The times are such that it makes sense for a board to review its ability to remain independent on a regular basis—every quarter, every six months, for example. Dan Grauman from DGA Partners recommends the use of an independence dashboard for the board’s use. This dashboard serves a tool to evaluate the organization’s position as the market unfolds.
An independence dashboard would show the five major organizational attributes of the hospital and specific indicators for each attribute (each attribute and/or indicator can be weighted as the board sees fit). An example follows:
- Market share overall and by major product line
- Admissions, ER and outpatient trends by service and product line
- Key competitor activity; outmigration trends
- Population and housing trends
Financial Performance and Access to Capital
- Profitability—operating and bottom line
- Cash position
- Leverage and overall capitalization
- Medical staff resources by specialty; additions, retirements, etc.
- Relationship between hospital and medical staff
- Consolidation and acquisition activity
Population Health Management Readiness
- Overall preparedness for clinical integration and population health management
- Ability to manage with new payment innovations—ACOs, bundled payments; degree of adoptions re. Care management and clinical IT
- Effectiveness/historical performance of current management team
- Strength of relation between the board and administration
- Presence of medical leadership and structure necessary for success
If, during the scheduled dashboard review, the board sees red flags that are potentially negative, it’s time for the board to take a hard look at whether the hospital can continue to go it alone. If attributes and indicators are strong, then the board may want to consider waiting until the next review or possibly exploring a looser affiliation with another organization.
Another type of dashboard Mr. Grauman recommends is the decision scorecard. When a board determines that the organization needs a partner, it must first understand the details and nuances of the different partnerships models. The board can then identify potential partners and “stack them up” against specific criteria the board has identified.
Mr. Grauman provided an example of a decision scorecard with sample decision criteria. These included (this is an example only—each board should identify its own criteria):
- Culture: style of engagement
- Experience: track record acquiring and integrating community hospitals
- Financial: ability/desire to provide capital and payer contracting
- Operations: support/integration of back office & IT functions
- Clinical: support seamless, accessible continuum of care
- Medical staff: support development and recruitment
- Level of interest
The board should evaluate the potential partners against its decision criteria in a thoughtful way. “And this is board work,” Mr. Grauman noted. Management provides support to the board in this process. He emphasized that this must be a structured process whereby the board brings discipline to a complex decision.
Dan Grauman appears in several iProtean foundational courses and also is featured in the upcoming advanced iProtean courses: Affiliation & Consolidation Strategies Part 1 and 2, Transforming Your Organization into an Integrated Delivery System, Financing Considerations for an Integrated Delivery System and Developing an Employed Physician Strategy.
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