iProtean—Introduction to Governance

“What a time to be involved in healthcare . . . our healthcare industry is under transformation right now and being on a board is a chance to play a role, to shape it in some small but significant way.  That’s a great opportunity for a volunteer.” (Barry Bader, Bader & Associates)


The myriad of challenges confronting hospital/health system boards and executives today represent an evolutionary shift in the healthcare delivery system.  The uncertainties about the viability and sustainability of the organization can either galvanize or paralyze its leaders.  Board members should feel confident that attention to their fiduciary duties, roles and responsibilities—along with relevant, up-to-date information—will serve them and their organizations well during this industry upheaval.


In the iProtean course Introduction to Governance, Barry Bader, Lawrence Prybil, Ph.D., Elizabeth Mills, Esq., and Anne McGeorge discuss the board’s fiduciary duties and core responsibilities, board roles, governance oversight, management versus governance, physicians on the board, the board chair and the role of the governance committee.


Barry Bader, Bader & Associates

A fiduciary is, in non-legal terms, someone who holds assets in trust for someone else who owns those assets.  A not-for-profit hospital board has a fiduciary responsibility to see that the organization, its management, its clinicians, everything it does is in the best interest of the community and of the mission of the organization to serve the community . . .


There are three fiduciary duties.  Trustees and directors first have a duty of fidelity, or obedience, to the purpose of the organization; that is, ensuring that everything the organization does is focused on its corporate or charitable purpose.


Second is the duty of loyalty, to ensure that the board, directors as well as officers of the organization, are acting in the best interest of the organization and are not acting for any personal or professional gain.


Third is the duty of care, to apply the diligence that a reasonable businessperson would apply in his/her own business to reviewing information and making decisions . . .


Elizabeth Mills, Esq., Proskauer

Fiduciary duties are enforced in a number of ways.  First and foremost, in most states, the attorney general is responsible for the oversight of charities such as hospitals.  The attorney general will be interested if board members are not acting in accordance with their duties.  In addition, the IRS has become very interested in governance on the theory that good governance usually means a tax-compliant organization.


Barry Bader, Bader & Associates

A board has responsibilities primarily in seven areas.  First, the area of mission and values—establishing, improving and periodically overseeing the mission of the organization and the values it stands for, and also overseeing how well the organization is fulfilling its mission, especially the delivery of community benefit services.


Second is the area of vision and strategy.  In changing times, organizations cannot stand still; they have to have a clear idea of where they are going.  It is the board that approves the vision, the strategic direction of the organization, and establishes measurable goals for knowing how well the organization is proceeding.


Third, the board is responsible for the financial health of the organization, both its profitability today, and also its sustainability for the long term.


Fourth—and this is not in priority order because some would say this is job one—the board is responsible for the quality of care that’s delivered by its physician and other clinical staff.


Fifth, the board is responsible for organizational integrity, corporate compliance, ensuring the organization is following laws and regulations and is following its own codes of conduct with regard to conflict of interest, confidentiality, equal employment opportunity and similar aspects.


Sixth, the board is responsible for selecting an outstanding chief executive officer and then supporting, evaluating and providing appropriate compensation to him or to her . . . Peter Drucker said this is a board’s number one responsibility and it’s very hard to argue with that.


Finally, there is the responsibility for governance itself, a board taking responsibility for how it operates, how it is structured, for its bylaws and, most importantly, for its members.


Anne McGeorge, Grant Thornton

One of the core responsibilities of the board is governance oversight . . . The board acts as a separate independent body that oversees management.   This is extremely important to the performance of the organization itself, whether the board is challenging decisions that are made by management, or challenging particular strategic directions management is taking the organization, or whether it’s making a decision to actually change out the leadership of the organization.  Those are the high-level governance oversight responsibilities of a board . . .


Barry Bader, Bader & Associates

The medical staff in a hospital is, for board members who come from other business enterprises in society, a very unusual relationship . . . The medical staff traditionally has a high degree of independence.  Its physicians have an individual accountability; in fact, they take an oath to work on behalf of the individual patient.  We say in our society that the physician-patient relationship is sacrosanct.  Even when physicians are employed by the organization, they maintain that responsibility, that accountability to their patients, and I don’t think anyone would want to change that.  So how can a board productively build a collaborative relationship with the medical staff—one that advances patient care?


. . . One of the things a board can do to build an effective relationship with the medical staff is to first acknowledge  that it needs to have a relationship with the medical staff.  A relationship means that they communicate, they talk to each other.  So a board should be saying, “What opportunities do we have to engage physicians as members of our board, on committees, in our retreats, and how well is management engaging physicians in the planning and conduct of quality activities?”


Second, the board should ask how and to what extent are physicians engaged in leadership and decision making activities throughout the organization . . . how are physicians involved in this organization?  Are they treated as partners, are they given a significant role?


For a complete list of iProtean courses, click here.


iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.


For more information about iProtean, click here.