Kanak S Gautam
Associate Professor of Health Management
Department of Health Management & Policy
Saint Louis University
St Louis, USA
Hospitals in industrialised economies face common problems such as financial deficit, staffing shortages, insufficient monitoring of quality and ageing facilities.(1) Addressing these problems requires consideration of difficult, often unpopular changes such as staff reductions to balance the budget, investing scarce funds in facility renovation and profiling physician quality despite physician resistance. Hospital boards can play a key role in helping hospitals deliberate and make such changes since they are legally empowered to take strategic decisions and resolve contentious issues. Yet many boards are handicapped by unqualified trustees, status quo-ist CEOs and meetings that focus on operational rather than strategic issues.(2)
For boards to facilitate change to address current problems, they need to operate as “purposeful, productive partnerships”. Purposefulness implies that the board needs to be well informed and proactive in fulfilling its duties. Partnership denotes that the board should establish a collaborative relationship with management and clinical staff for achieving strategic goals. Productivity implies that board discussions should be focused on strategic issues through careful meeting planning and facilitation. Each of these characteristics is integral to the board’s ability to promote change.
Hospital boards have a legal authority to “govern” hospitals by overseeing hospital performance and providing long-term direction. They have the authority to deliberate and initiate strategic change as part of a long-term plan. Yet, hospital trustees tend to be outsiders with fulltime jobs and limited knowledge about hospitals. As a result, many trustees are passive and prone to “rubber-stamping” decisions and lack the confidence needed to propose major changes.(3) A purposeful board is needed to promote change today, one that is well informed, well prepared to discharge its duties, and proactive and strategic in orientation.
Hospitals are often ineffective in orienting and educating trustees. Trustees are often unable to comprehend board proceedings because they lack information about their role and about the hospital. Since board meetings often focus on operational detail, trustees remain unaware of their higher strategic function. Uninformed trustees accept hospital reports without comment since they feel ignorant and insecure. Such trustees are unlikely to propose solutions to hospital problems.
Boards need to carefully plan trustee orientation and education sessions. These should inform trustees about their fiduciary duties and explain the importance of their role. Details about the hospital should be explained (eg, history, services, population served, competition, finance). Strategic priorities of the hospital should be discussed and trustees taught to function as strategic advisors. Effective trustee education can promote proactivity and restore trustees’ self-belief.
Well-prepared boards partly result from being well informed. In addition, boards require trustees knowledgeable in various strategic areas confronting hospitals. To identify the type of trustees to recruit, boards needs to ask themselves: What issues face the organisation in the next five years? Is the board’s current makeup ideal for addressing those issues? What gaps need to be filled?(4) Given current problems, today’s boards require experts in finance, IT, medical quality, personnel management and construction who can help them make required changes in these areas.
Proactive, strategic boards
A strategic plan allocates resources to meet long-term goals that address opportunities and threats in the environment. A hospital’s strategic plan should address current hospital problems (ie, threats) such as financial deficits, staff shortages and ageing facilities. The board needs to actively shape hospital strategy. As Kramer states: “… every board member should clearly understand the organization’s strategy, why it is the chosen strategy, the alternatives that have been explored and the milestones that can be measured along the way.”(5) In addition to understanding, the board also needs to be involved in preparing organisational strategy. In many hospitals, the strategic plan is prepared by management and ratified by the board. Management-created plans tend to be status quo-ist in orientation. Given current hospital problems, trustees as “outsiders” may provide an alternative interpretation of unrealised problems to management. For example, a trustee may point out that quality reports are becoming a marketing tool and producing quality reports to attract patients makes strategic sense. Being well informed, proactive and strategic enables the board to identify and institute changes required today.
Partnership implies a collaborative relationship between the board and management/clinical staff based on trust and honest communication and aimed at meeting organisational goals. The board cannot facilitate change without collaborating because as an “outsider” entity it depends on management and clinical staff for information and expertise.(6) For example, to explore staff reductions, the board depends on management for comparative staffing data as well as expert advice regarding the impact of leaner staffing on care quality. Also, since management and clinical staff run day-to-day operations, their cooperation is vital. If the board wants a quality monitoring project initiated, its success depends on the CEO’s cooperation.
Yet creating a true partnership faces obstacles. If a CEO does not respect the board, he may lead the hospital in a different direction by presenting selective information supporting his viewpoint or withholding information supporting the board’s position. Due to their dependence on management and medical staff, many boards try to appease management by not raising contentious issues. Unfortunately, this reduces the board’s effectiveness as a watchdog. To create an honest, trusting partnership without compromising the board’s role, the following steps are necessary:
Establish clear expectations for the CEO
The board must determine what it wants a CEO to accomplish and clearly communicate this to the CEO. Specifically, CEOs must be told the four or five priorities they should focus on.(7) Chosen priorities should be related to the hospital’s strategic plan and phrased in objective terms. For example, the board may decide that the CEO should focus on an identified strategic priority – namely, creating a quality monitoring system. Clarifying performance expectations allows the board to raise questions about the CEO’s performance without arousing resentment. Honest exchanges about the CEO’s performance create professional trust between parties and strengthens relationships. Moreover, focus on CEO performance sends the message that the partnership exists for meeting organisational goals, not expedient needs of either party, and that cooperation provided by the CEO is not a personal favour.
Specify the board’s role and information requirements
The board should develop a written statement describing its oversight role in terms of the level and scope of its decision-making. If the board wants to oversee preparation of the strategic plan, this should be in the written statement. The written statement broadcasts the board’s intentions and avoids surprising stakeholders. Also, the board needs to define the information reports it needs for strategic oversight, including level of analysis, detail and frequency. A clear definition of the board’s role helps the board communicate what issues it expects partners to concentrate on. Requiring a periodic information report reduces the board’s informational dependence on management.
Partnership with clinical staff
Clinical staff are autonomous professionals likely to resist changes in their professional practice. To elicit their cooperation, they should be given “seats at the table” on the board, board committees and advisory councils.(8) For example, if the board wants to profile physician practice patterns, a medical advisory council can be used to start a dialogue and defuse physician resistance. Also, as most trustees are nonclinicians, they acquire a reputation of being focused on the bottom line and not caring about clinical issues. For this reason, the board needs to communicate informally with clinicians on the patient floor and at informal dinners and retreats. This helps to demonstrate the board’s commitment to quality and clinical issues. An effective partnership ensures the board information, expertise and cooperation necessary to initiate and institute change.
Board meetings need to be productive. Given infrequent board meetings, busy trustee schedules and multiple complex issues to be discussed, meeting time is a scarce resource. Being productive using board time for informed discussions on strategic issues through better meeting preparation, agenda planning and meeting facilitation.
Improving meeting preparation
Today, board meetings require trustees to go through considerable preparation material. Preparation packages that summarise key issues for trustees make for informed discussions. Hospitals should consider using dashboard-type reports that graphically summarise key indicators such as staffing or quality.(9) Benchmarking important data (eg, showing financial performance over time) also facilitates trustee comprehension, as do executive summaries of management reports. Additionally, trustees need time to read preparation materials. Trustees should receive the presentation packet at least a week before the meeting.(10)
For productive meetings, agenda items need to be linked to strategic issues. As a rule of thumb, 80% of agenda items should relate to future actions (eg, plans to eliminate staffing shortages), not to past issues (eg, review of minutes). To avoid endless reviews of reports and minutes, a consent agenda covering routine board approvals (eg, minutes, reports) can save time.(11) Trustees can review these before the meeting and vote on them en bloc, freeing meeting time for important discussions. To prevent contentious issues, such as “physician profiling”, from dominating the meeting, the agenda should provide a good flow of discussion items. Experts suggest starting with routine issues to get the ball rolling, then moving to important issues, and ending with noncontentious issues.(12) The agenda should also have time allocated for each discussion item.
Effective facilitation and evaluation of meetings
Meetings should be facilitated well to promote focused and inclusive discussions. Guidelines for running a good meeting include briefly introducing each agenda topic, keeping the meeting on track, encouraging participation by silent members, managing conflicts, refocusing the discussion on the issue at hand and, as far as possible, adhering to the allotted time for each topic. Meetings can be improved if trustees evaluate board meetings periodically by responding to questions such as: Was the agenda related to the organisation’s strategic priorities? Was at least 80% of meeting time spent on future issues? Was the preparation package useful? Was the meeting facilitated well? How could the meeting be improved?(10) Productive meetings allow the board to spend time identifying and resolving strategic problems.
Problems facing today’s hospitals require boards to overcome a passive orientation and operate as purposeful, productive partnerships. This entails acquiring self-belief by being well informed and well prepared; actively shaping organisational strategy; collaborating to ensure information, expertise and cooperation from management; and ensuring that scarce board time is allocated to strategic issues, not routine matters. This will help resolve common problems facing hospitals today.
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- Molinari C, Hendryx M, Goodstein J.The effects of CEO–board relations on hospital performance.Healthcare Manage Rev1997;22:7-15.
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- Rice JA. Developing a partnering culture: the role of board and management in improving medical staff relations. Healthcare Exec 2002;17:6-10.
- Knecht PR. We’ve got to stop meeting like this. Creating board agendas that work. Trustee 2001;54:26-7.
- Gautam K.Transforming hospital board meetings:guidelines for comprehensive change. Hosp Top 2005;83:25-31.
- Carver J, Cadbury A. John Carver on board leadership. San Francisco: Jossey-Bass; 2001.
- Small J. Anatomy of a great board meeting. Trustee 2003;56:22, 28.