1 board of commissioners orientation presented by the lakes group

1

Board of Commissioners ORIENTATION

Presented by the Lakes Group

The Lakes Group, Kirkland WA 2

Purpose

• To gain an understanding of the responsibilities, accountability and relationships needed by the board of commissioners (directors & trustees) as a whole to effectively meet the district’s mission and vision

• To provide access to resources that can help answer commissioners’ legal, regulatory or board effectiveness questions


Sample Advertisement for a district commissioner/board

memberWANTED: creative, dynamic, intelligent,

open minded individual with superb listening skills to engage in strategic planning, lively debates, voting and occasional dining out. Must be able to toe the line, rock the boat, feed the fire, strike a balance and take the heat. Multiple hat collection a plus.


BOARD ORIENTATION IN GENERAL

• “Nose In, Hands Off (NIHO)—one of the hardest functions of a board of commissioners

• BENCHMARK GOVERNANCE: Identify “best practices” and use them to fit the local need. Benchmarks will change over time and so will individual board policies, strategies and “dashboard” monitoring


BOARD TIME SPENT ON CORE FUNCTIONS

TYPICALFinance: 40%Operations: 35%Credentials: 5%Quality & Service: 5%Strategy: 5%Other: 10%

Source: Pugh, Ettinger & McCarthy, MGMA October 2001

BALANCED

Finance: 20%

Operations: 10%

Credentials: 10%

Quality & Service: 25%

Strategy: 30%

Other: 5%


Client Board Meeting Actions Compared to “Typical” and “Balanced”

Typical (Hospital Name)

Balanced

Finance-40% 20%

Operations-35% 10%

Credentials-5% 10%

Qual/Svc-5% 25%

Strategy-5% 30%

Other-10% 5%


BOARD REVIEW EXAMPLES

• Nearly all hospitals regularly review the hospital operating statistics, financial statements, capital planning data and patient survey results

• 80% of boards review adverse medical events, medication error rates and infection rates

• Only 50% of the boards review community health issues—a key component of their mission and social responsibility

• 42% of the hospitals use a balanced scorecard or dashboard system to monitor performance

The Governance Institute-Biennial Survey of Hospital Boards, July 2001


COMMANDMENT OF GOOD GOVERNANCE: THE BOARD

WILL…• Keep up-to-date on the organization from an external

viewpoint…maintain objectivity!

• Ask all its questions and state all its concerns as they arise

• Make its perspectives, experience and judgment available to management to improve the performance of the organization

• Seek to improve its own performance and keep its composition evergreen

• Create an atmosphere conducive to dialogue and discussion


COMMANDMENTS OF GOOD GOVERNANCE: MANAGEMENT WILL…

• Help the Board in understanding the changing external environment ( industry, competition, global factors) from different viewpoints

• Tell the Board what management is trying to accomplish in the longer term

• Provide sufficient, efficient information to allow the Board to assess whether the goals are being achieved

• Put good and bad news on the table• Create an atmosphere conducive to critical discussion of

key business issuesSource: MGMA Presentation by F.K. Ackerman, FACHE October 24, 2001


COMMUNITY REPRESENTATION AND THE EFFECTIVE BOARD

Richard Umbdenstock, the author of So You’re on the Hospital Board and President/CEO of Providence Health Services in Spokane has succinctly defined governance as “fulfilling the function of responsible ownership on behalf of the community and involves the responsible stewardship and allocation of health resources to produce a sustained benefit to the communities served”.


SUCCESSFUL BOARDS HAVE EXPECTATIONS OF THEIR MEMBERS:

A few illustrations:• Board and committee preparation, attendance & participation• Education (Local & State—also consider national if cost

effective)• Attendance at board retreats• Enhance a spirit of partnership and communication• Confidentiality• Avoid conflicts of interest• Participation in organization events

Source: Dennis Pointer, PhD, WSHA 24th Annual Rural Summer Workshop


ENHANCING BOARD EFFECTIVENESS AS A

WHOLE


REASONS FOR INEFFECTIVE GOVERNANCE:

Board members who represent the interest of specific constituencies, not the organization as a whole

A focus on short-term issues because the Board lacks a clear sense of the organization’s purpose

Time spent monitoring the past instead of planning and creating the future

Reviewing information that is largely irrelevant to the critical, strategic issues confronting the organization


REASONS FOR INEFFECTIVE GOVERNANCE CONTINUED:

• Non-performing or dysfunctional Board members that create a negative dynamic and ultimately diminished effectiveness

• Maintaining unwieldy, inefficient governance that waste the Board’s and Management’s time

• Confusion about roles, responsibilities and relationships with management, the medical staff, committees and other Boards

Source: Systems Thinking in Governance, Adapted “Trustee”January 1999


ASSESSING THE NEED FOR CHANGE:BOARDS SHOULD ASSESS THE

CURRENT GOVERNANCE PROCESSES AND ASK:

• Is our current governance process designed to drive the values and goals of a health system of the future, or a hospital, group practice based system of the past?

• Is our governance structure streamlined to make efficient decisions? Does it use the Board member and management’s time efficiently?

• Do we have a lot of overlapping and duplicate committee meeting and governance reports?

• Are we more involved in policy and big picture decisions or in operational detail?

• Have we been conducting routine self-evaluations? What have been the results?

Source: Orlikoff/Totten Trustee Magazine November-December 1998


A SUCCESSFUL BOARD ENSURES ITS ACTIONS PROTECT AND ADVANCE THE

INTERESTS OF THE STAKEHOLDERS

• Have you identified your stakeholders?

• Are you familiar with what your stakeholders expect of, and want from the organization? What was your method of identification and time frame utilized?

• Does the Board decide and act on the stakeholders’ behalf?


Sample Table of Contents: Frontier Hospital Community Survey


DASHBOARD OVERSIGHT

Using an automobile analogy, what dashboard gauges are needed to monitor the organization from a governance perspective? There are five recommended areas to monitor:

Ends: the extent to which the vision is being fulfilled and key goals are being accomplished

Management: the extent to which the CEO’s performance is in line with Board expectations

Finances: the extent to which financial performance is in line with board specified objectives and expectations

Quality: Does the quality of care meet Board’s standards? Self: the extent to which the Board is fulfilling its responsibilities and

executing its roles


Board Oversight as “Steering the Ship”

• In a more basic definition of “dashboard” indicators, you can separate into two categories: “lagging indicators”: results of past performance and “leading indicators”: drivers of future performance.

• As to the Board’s role of steering, not rowing the ship: Keep a balanced view of the organization’s performance and keep management focused on adhering to the navigational plan, e.g. chart the course (high level plan); ensure the deck is clean (details); check the wake of the ship (lagging indicators) and keep an eye on the horizon ahead (leading indicators).


DASHBOARD OVERSIGHT CONTINUED

For Dashboard Oversight to be effective, a standard needs to be attached to each indicator, e.g. the board specifies it expects net operating margins from inpatient operations to exceed 3%--the indicator is net operating margin and the standard is 3%. Indicators must be quantitative, or quantifiable.

Data presented across time (preferably in graphic format), juxtaposed against a standard internal or external benchmark trends and patterns are more easily identified, interpreted and addressed

Source: Board Work Dennis Pointer/James Orlikoff


Narrative Executive Summary Report

• Narrative summary reports by the “C Team” (CEO, CFO, CNE, Chief of Staff) that highlight, in a one page executive summary the areas of concern and actions in place or being developed to address the areas in question are extremely valuable to board members. It is important that the dashboard indicators and the executive summary are provided to the Board in advance of the Board meeting. Timing of financial and other statistical data is frequently in conflict with historically established board meeting dates.

• Of course areas of significant improvement or accomplishment should also be included in this Executive Summary Report


CONSENT AGENDA

The “consent agenda” consists of items that can be approved without expressive action by the full board. These items are combined into a single section and included with the full agenda packet for members to review prior to the meeting. If there are no questions or concerns, the entire block of issues can be approved with one board vote and no discussion. Any member can ask that an item be removed from the consent agenda for full discussion

Board Room Press, The Governance Institute, La Jolla, CA June 2001:2


Comments on Client Board Minutes (dates reviewed)


Sample Board Agenda to Consider

1. Call to Order2. Reports and Presentations (establish time parameters for reports):

A. CEO ReportB. Finance Report (with predetermined dashboard indicators)C. Medical Staff Report (General issues/Quality/Credentials)D. Patient Services Report (Quality/Training/Staffing etc)E. Performance Improvement ActivitiesF. Other

3. Consent Agenda:A. Vouchers & WarrantsB. Write-offsC. Other


Sample Board Agenda to ConsiderContinued

4. Old Business:

A. Strategic Goal # X: Status/Actions in progress

B. Other: List item and action requested at the board meeting

5. New Business:

A. List item and action requested at the board meeting

B. Other

6. Adjourn


GENERAL EFFECTIVENESS CONSIDERATIONS:

• ANNUAL MEETING: SOCIAL FUNCTION OR STRATEGIC IMPERATIVE?: Annual meetings/retreats to review accomplishment of previously established goals, mission and vision statements and establish direction for the future are one of the keys to successful governance

• BOARD ORIENTATION: Is your orientation a process or an “event”? Orientation should assist board members over time to learn, to do and to lead.

• JOB DESCRIPTIONS: Does your board have job descriptions for individual commissioners and the Chairperson? Are they reviewed periodically?


GENERAL EFFECTIVENESS CONTINUED

• BOARD SPEAKS WITH ONE VOICE: Board members need to support decisions or actions taken by the Board as a whole, even if they have voted against the action or disagree with the action taken. It is imperative that the Board be perceived as together, not at odds over a decision that has been approved by the majority. For those tempted to discuss board actions with others outside of the district, remember what our Mothers told us—”If you can’t say something nice, don’t say anything”


EFFECTIVE MEETING TIPS #1

BOEING’S CODE OF COOPERATION FOR EFFECTIVE MEETINGS: Attend all team (board) meetings and be on time Listen to and show respect for the views of other (board) members Criticize ideas, not people The only stupid question is the one not asked Pay attention—avoid disruptive behavior Carry out assignments on schedule Avoid disruptive “side” conversations Always strive for win-win (I prefer gain-gain) situations/solutions Every (board) member is responsible for the team’s (board’s)

progress/success


EFFECTIVE MEETING TIPS #2

IS IT A GROUP OR A TEAM?

Are discussions fully open? Are core values, e.g. respect & tolerance upheld? Is debate based on honest differences rather than turf

battles? Does the team (board) make decisions through consensus?

—or is majority adequate? Are there full contributions from everyone? Do team (board) members hold each other accountable?


CONFIDENTIALITY

CONFIDENTIALITY: Confidentiality of board working discussions by board members is a key factor in board effectiveness and credibility with the board as a whole, executive management and organization staff. If there is a question about the confidentiality of specific information, err on the prudent side and ask the Board Chair or CEO

Confidentiality, particularly involving patient information is a very serious issue in all health care organizations, with penalties up to termination of employment for discussion of such information outside of authorized channels


COMMUNICATIONS

Quote from a supervisor, Fortune 100 company: “ We know communication is a problem, but the company is not going to discuss it with the employees.”

Although we hear “communication is the key”, it may not be the problem, and more communication may not be the solution. With so many options in communication methods, we tend to pay more attention to how we are going to communicate, rather than what we are going to communicate, i.e. communication is an activity rather than an outcome.


Communications, Continued

• Another reason for communications failure or “static” in transmission is that we have forgotten communication is a two-way process.

• To build understanding, support and acceptance, we need to make a shift and think of communication as an outcome.

• To do that we must look at the communication from the receiver’s perspective. We should ask the question, “What is my desired outcome with this communication”. What do I want my employees, board members, medical staff and/or service area community residents to think, feel and do after receiving my message?”


COMMUNICATIONS: Administrator, Board & Medical Staff LeadershipAdministrator, Board & Medical Staff Leadership

• Can the Board be “wired” for flow of information?• Identify Board and Medical Staff’s preferred means of

communication for routine information, “heads up” and educational bulletins, e.g. “memo in the chair”

• Does the Administrator have regularly scheduled meetings with the Board President prior to scheduled board meetings?

• Is there some sort of “Joint Conference Committee” to discuss clinical and medical staff issues/concerns between the Board, CEO, CNE/DNS before action is requested by the full Board?


BOARD/ADMINISTRATORRELATIONSHIPS

Washington law is quite clear in requiring the elected board of commissioners to oversee the hospital district’s general policies and organization. To fulfill this obligation, the board’s role is to adopt the necessary general policies to achieve these ends and delegate the day-to-day responsibilities of these policies to the appointed district administrator.

Source: AWPHD Public Hospital District Commissioner’s Guide



• It is the board’s responsibility to communicate effectively, frequently and candidly with the administrator/CEO---the administrator/CEO’s responsibility in turn is to take action and make changes.

• Ensuring that a performance appraisal process is fair and covers all the bases is a responsibility of both the board and the administrator

SOURCE: PRACTICAL GOVERNANCE, Tyler & Biggs



A study done by the authors of “Practical Governance” several years ago revealed that 1 in 10 administrators had never received a performance appraisal—one of the key factors hindering completion of the performance appraisal was “the lack of clarity or agreement over the organization’s vision, goals & priorities linked with a failure to define administrator roles & responsibilities.”

SOURCE: PRACTICAL GOVERNANCE, Tyler & Biggs



Performance appraisal should be based on a number of quantifiable factors, e.g. financial performance against budget; operating indicators, e.g. clinic visits, ancillary service utilization; physician & employee satisfaction based on survey scores and other key goals deemed important by the board. In summary:

THE BOARD SHOULD SET CLEAR EXPECTATIONS AS TO WHAT THE BOARD WOULD SEE AS A GREAT JOB PERFORMANCE BY THE ADMINISTRATOR

REMEMBER “THE GOLDEN RULE”


CEO PERFORMANCE EVALUATION

• 85% of hospitals responding to the 2000 survey reported that they formally evaluated CEO performance on predetermined objectives and criteria (the high response does not indicate whether these evaluations are done well)

• “We know that the quality of performance evaluation is tied to CEO turnover—if there is an unplanned departure, it is often related to an ineffective CEO evaluation process”—Barry Bader, President, Bader & Assoc.

• Governance experts recommend that hospitals link CEO incentive compensation plans to the outcome of the formal evaluation process—The Governance Institute


BOARD/ADMINISTRATOR RELATIONSHIPS

THE OBJECTIVE OF A

PERFORMANCE APPRAISAL IS TO SUPPORT OR CHANGE BEHAVIOR

“There are no misunderstandings; there are only failures to communicate.” Senegalese proverb


Some Recommended Informational Sites

• www.wsha.org

• www.awphd.org

• www.whf.org

• www.healthleaders.com (excellent daily/weekly summary of health care events in numerous categories-free)

Thank you. [email protected]

http://www.wsha.org/

http://www.awphd.org/

http://www.whf.org/

http://www.healthleaders.com/


Miracle Slide


Why Strategic Planning?

With all the uncertainties in our present healthcare environment, how

can we plan for the future?


WHY HAVE A MISSION & A STRATEGIC PLAN?

“It is critical to not only establish an organizational mission and strategic plan to make a business successful, but also to connect that strategy with the hearts and minds of its employees. You can never underestimate the necessity of understanding the core competencies of a business and how they link up with the beliefs and values of the staff. HOWEVER, the strategies adopted need to move employees out of their comfort zone and toward a different future.” Cheryl Scott, CEO Group Health Cooperative

Puget Sound Business Journal, February 27-March 4, 2004


The “hospital” is not the Business

Past discussions by hospital CEO’s and their boards have focused on “making the hospital more businesslike”, while there has been little fundamental change in the structure & organization of hospitals for the last 30 years. In fact, it has been said that the current organizational format of most hospitals would be similar to Dell Computer Corporation organizing around production facilities rather than its product.


Hospital is not the “Business” Continued

• The potential benefits of a real redesign of delivery systems begins with the understanding the needs of patient populations and designing simple systems to move them through the delivery process (access & follow-up which goes beyond just clinical systems)

• The “80-20” rule also applies to hospitals, i.e. there will be a small number of hospital/district services that account for 80% of the income of the organization—these businesses need to become the basis for the organizational structure. Don’t rely on instinct-- use data to identify and confirm the+20%!

• We need to change the historical “business” focus on the hospital infrastructure, e.g. staffing, ancillary services, IT, etc. to focus on the development of delivery systems focused on meeting the needs of the patient groups and “stakeholders”. Systems should be designed from the end-user backward through the organization.

IS THIS BOARD AND ADMINISTRATION UP TO THE CHALLENGE?


THE FIVE TASKS OF STRATEGIC MANAGEMENT

1. Developing a concept of the business organization (hospital district) and forming a vision of where the district needs to be headed; providing the organization with a sense of purpose, providing long-term direction and establishing a mission.

2. Converting the mission into specific performance objectives3. Crafting a strategy to achieve the targeted performance4. Implementing and executing the chosen strategy efficiently and

effectively5. Evaluating performance, reviewing the situation, and initiating

corrective adjustmentsThe completed strategic plan will illustrate the organization’s vision,

mission & strategy intended to achieve specific performance objectives outlined in the plan


SAMPLE STRATEGIC BUSINESS PLAN STATEMENT

This ___ (year) Business Plan projects the performance of organization for the years of 2004, ?, ?. The following work plan represents the strategy-making and strategy-implementing process selected by management to meet the priority goals established by the Board of Commissioners on date.

1 board of commissioners orientation presented by the lakes group

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