Developing high performance healthcare boards in practice:

from anecdote to evidence-based performance improvement

Stuart Emslie Assistant Director, London Centre for Corporate Governance and Ethics,

Birkbeck, London UniversityVisiting Fellow, Healthcare Governance and Risk, Loughborough University Business School

Formerly Department of Health Head of Controls Assurance for the NHS in England

Thought for the day #1

"I've never seen a distressed organization that could not be traced

back to ineffective governance." Larry Scanlan, President & COO,

The Hunter Group, USA

‘Governance’ in healthcare• Board• Care• Clinical • Commissioning• Community • Converged • Corporate• Direct • Educational• Enterprise• Environmental• External• Financial• Governance between organisations• Health and Social Care• Health• Healthcare• Hospital• Indirect• Information• Integrated• Internal

• Local• Medicines• Mental health • Modern• Mutual• Network• New• Organisational• Partnership• Policy Governance®

• Professional• Project• Public• Public health• Research• Resource• Self• Service• Shared• Staff• Transitional • Whole system

www.HealthcareGovernanceReview.com

“The role of boards is to govern, not to manage. It is about setting overall direction,

establishing boundaries and controls, recruiting and motivating talented

executives and overseeing their operation of the business.”

FTSE et al.

‘Rewarding Virtue’

FTSE et al on governance….

www.ftse.com/Indices/FTSE4Good_Index_Series/Downloads/rewardingvirtue.pdf

Governance is a function of ownership, not management.

Governance is the key link in the chain between ownership and management (i.e. the board).

The job of the board (i.e. ‘governance’) is to define organisational purpose through ownership

connection; set the values for the organisation; and hold management to account (assurance).

John Carver on governance

“Does good governance actually link to better organizational performance?”

Questionfor the day……

Thought for the day #2

"[Good] governance is a little bit like porn," says Robert Daines.……….co-director of Stanford's

Rock Center for Corporate Governance, referring to Supreme Court Justice Potter Stewart's

famous comment about recognizing obscenity. “I can spot it when I see it, but it is hard to say

what it is."

http://money.cnn.com/2008/06/26/news/companies/watching_the_watchdogs.fortune/

5.7%!

OR

GA

NIS

AT

ION

AL

PE

RF

OR

MA

NC

E

1. OWNERS (legal and moral – can also be customers)

2. ‘CUSTOMERS’ (patients, users, etc. - can also be owners)

Board of governors

Board ofdirectors

Management

Front line staff (clinicians, etc.)

3. O

TH

ER

ST

AK

EH

OLD

ER

S(i.

e. e

xcl.

Ow

ner

s &

Cus

tom

ers)

NHS foundation trust

Members

Internal context – Law, ethics and prudenceExternal context – Political, economic, social, etc.

Link?

Richard Chait, Thomas Holland and Barbara Taylor (1993)

Board Self-Assessment Questionnaire (BSAQ)

• Contextual

• Educational

• Interpersonal

• Analytical

• Political

• Strategic

** Evidence-based & behavioural **

www.healthcaregovernance.com

Higher BSAQ scoresrelate to betterorganisational performance

NHS foundation trustBSAQ scores:

Contextual

Educational

Interpersonal

Analytical

Political

Strategic

Total Score (Mean)

NHS foundation trustperformanceindicators

Financial and related•Surplus•Surplus/Income ratio•Financial risk rating•Use of resources

Non-financial•Governance risk rating•Quality of services•Hospital standardisedmortality ratio (HSMR)

•Complaints•Complaints/Income ratio•National adult inpatientsurvey (various)

•Pre-operative bed days•Length of stay•Day case surgery rates•National staff survey(various)

BSAQ Strategic Score

1.0.9.8.7.6.5

Su

rplu

s (£

mill

ion

)

10

8

6

4

2

0

-2

-4

r=.73, p<.001

BSAQ Political Score

.9.8.7.6.5

Qu

alit

y o

f w

ork

-life

ba

lan

ce3.7

3.6

3.5

3.4

3.3

3.2

BSAQ Political Score

.9.8.7.6.5

Po

sitiv

e f

ee

ling

with

org

an

isa

tion

3.8

3.6

3.4

3.2

3.0

2.8

2.6

BSAQ Political Score

.9.8.7.6.5

Job

sa

tisfa

ctio

n

3.7

3.6

3.5

3.4

3.3

3.2

BSAQ Political Score

.9.8.7.6.5

Inte

ntio

n t

o le

ave

job

3.0

2.9

2.8

2.7

2.6

2.5

2.4

2.3

2.2

Quality of work-life balance (r=.52)

Job satisfaction (r=.53) Intention to leave job (r=.53)

Positive feeling with organisation (r=.62)

Findings

• Higher performing boards are associated with better organisational performance

• Little difference between executive and non-executive directors

• BSAQ instrument is, potentially,an excellent board development tool

• If all boards operating at same level then approx. £126m instead of £53.3m – i.e almost 2.5 times greater surplus

No relationship found between board effectiveness and ‘clinical’

measures of performance…..but…

“Perhaps that will change as better financial management generates surpluses for re-

investment and as improved staff morale benefits service quality.”

Bob Deed, 2008

http://deed-consulting.blogspot.com/2008/07/good-governance-improves-performance.html

Findings cont……

• Board adopts some explicit goals for itself, distinct from goals it has for the total organisation

• When faced with an important issue, board “brainstorms” and tries to generate a whole list of creative approaches or solutions to the problem

• Before board reaches a decision on an important issue, it requests input from persons likely to be affected

• Board acknowledges responsibility for ill advised decision.

• etc.

Findings cont…..• Boards really can make a difference• Need improvements in methods for

evaluating board effectiveness• Benchmarking is an important driver in

board performance improvement• Boards need a governance ‘operating

system’ – “It’s easier to change a board’s behaviour through system and process changes that enable board members to act differently, than through exhortation.” (Chait, Holland and Taylor).

Paul Stanton is “influenced by the work of John Carver whose Policy Governance model is admirably

clear……”

CHRE………”we looked at available key publications on governance and on the guidance specific to health.

Having done so, we felt that John Carver’s Boards that Make a Difference (Third Edition 2006) offered the most relevant and sensible advice, focussed on the public/not

for profit sector, and widely respected.”

Policy Governance [is a] fully integrated and coherent system of governance, a significant advance in

management thinking, as near a universal theory of governance as we at present have."

Sir Adrian Cadbury

1. The board should determine the purpose and values of the organisation, and review these regularly

2. The board should be forward and outward looking, assessing the environment, engaging with the outside world, and setting strategy

3. The board should determine the desired outcomes and outputs of the organisation in support of its purpose and values

4. For each of its desired outcomes and outputs, the board should decide the level of detail to which it wishes to set the organisation’s policy

5. Any greater level of detail of policy formulation should then be a matter for the determination of the chief executive and staff

6. The means by which the outcomes and outputs of the organisation are achieved should be a matter for the chief executive and staff; the board should not distract itself with the operational matters

7. The chief executive should be accountable to the board for the achievement of the organisation’s outcomes and outputs

8. In assessing the extent to which the outcomes and outputs have been achieved, the board must have pre-determined criteria which are known to the chief executive and staff

9. The board should engage with its ownership regularly and be confident that it understands its ownership’s views and priorities

10. The membership of the board should be capable and skilled to represent the interests of the ownership; this should not be done in a tokenistic way

11. Information received and considered by the board should support one of two goals – to enable decision making, or to fulfil control and monitoring processes

12. The board must govern itself well, with clear role descriptions for itself, its chair, and its members, with agreed methods of working and self-discipline to ensure that time is used efficiently

June 2008 – Characterisiticsof an effective board……

“It’s easier to change a board’s behaviour through system and process changes that enable board members to act differently, than through exhortation.” (Chait, Holland and Taylor).

Take home message…..

Anecode is fine, but if you are looking for robust organisational

performance enhancement please consider evidence-based

board development.

THANK YOU……and please consider supporting our research programme

and/or coming to a Policy Governance NHS workshop at Birkbeck, London University on 22 October 2008 - see

www.ukpga.org.uk

Stuart EmslieSVEmslie@aol.co.uk

www.healthcaregovernance.comwww.healthcaregovernancereview.com