVATIONS Challenges in Governance The feature articles associated with this commentary, Building Better Boards in New Era of Accountability, by Orlikoff, and Priority Issues for Hospital Boards, by Middleton, present a realistic appraisal of a challenging and complex environment in which hospital and health system boards and their CEOs operate today-and, increasingly, tomorrow. Although these excellent articles present effective boards from different perspectives, they both do a wonderful job of framing tomorrow's issues and challenges. They also offer suggestions and insights that are necessary to consider. Both articles underscore growing complexity of healthcare environment. Whether challenges are compliance with recent regulations-adhering to Sarbanes-Oxley Act of 2002, defending tax-exempt status, measuring and reporting benefits to community and to government, and satisfying needs of bondholders-or compliance with regulatory issues in future, we cannot serve our communities well unless we have effective boards. The focal point of this effectiveness is represented by relationship between CEO and board, especially board chair. As Middleton points out in his Final Note section, the board cannot be at war with CEO, and the chair should be in regular communication with CEO. That is good advice for a productive relationship. The CEO's Role The articles also point out that CEO plays a key role in developing a more effective board. Creating effective orientation programs, requiring continuing education for members of board, working with board to select needed diverse expertise and experience in new board members, helping board stay on mission and focus, and avoiding conflicts of interest are key areas where CEO can directly enhance board effectiveness. Also, helping board focus its meetings on right issues, providing sufficient time to deliberate, and streamlining process by which board meets its accountability and compliance activities are effective strategies to assist board in focusing its time on more appropriate issues. Given complexity and regulatory challenges facing our boards, it is easy to understand how they might focus more attention on risk and compliance issues than on providing leadership and strategy to organization. The competition for boards' time, energy, and resources must be preserved for important; we cannot allow urgent to crowd out that which is important, especially when board is given responsibility to meet healthcare needs of our patients and our communities. REACTION TO MIDDLETON'S ARTICLE Middleton's feature article is full of practical insights, many of which I support and endorse. For example, board must have a clear understanding of its role as governing authority. If a hospital or health system board spends its time fulfilling management's role, then who fulfills role of governance? Middleton talks about having too many committees-and I would add, perhaps too many boards-especially in multihospital systems representing diverse geographic areas. Too many boards and too many committees result in overly complicated decision-making processes and place too heavy a burden on management. …