In health care, we strive toward short, seamless transitions — whether it's a care handoff between providers or a behind-the-scenes switch to a new health IT system. Hospital and health system board members recognize the value of streamlining these transitions, and support their management teams in an effort to reduce transition times and improve efficiency.

On a larger scale, the health care system is in the midst of the most significant transition it has experienced in decades — a transformational shift from volume- to value-based payment. Although the nature of the transformation is clear, the duration of the transition period is hard to predict and probably will be defined only in retrospect. At the macro level, there is little that board members can do to expedite or streamline it.

But there is a great deal boards can do to help their organizations prepare for value-based health care as the transition unfolds. In their book, Governance as Leadership: Reframing the Work of Nonprofit Boards, Richard P. Chait, William P. Ryan and Barbara E. Taylor identify three roles or functions of governance. The first is a strategic role — helping the organization chart a course for the future. The second is stewardship — helping to sustain the organization's viability through oversight of its management and resources. The third function is generative — grappling with the issues an organization confronts, and generating ideas that potentially reframe or refocus the organization's priorities and goals.

Hospital and health system boards will need to draw upon all three functions to help their organizations prepare for a value-based future, including: defining the strategic vision for the organization focused on providing value for the purchasers of care; assessing the organization's strengths and weaknesses to position it for success in a value-based environment; and holding management accountable for making a successful transition.

Boards also will need all three functions to support the development of four key value-driving capabilities among board members and throughout the organization. Organizations must focus on: people and culture to instill a culture of collaboration, creativity and accountability; business intelligence, including collecting, analyzing and linking accurate quality and financial data to support organizational decision-making; performance improvement — using data and evidence-based medicine to reduce variability in clinical processes and improve the delivery, cost-effectiveness and outcomes of care; and contract and risk management — developing and managing effective care networks and predicting and managing different forms of patient-related risk.

At the board level, preparation for a value-based world should include an assessment of the composition of the board itself and of the senior leadership team, along with development of educational programs designed to help board members gain the forward-looking, value-focused perspective they will need.

In its January 2012 outlook for U.S. nonprofit health care, Moody's Investors Service cited strong management and governance as key assets to providers, with opportunities for those with strong governance and management teams to "outshine" others. In that same report, Moody's also predicted that credit trends for nonprofit hospitals will remain negative "until the next wave of regulatory and business model changes are more established in coming years." One thing is certain: Considering the scope and magnitude of the work to be done, time is short. Organizations that don't use this transition period to prepare for the next wave of change risk being washed away by it.

Richard L. Clarke is president and CEO of the Healthcare Financial Management Association in Westchester, Ill.

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