iProtean—The Importance of Governance

Governance matters to credit rating agencies, according to Lisa Goldstein of Moody’s Investors Service.  At the iProtean Symposium last week, Ms. Goldstein presented the scorecard used by Moody’s to assess governance and management.  The five core elements of governance used by Moody’s include:


Whether the board and management exhibit leadership capability in stable and stressful times.  This element is assessed by confirming that the board has a mix of tenured and new members (i.e., term limits are preferred); the organization has experienced senior leadership; and the governance structure reflects the organization’s strategy.


Whether the board has sufficient oversight and disclosure processes that reduce risk and enhance operational effectiveness.  This element is assessed by examining the board’s disclosure practices.


Whether the board effectively integrates short- and long-term plans to optimize resource utilization.  Here, the determining factors are:  Integrated strategic, capital and financial planning with an emphasis on scenario planning; conservative budgeting and consistent results; fundraising activities; and consideration to consolidation.


Whether the board has a commitment to self-assessment and benchmarking to promote ongoing improvement.  This includes reviewing and assessing the performance of senior management, and conducting the board’s work according to “best practices.”


Whether the board effectively manages government relations in its efforts to influence local, state and federal healthcare policy.  This means understanding the regulatory environment and establishing/maintaining ties to local and national industry affiliations.


Ms. Goldstein emphasized that health reform will “test  hospital boards like never before—the recession was nothing compared to what’s coming.”  She outlined what Moody’s calls the characteristics of a “progressive health care system”—regardless of size:


Data, Data, Data

Integral use of data to develop evidenced-based medicine; build data-warehouses to predict health care outcomes to manage population health


Forward-Thinking Leadership

Use data for competitive advantage; execute strategies; add board expertise in manufacturing, engineering, consolidation; continued focus on quality and safety


Strong Financial Management

Scenario planning; execute next level of cost reductions; critical approach to spending when ROI is uncertain or hard to measure; realization that inpatient utilization will likely not return to historical levels


Consideration of Consolidation

Strategies that examine avenues to drive efficiencies and leverage from scale and size


Preparing for Payment Models that Embrace Value

Heavy integration with physicians to build a clinical playbook, prepare for readmission penalties, bundled payments to lower costs


And boards of progressive health systems must demonstrate their own specific “progressive governance” characteristics, according to Ms. Goldstein:


  • New expertise to the board
  • Consideration of non-traditional partners
  • Evaluation of all services/facilities for re-purposing, including scenario planning
  • New mission or re-evaluation of healthcare delivery model
  • Managing to Medicare


Ms. Goldstein will be featured in iProtean’s upcoming courses Transforming Your Organization into an Integrated Delivery System, Affiliations & Partnerships, Making Difficult Decisions about Services and Programs:  A Portfolio Approach,  Physicians and Governance and Competency-based Succession Planning.  iProtean subscribers please note that the new iProtean courses are considered advanced and will enable those who are interested to earn advanced certification.



For a complete list of iProtean courses, click here.


For more information about iProtean, click here.