(Originally published in Nasdaq’s MarketInsite and written by Gordon Clark, President and CEO of iProtean)
The volunteer board members of not-for-profit hospitals and health systems are smart, prominent and accomplished people drawn from the community. Yet, our research shows only 27 percent of hospital and health system board members feel they have the knowledge to be effective. Among new board members we estimate the figure is less than half of that. Why would that be?
In 2002, management guru Peter Drucker wrote, “Healthcare is the most difficult, chaotic, and complex industry to manage today.” Over the last 14 years it has become even more so. It is also, as healthcare attorney Monte Dube noted, “the most heavily regulated industry on earth.”
Into this maelstrom steps the new board member. To become an effective contributor, that new director will benefit from first developing a basic understanding of:
- What it means to be a not-for-profit healthcare organization
- How the mission drives the organization’s strategy
- The organization’s strategic plan
- Differing responsibilities of the board, management, and medical staff
- The idiosyncrasies of hospital financial statements
- The role of “payers”— government, commercial, and private
- How hospitals finance capital expenditures
- The medical staff/hospital dynamic and hospital/physician alignment
- The distortion of traditional market forces that typically drive a business
- Quality and patient safety oversight
- How hospitals use information technology, including electronic health records
- The role of federal and state regulators
- The impact of the Affordable Care Act on hospital finances and quality
- Consumerism, Population Health Management, and other topical issues
- And so much more
No wonder the rule of thumb is it takes a new board member up to three years to be sufficiently knowledgeable about healthcare in general and the specifics of the organization in particular. What can be done to accelerate the learning process?
The first step is to recognize that effective boards are comprised of people with diverse backgrounds. Ideally, new board members are selected to complement the knowledge, skills, and life experiences of those already on the board, so that the board as a whole will be equipped to grapple with the complex issues facing today’s hospitals and health systems. The key is for a board to develop a common baseline of knowledge, without having a common set of blind spots.
Many organizations make the mistake of taking a one-size-fits-all approach to orienting new directors. Yet, each person is joining the board from a unique starting place. A new board member, for example, may have a strong clinical background and a deep understanding of quality and patient safety, but little to no experience with strategic planning or healthcare finance. A second one may possess outstanding business expertise, but has never before tried to apply it to the arcane world of healthcare. The strengths of others may be in the law, community relations or information technology. The areas of need for each new board member will be just as varied as their strengths.
Our view is that the most effective orientation programs assess a new board member’s knowledge level in each key aspect of the board’s responsibilities; and use it to develop an individualized orientation plan. Such a targeted approach helps the new board member more quickly become comfortable with the basics, which leads directly to more quickly becoming an effective contributor.
Another mistake organizations make is trying to complete the board orientation process all at once. It’s an understandable impulse, intended to bring a new board member up to speed as quickly as possible. Yet, for the new board member, such an approach is like drinking from a fire hose. Instead, remember to teach slow to learn fast. A series of short, focused sessions over at least a 90-day period will impart much more to your new director than a marathon data dump. To protect a board member’s time, it can make sense to schedule the sessions for immediately after a board or committee meeting. Doing so also presents the opportunity to tie the orientation session to the topics discussed at the meeting, anchoring the session with real world examples. It can also be helpful to have the board chair or committee chair participate in the orientation, along with the senior executives responsible for the functions under discussion.
The role of governance is an additional area that can receive insufficient attention during the board orientation process. Directors who become overly involved in operational issues, often with the best of intentions, may be a bane of management-board relations. Directors who misunderstand their roles and responsibilities can potentially also be a disruptive force and distract the board from proper execution of its duties. Recognizing that it’s easier to create an attitude than to change one, ensuring upfront that a new board member understands the role of governance, will be time well spent. Central topics to cover include the difference between management and governance, what makes a board effective and what constitutes a high-performance board culture.
Other ways to jump-start the education process for new board members include assigning a mentor to the new director, arranging brief one-on-one meetings with each member of the executive team, shadowing a physician or nurse or touring key facilities.
Many years ago a turnaround specialist famously commented that he had never seen a hospital failure that couldn’t be traced back to bad governance. Good governance requires engaged and knowledgeable directors focused on the right issues. There is no better place to start than ensuring new board members quickly become effective, so the organization has a full board of contributors. As noted by Matthew Healy, VP, Head of Governance, Nasdaq Corporate Solutions, “Educated and informed boards help organizations improve governance and increase efficiency and transparency by making more informed decisions, reducing risks and creating organizational opportunities. Ultimately, better prepared directors can provide your healthcare institution better governance.”
“Nasdaq’s Board and Leadership Solutions have a unique collaboration with iProtean, an e-learning company that provides online governance education and information to hospital directors. Bringing over 50 years of combined experience in healthcare governance information and education, the iProtean leadership team understands the specific needs of hospital and health system board members. The company is committed to helping directors make a meaningful difference in their communities.” (MarketInsite, Nasdaq, January 25, 2017)
ABOUT NASDAQ CORPORATE SOLUTIONS
Nasdaq Corporate Solutions helps organizations manage and master the two-way flow of information with their audiences. Around the globe, market leaders rely upon our unmatched suite of advanced technology, analytics and consultative services to maximize the value of their work—from investor relations and corporate governance to public relations and communications.
Intuitive Board Portal Software for Public, Private, and Non-Profit Boards
Nasdaq Corporate Solutions’ MeetX and Directors Desk can help streamline meeting processes, which, in turn, may accelerate decision-making and strengthen governance. Used by public, private and non-profit organizations worldwide, including over half of the Fortune 500, MeetX and Directors Desk combine functionality with security features, ease-of-use and mobility.
iProtean subscribers, the advanced Quality course, Driving a Sustained Culture of Quality, What Works, What Doesn’t, featuring Larry McEvoy, M.D., and Stephen Beeson, M.D., is in your library. As always, Drs. McEvoy and Beeson take a cutting-edge view of the board’s role in overseeing quality—beyond the traditional processes and structures where boards customarily focus their oversight responsibilities.
And coming soon: an advanced Mission & Strategy course, When the Dust Settles, featuring Marian Jennings and Dan Grauman.
For a complete list of iProtean courses, click here.
For more information about iProtean, click here.