The Canary in the Coal Mine

Abstract

AMERICA'S NOT-FOR-PROFIT HOSPITALS must survive. Period! They are the foundation of our nation's healthcare system, born out of community need, and have always played a significant role in support of the country's safety net hospitals. Combined, the public/non-profit sectors provide the lion's share of healthcare to America's most vulnerable patient populations. Frontiers first began delving into this subject in 1989.1 find it telling that all these years later the publication is again focusing on the future of not-forprofits. It points to two major issues that continue to need resolution: weaknesses in governance and executive leadership and our industry's broken reimbursement STRONG BUSINESS PRACTICES ALONE AREN'T THE ANSWER Effective leaders long ago rejected what Bryant H. Krenek, Jr. describes as a mentality, or organizational culture that not only permits, but actually encourages a lack of focus on the need for not-for-profit to make money to fulfill their missions. Instead, they honed their executive skills and, like Krenek, changed their organizations' cultures by introducing effective business practices to their operations. Krenek and Dr. Vernon E. Weckwerth are correct in saying that are big businesses and must be run as such, whether investor owned (IO), not for profit (NFP), or government run. But focusing on the bottom line alone won't eliminate the major problems today's face: * the growing number of uninsured; * declining reimbursements; and * competition from specialty organizations. GOVERNANCE As Dr. Weckwerth discusses, hospital trustees are responsible for making sure their hospital runs like a business, but few board members are skilled at the policy level of governance other than in the business elements. During my 25-year career in healthcare management, I've noticed that in large part, incoming trustees are not well prepared for the important work ahead. They have limited knowledge of hospital management and operations, regulatory entities and requirements, quality improvement and care management, or medical staff relations. All too often, trustees are too closely aligned with special interests, meaning decisions may not always be made with the community's best interests in mind. As stated in Boards Under Fire, a publication of the Volunteer Trustees Foundation and The Governance Institute (Miller 2001), Boards need to know that not-for-profit organizations are, by law, operated for the benefit of the community. The directors are literally 'entrusted' to provide stewardship on the public's behalf. The paramount duty of a not-for-profit director is obedience to Every decision a board member makes concerning the use of assets must further the organization's purpose. If NFP are to survive, their trustees must bring much more than business savvy to the boardroom table. They must be bold, visionary leaders who understand the importance of maintaining their hospital's social contract with the communities in which they operate. Dr. Weckwerth describes this as the good, and quotes the researchers at Santa Clara University in that it consists primarily of having the social systems, institutions, and environments on which we all depend, work in a manner that benefits all people. The researchers cite as example of a particular common good an accessible and affordable public healthcare system. That system, as Krenek points out, bears the heaviest burden in regards to providing uncompensated care. Government generally devoted substantially larger shares of their operating expenses [11.2 to 18 percent] to uncompensated care than did NFP and for-profit hospitals in 2003. According to Krenek, the range of uncompensated care costs as a percentage of expenses was 2 to 5.4 percent on the investor-owned (IO) side and 3.2 to 6. …