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Health care governance is clearly at a crossroads. The changes being brought by delivery system transformation and health care reform have handed boards huge responsibilities to reposition their organizations for the future. Health care boards will need new skills and competencies to guide organizations toward success. These include sophisticated strategic planning skills, team building, change management and the ability to think outside traditional health care norms. Boards also must be prepared for greater transparency and engagement with hospital leadership, physicians and the community.

To assess the evolution of health care governance and the role of governance in the future, Health Forum convened a panel of trustees and hospital executives July 18 in San Diego for a roundtable discussion. Health Forum would like to thank all participants for their open and candid discussion, as well as B. E. Smith for sponsoring this event.


MODERATOR (John Combes, M.D., AHA's Center for Healthcare Governance): Our task today is to have a conversation about the value of strong governance, how it's helped your organization, how it's helped you, and where you see governance going in the future, especially with regard to health care reform. What kinds of skills and competencies are you looking for in board members to help make your job easier? Are boards as they exist and operate today truly necessary for future success in health care, or are they unnecessary and actual impediments to organizational success?

KEVIN LOFTON (Catholic Health Initiatives): I think, for me, the key phrase is "as they exist today." In our organization, we have asked that very question. We have a national board and local boards, and we determined that it is best to keep it that way. We can't run a national system out of Denver. Local boards provide a valuable resource. Its members are vested in the community and can help us make sure that we're addressing the community's needs, and that we have people on the board who have the qualities, capabilities and expertise to help guide the organization into the future. The competency, mix and focus of the board are very important. So, yes, we need to continue with our local boards and make sure the value is being given back to the community.

SCOTT DUKE (Glendive Medical Center): That is true, especially from a rural perspective where the relationship is a little more intimate. We do all we can to make sure the connection to the community is balanced between what we do in our day-to-day operations and knowing what our patients need and desire. We have an independent board as well. More than ever, we're looking to meet the challenges of tomorrow, and we're exploring opportunities for certification, training and collaboration for our board.

MARGARET HEPBURN, R.N. (Sierra Vista Regional Medical Center): I agree with what's been said. I think another critical element is the board's relationship within the hospital. The triad relationship among the board, administration and physicians is essential and it's going to be more important as we go forward.

KIMBERLY MCNALLY, R.N. (Harborview Medical Center): I've had experience with that in several ways. We're a Level 1 trauma center serving four states in our area; we're basically a safety-net provider and medical center. The combination of trustees, physicians and administrators creates a tension — or balance — depending on the relationship. In our organization, another triad exists among the owner, King County, the University of Washington that was hired to manage us, and the hospital. It's been a 40-year relationship and, as you can imagine, there have been some interesting relationships and dynamics. But the creative tension has helped us work really well together, and we've gotten through some pretty challenging times.

DONNA KATEN-BAHENSKY (University of Wisconsin Hospital and Clinics): There's a great deal of uncertainty in health care today. As a CEO, I like having a board that I can bounce strategies off of and discuss issues as they come up. I feel that our board is not only necessary for our hospital, it's necessary for me, because I look to it for advice and counsel.

GEORGIA FOJTASEK (Allegiance Health): We are an independent health system, serving a population of about 300,000 to 400,000. We have a local board, and the members not only bring the lay expertise for our community, they are often the employers in our community. That creates a whole different perspective, particularly when they use our facility. It's been helpful to us to have them be able to celebrate the things they helped implement and humbling for them to see where there are opportunities for us to improve.

RICHARD DE FILIPPI (Cambridge Health Alliance): Let me expand on that, from a board member's perspective. To some extent, we are the community representatives. If we weren't there, how would the organization develop a strong sense of what's going on in the community? We can provide a great deal of input in that respect. We are a public system and, in our case, we also serve as a buffer from the city government. We are vested with stewardship and fiduciary responsibilities, and management doesn't have to look to the vagaries and the variations that might be going on with policies that are coming from a different level of public policy.

MODERATOR: Let's explore this concept of the triad for a moment. Have you been challenged personally by the board and how? And board members, have you challenged your leaders to expand their horizons and move the organization forward?

JIM HINTON (Presbyterian Healthcare Services): It's hard for me to imagine a "yes" board in this day and age. The idea raises some questions, of course. Does the organization have the right board members in place and, more importantly, are the topics presented to the board the right topics? If the board is simply approving financials and reports, then they are essentially looking in the rear-view mirror versus looking out the front windshield. In our organization, there aren't too many "yes" answers, especially when planning for the future. There are a lot of very close calls and a lot of very nuanced situations. For organizations that think they have a "yes," board, I would suggest they look at the content of that board meeting. What percentage of the time is spent looking into the future? What percentage of the time is spent on the very difficult decisions? If the difficult decisions make the bulk of board discussions, then the dynamic you described probably doesn't exist.

HEPBURN: The board I'm working with now has challenged me more than any other board in my career. In the past, we spent a huge amount of time talking about the financials of the organization. That was due, in part, to the fact that board members feel more comfortable in that area because they are business owners, etc. Now boards are more involved in quality and credentialing. We spend a majority of our time in board meetings talking about these two issues. Our board is well-educated. Board members have taken a tremendous amount of time to educate themselves on quality. They challenge us to step up to the plate and look at best practices and high-performing organizations.

LOFTON: As part of our agenda, we try to take a holistic approach and talk about the health of the community. For example, we are looking closely at the impact of health reform and the management of population health. This process will take us down some paths that are not traditionally a part of the health care delivery system. Our board has challenged the entire organization to adopt a strategic initiative to curb violence in society. Every one of our markets will have to take on an initiative to reduce violence. It can be anything, from child abuse to elder abuse to gang violence. We are trying to show that, in addition to providing high quality care, we're focusing on the health of the community.

FOJTASEK: One of the things that really has benefited us is the use of a balanced scorecard. Our board, however, has questioned whether we're looking at things that truly will advance our mission and vision. It's not enough for us to be financially strong. It's necessary, but it's not sufficient. Our scorecard has driven a lot of forward-thinking conversation and has led to a greater focus on our vision, which is to create Michigan's healthiest community.

KATEN-BAHENSKY: We've come far as an organization in being transparent. We're a state institution, reporting to a board of regents. We have an active board that's very engaged and transparent. We tell the board everything, we ask for the board's help, we talk strategy with the board and we don't hold anything back. The audit and finance committee meetings are really interesting. They always seek to answer how a decision will impact the patient.

MODERATOR: How about the trustees in the room? How have you challenged the administration? What kind of relationship do you have with administration?

MCNALLY: As board members, we want to make sure we are doing our due diligence and ask the right questions. We want to make sure we are providing the appropriate scrutiny. We try to do so within the framework of respectful dialogue. That's what comes to mind for me. It's important that these discussions always occur within the framework of respectful dialogue. If that's not there, the situation could be very divisive.

DE FILIPPI: In many ways, our board developed the core mission of our system. Years ago, we had a very foresighted mayor in the City of Cambridge who combined the department of public health and the department of hospitals and created a new board at that time. As the board assessed the future of the hospital, it was always within the context of what was best for the community.

Our community is racially and ethnically diverse; more than 50 percent of our patient population speaks another language besides English at home. Our board is very responsive to this and is focused on community outreach. That focus is shared and embraced by administration. But it was the board that drove that.

MODERATOR: We're entering an age where we have to have real partnerships between physicians and our organizations. We need to bring physicians into the system of care that is being developed. How can trustees help us with this process?

HEPBURN: Several years ago, we formed a quality council that comprised administration, the board and physicians. That was our first real effort to bring the groups together in a formal way to discuss some of the issues in health care and the organization. From that came physician representation on our medical executive committee. A board member who is a physician sits on the medical executive committee and has voting rights. We're planning a retreat for board members and physicians next month. It's going to focus primarily on the issues facing physicians today and how the board and hospital can work with them and support them in their quest for excellence.

HINTON: It occurs to me that most of our organizations and most of our boards have taken on a transformation agenda. You may call it something different, but that's essentially what we're all doing. I don't believe you can transform a highly technical industry like health care without the technicians being involved in the change. It's important for boards to come to grips with that. The boards themselves aren't going to transform health care. The boards, in conjunction with physician leaders and administration, will transform health care.

The notion of physicians involved in governance as somehow representative of medical staffs is no longer the contemporary view; physicians are now representatives of a highly technical industry going through significant change. That should be the mindset going forward. That doesn't make it any easier to integrate physicians into governance. That's a challenging issue because our physicians do, in fact, come with a representational mindset. The challenge is getting them to come to the table with more of a transformational mindset and that may be the future job of governance.

MODERATOR: The chair of Cincinnati Children's Hospital talks about transformational change, and he says change is not going to come from administration and it's not going to come from the boardroom. Change will come from clinicians and patients. How can boards facilitate an environment in which clinicians lead transformational change?

DE FILIPPI: That's a tough job for a board, compared with the job of providing guidance to management. Many of us come from management in another environment or some other leadership position, but we're not physicians. And, as a result, I see boards having difficulty in providing oversight over physician initiatives or changes, if you will.

MCNALLY: To pick up on that, I'm impressed with all of our physician colleagues. But some of the younger, mid-career physician leaders are really leading the issues around safety and quality. Sometimes they subtly look to the board to reinforce their ideas. Whether it's around hygiene or some other topic, it's clear whose on board and who isn't. It often encompasses issues of professionalism and codes of conduct. Sometimes just a simple restatement of the importance of an issue from a board member can be valuable.

FOJTASEK: We have some long-term board members who have worked through the old era with us, including joint physician ventures. Just recently, we looked at what we are going to do to bring together our hybrid medical staff, which includes employed physicians and those who choose to remain in private practice. When we got to the point of creating the infrastructure that would bring these groups together, our vice chairman of the board, who has been on the board a number of years, said he never thought it would take an act of Congress to lead to an alignment, since that's been the board's goal for a long time. That statement was so compelling, because this is an opportunity to align incentives. And it's something we've been working toward for a long time.

DUKE: On several occasions, our board sought physician involvement by seeking a top physician who wasn't necessarily aligned with the board's intentions. They came to realize that wasn't necessarily the best approach. Instead, the focus is on achieving quality, patient-centered care and that imperative forms a link between the board and physicians. We created a new work group — a quality committee for patients and families. We have two physician members of our board and they get it. They know it's not about anything other than the patient. And that carries over to other strategic initiatives. We are continually learning and it's really healthy.

LOFTON: My board functions as a corporate board. We have two physicians on our board. But it's a different dynamic than the local boards. Two-thirds of our hospitals are in rural communities; many of them are small sole-community provider hospitals. For those organizations, it gets to be a major challenge to find physicians that actually can fulfill the role on the board in a meaningful way. That's because many physicians compete with the hospital. As organizations focus on strategic initiatives and look for physicians to bring their background and expertise to help craft these initiatives, it gets to be harder and harder to avoid direct conflicts of interest from many of those physicians. It's a challenge.

MODERATOR: What are trustees looking for in terms of their own development? What are the skills and competencies they need to be successful and help the organization be more successful? And to the CEOs here, what are you looking for in trustees and how has that changed over time?

LOFTON: We touched on this earlier, but boards are comfortable in the traditional fiduciary role. We have engaged Richard Chait, a Harvard professor who focuses on governance, to try to move our agenda and conversation beyond fiduciary responsibilities. Chait uses the term "generative discussion"; we call it "blue sky." It's a part of every board meeting, allowing us to look into the future. It allows board members to use their collective talents, backgrounds and experiences to help move the agenda forward.

MODERATOR: So, do you look for a specific set of skills that helps with that level of discussion when you look for new board members?

LOFTON: Yes. We have identified the competencies that we need to fill our boards of the future. We felt we needed someone on the board with IT experience and we brought on Blackford Middleton, M.D., corporate director of clinical informatics research and development at Partners HealthCare. We look at other competencies that we'd like to have and then try to find those people. I don't have a single board member who lives in Colorado except for me. We have a national pool of individuals to get the competencies that we need. The hardest thing is keeping people from delving into more of the day-to-day types of conversation and focusing more on the blue-sky level.

Board reviews and self-reviews are an important way to get feedback. We review each meeting, in addition to a year-end review. We want to make sure that we are making the kinds of decisions we need to make here, versus the kind of decisions that need to be made locally.

HINTON: We have a competency-based governance system. We're actually in our second iteration of our competencies — we just updated them to modernize them a bit. Competencies are a really important place to start. It's a great way to identify board members, to recruit them and then to evaluate them as part of the individual governance process. Sometimes we forget that governance is a complex interaction between human beings and a system of governance that includes agendas and the role of the executive and even the mechanics of materials and how they are presented, not to mention the new role of technology. The competency discussion has really unlocked some things for us. To some extent, it's put more pressure on our overall governance system to have the governance process rise up to the level of the trustees and to make sure that we're not bringing in really great people and putting them in a crummy system.

MODERATOR: That's a great point. Organizations are looking for trustees who have a new set of competencies around collaboration and being able to challenge administration. And yet, there may not be the system yet to support them. That's a real challenge.

TIM MORGAN (B. E. Smith): I work with a lot of boards, and you would be surprised at how many boards are still purely philanthropic boards. That transformation needs to take place in many hospitals across the country. Board composition is more complicated today, given that we need a group of educated, dedicated and strong individuals to navigate our health care organizations through this period of unprecedented transformation.

KATEN-BAHENSKY: Given that yesterday's strategies aren't going to work for us in the future, I'm really looking for board members who are willing to learn and are willing to speak up when they don't understand something. We do have an educational component at all of our board meetings. We've had to educate our board on value-based purchasing and other aspects of reform and it's helped that they can learn along with me. When filling board positions, I also look for someone who appreciates the role of the physician within the hospital.

HEPBURN: I'd like to stress the importance of the annual or biannual board assessment survey. We all have a matrix of attributes that we want board members to have. When a finance person leaves, we look for someone with a finance background. A gap analysis focuses on areas that the entire group identifies as an opportunity. We use the gap analysis to hone in on an area that provides an opportunity for growth. It's been a useful tool for us.

FOJTASEK: We also engaged Richard Chait and he helped us develop a system to make sure we have good people in place. We use committees to bring in new members, physicians and community leaders. It's a chance to see those who are really willing to ask the generative questions, the tough questions, and also be able to work as a team. It's been very helpful.

DE FILIPPI: John and I worked together on an AHA panel that generated a report that assessed individual board member competencies. We were looking at competencies as process measures, and we're now looking at them more like outcome measures. The generative board is a great example. If you asked a board to provide a list of ideas they are practicing that came from the board, rather than from the management team, you would have a sense of how well you've produced a generative board. During our panel discussions, we struggled with the idea of how to define the competency of a board as a whole. The answer may be outcome measures that show how the board is performing against performance criteria.

MCNALLY: We certainly look for board members who have technology backgrounds and safety experience in other industries. But we've also been interested in people who have either entrepreneurial or innovation skills based on their background. That is going to be important moving forward. We need people who have experience in evolving industries other than health care. And sort of embedded in that are people who really appreciate partnerships, particularly when you're trying to assist an underserved population. That's increasingly important. When I think of the board's competency as a whole, I think the board needs to be the steward of the community's health; if we don't do that, then it's easy to get off course.

MODERATOR: Let's explore the community issue. How has your board kept you connected to the community? What issues have they raised that arise from the community to make sure that you maintain that very tight relationship?

FOJTASEK: Years ago our board identified prenatal care for the poor as an area of need within our community. Patients were referred to the University of Michigan, about 40 miles away, while they were in active labor. They would return without a pediatrician or obstetrician. We joined forces with community groups and received some funding from Kellogg to start opening clinics. We really had no idea what it would become, but it is now a federally qualified health center with about 30,000 patients. The hospital had to spin off this entity and we also had to give up governance, although we can maintain some representation. We've chosen to continue to support the center. It's been a 20-year journey and the entire endeavor was started when the board recognized a problem within the community and acted on it.

HINTON: Sometimes the questions board members ask are more powerful than the statements they make. The board keeps raising the bar. They keep challenging us as to whether we are doing enough for the community. They keep broadening the sphere of management. That can be frustrating. Hospitals are increasingly looked to for solutions to problems within the community. But we can be part of the solution in some creative ways that maybe we haven't been in the past.

KATEN-BAHENSKY: Our board has been proactive in encouraging community partnerships. The board also encourages me, and the entire leadership team, to become involved in a community activity. Whether it's singing in the choir, cleaning up or building a house, it doesn't matter. Everybody is expected to do something in our local community.

HEPBURN: Our board has had a huge impact in the area of advocacy. We have several board members who are active with both the state and federal governments. That has made a huge difference in the community in terms of knowledge and awareness. Over the last five years, we have developed a huge network of people throughout the community and within the organization who are ready to respond immediately when there is an issue at hand. There are thousands of people in our network now, from senior citizens to military personnel.

LOFTON: That's another competency area that you would want on your board. We've been blessed over the years with some excellent people in that area. Mary Wakefield, our former board chair, is now the administrator for the Health Resources and Services Administration, and Bruce Siegel, M.D., who is now CEO of the National Association of Public Hospitals and Health Systems, was the chair for the quality committee. You need people on the board who are going to push you from within.

DE FILIPPI: We have numerous examples of political connections; we serve a seven-city area just north of Boston. We have personal relationships with the state legislator and our congressman. When health care reform was passed in Massachusetts, the governor assured us that our Medicaid rates would be raised because the uninsured were to be paid for by Medicaid. With that promise in mind, we agreed to support health care reform. Lo and behold, when reform came in, Medicaid rates changed two percent. That wasn't adequate to bridge the difference. We resolved the issue after long discussions with the governor, state legislature and other political leaders. We planned the meeting and contacted everyone we possibly knew to get the meeting assembled. It took the governor a bit by surprise. That would not have been done without the various political connections we had among board members.

LOFTON: Another important aspect is the support from boards allowing leaders to be involved in advocacy organizations like the American Hospital Association. That's another way the board supports our political agenda.

MODERATOR: Do boards have any visibility within your organization? Or do they mostly interact with the leadership team?

HEPBURN: Our board members participate in many of our functions. Board members are present at staff celebrations. Many of our employees recognize our board members in our organization and appreciate their encouragement and involvement.

DUKE: We determine the board's purpose, intent and alignment. We have to communicate with the board about significant events that are happening and whether they are connected with the community in some strategic way or whether they are a celebration. We have a leadership institute and a board member is the commencement speaker at every graduation. It's great to get board members engaged with the organization, to celebrate milestones or years of service.

MCNALLY: About five years ago, board members began participating in patient safety rounds. It's worked really well and enhanced board member engagement with our safety and quality strategies. We get updates from our CEO about safety and quality, but hearing about it from front-line staff provides a whole new perspective. And they feel encouraged to speak up about what's happening. The executive committee made a recommendation, which was endorsed by the entire board, that participation in rounds is mandatory. It's a requirement of board service that people participate on one inpatient and one outpatient safety round per year. It's that valuable.

FOJTASEK: We are pretty open relative to staff coming to present at board meetings, to piggyback on some of the items that have been presented. We do root cause analysis at board quality meetings and, at times, entire teams are brought in to participate. When we present major projects to the board, we are more generous with who is invited. If an item is going to the board for final approval, people are involved actively by getting to sit and listen to the dialogue. This process doesn't stifle conversation. Occasionally, someone is there to answer a specific question, and I think that's broken down some barriers.

I share the board's agenda with the management team every month. It's rare that I have to make any adjustments. By sharing the board's focus, we're able to share what's important and that cascades throughout the organization.

MODERATOR: Donna, yours is a complex institution. Can you establish that kind of relationship between the staff and the board?