Last month, the American Hospital Association’s Center for Healthcare Governance held its National Symposium “Embracing and Effecting Change: Governance and Leadership of Transforming Organizations.” The packed three-day agenda covered consumerism, consolidation, disruptive competition, risk, compliance, board performance, population health, partnerships, leadership, innovation, policy and politics.
I am a career health care data geek and health policy wonk. I have also served on two hospital boards, so I found myself pondering the enormity of the task facing hospital boards, and especially the areas where they might not be as well-prepared or prone to surprises. They’re blind spots, where boards need independent insight necessary to fulfill their fiduciary roles:
Publicly Accessible Data and Cybersecurity
There are no secrets about a hospital if an enterprising investigator is so inclined. And data security for hospitals is a menacing challenge. The $2.6 billion acquisition of Truven by IBM announced last month is the latest in the analytics arms race that’s reshaping how reputations are built and success is defined. Hospital boards must understand relative and absolute costs at a granular level. Ditto how charges are set, the evidence around clinical protocols and step therapies is structured, outcomes defined and measured, and so on. And like every player in health care these days, they must not be infatuated with their reputations: More than 800 hospitals can lay claim to being on a Top 100 Hospitals list, so it’s about facts and performance. Not understanding how the hospital’s safety, outcomes, costs, employee engagement, patient experience et al. is measured based on hard data can be a blind spot for a board.
Hospitals and health system operations revolve around clinical processes based on fast-changing science. Every day, 80 randomized control trials are published, and elegant algorithms are written by medical informaticists to enhance the predictive value of treatments. How diagnoses are defined and made, how care is designed and delivered, which interventions work best and how an individual’s signs, symptoms, preferences and values integrate as part of the care team are essentials for hospital board consideration. Hospital boards must stay on top of how clinical care is designed in their hospitals: It’s a regrettable blind spot if not routinely addressed, especially if decisions about care coordination and capital budgets are based on inadequate or incomplete understanding of clinical best practices.
Regulation and Compliance Risk: Hospitals are highly regulated at the federal, state and local levels, and these rules and regulations are complicated and ever-changing. Every clinical decision made by a physician credentialed in the hospital is subject to regulatory scrutiny to void care that’s not medically necessary. Coding miscues are the focus of auditors and whistleblowers. And, as hospitals add capabilities in long-term care, health insurance and retail services, the regulatory compliance risk stakes become more complicated. Hospital boards and their advisers must be equipped to understand and anticipate how sectors beyond traditional hospital services — acute, outpatient and physician services — operate, and what constitutes regulatory compliance in each. It can be a blind spot.
The biggest blind spot might be the board’s fiduciary role in setting the overall direction for the organization. In this regard, it’s said “culture eats strategy for lunch.” Boards routinely review plans and authorize major projects, but they’re rarely close enough to know how the organization really ticks or understand the unwritten rules that drive individuals to behave in ways considered acceptable or unacceptable. Like every publicly traded company, successful hospitals have a healthy culture in which respect for individuals is sacred, the environment is safe for employee feedback and success is defined by measures beyond the P&L. Hospitals are stressful workplaces. Zero defect performance is expected. Cost-reduction is an ever-present pressure. In hospitals, as in every organization, pressures to change force bad behavior: Old habits don’t die peacefully. A board must understand the culture of the organization it oversees. A strategy perfectly designed can be neutered by an unhealthy culture. It can be a blind spot if not addressed by the board.
Hospital board members typically serve on a voluntary basis, contributing their time to benefit their community. Most trustees work full-time in industries outside health care. They trust the hospital’s leadership to keep them abreast in areas such as these, but it’s tough. This industry is constantly changing, and hospitals are ground zero for the convergence of the clinical, economic and regulatory forces that are transforming the industry.
For hospital boards, the stakes are high. Inattention to these blind spots can be devastating; attentiveness can be transformative.
Paul H. Keckley, Ph.D., does independent health research and policy analysis and is managing editor of The Keckley Report, a weekly blog free to subscribers at www.paulkeckley.com.He is a member of Health Forum’s Speakers Express. For speaking opportunities, please contact Laura Woodburn.