Session #5: Balancing Governance Among System and Local Bands

Transcription

1 Session #5: Balancing Governance Among System and Local Bands Speaker: James Rice, Ph.D., FACHE Saturday, Jan. 13, :15 a.m. 12:15 p.m. Hennepin 3

2 James A. Rice, Ph.D. Managing Director, Governance and Leadership jim_rice@ajg.com Mobile Jim Rice has over 35 years of experience within the US health sector, and has worked in over 30 countries to strengthen their health financing, management and governance systems. At Gallagher Integrated, a subsidiary of Arthur J. Gallagher, he is responsible to help clients enhance the effectiveness of their governance strategies and structures, as well as to enable more physician leaders to engage in modern leadership and governance processes. Jim s work ranges from consulting with academic medical centers and large health systems to Critical Access Hospitals and Federally Qualified Health Systems. He was a senior officer actively involved in building the Allina Health system in Minnesota. Dr. Rice has lived in Russia managing a large health system reform program in the mid-90s and recently led a $200 million USAID project to strengthen the leadership and governance of health systems in Asia, Africa and Latin America. His thought leadership is reflected in a number of recognitions and awards, such as a National Institute of Health Doctoral Fellowship in Health Policy, a US Public Health Service Traineeship in Hospital Management, and a Bush Fellowship to study at the National University of Singapore, and is the recipient of the University Of Minnesota School Of Public Health s Distinguished Alumni Award. He holds faculty positions at the Business Schools of Strathmore, Nairobi Kenya and the Judge School of Business, Cambridge University England, as well as the School of Public Health, University of Minnesota.

3 Balancing Governance Among System and Local Boards Jim Rice January 12, 2018

4 Balancing Governance Among System and Local Boards James Rice, Ph.D., FACHE, managing director and practice leader, Gallagher Integrated, As the health care delivery system takes on a new shape, organizations will need to evaluate their organizational structures, care delivery roles and collaborations in order to best achieve their mission and vision and ensure an ongoing capacity to successfully meet community needs. As a result, governance structures are also adapting and transforming, with many organizations shifting governance responsibilities to a different but still vital advisory role. This program will explore the fundamental differences in roles between operation and advisory boards and highlight ways to ensure that advisory governance is meaningful and valuable to organizational thinking and responsive to the challenges ahead. 2

5 Distilled Insights from Many Sources: 3

6 Many Structures & Roles: 1. System or Corporate Board 2. Regional Board 3. Local Institution Board 4. Subsidiary Boards 5. Advisory Boards 6. Foundation Board 7. Co-Venture Board 8. Community Partnership Board 4

7 Responsibility Continuum: Decide Influence Advice Community Needs Assessment Strategic Planning Program Quality Planning Consumer Experience Mapping Program Performance Assessment Financial Planning & Budgeting Philanthropy CEO Hiring, Performance Review 5

8 Why have Mix of Board Types? 1. Mix of Roles and Contributions 2. Need to Optimize Community Engagement 3. Exploding Enterprises in Accountable Care 4. Need for Many Competencies 5. Work Load Needs to be Shared 6. Moderate Numbers Making Decisions 7. Tax-Exemption Pressure 6

9 Board Work Along The Continuum Calls for New Board Competencies and Decision Making Processes Acute Care Integrated System of Providers: Clinics Offices Surgery Hospitals 7

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16 Let s Look at Basics of Good Governance and then how to balance the roles among types of governing bodies. 14

17 What is great governance, who are players? Great governance is an effective and efficient process to develop policies that set the strategic directions for the healthcare enterprise, and then help assure that resources are assembled and allocated for the successful implementation of the plans in a transparent and ethical manner, compliant with regulatory parameters Players are physicians, other community leaders and senior management within and from out of the region 15

18 Governance Matters Better Governance Yields Better Performance Governance Building Blocks Better Governance Better Health System Performance Better Health Care Better Health Gain What are the key building blocks for an excellent governance system? 16

19 Six Core Board Responsibilities: 1. Determine the future of the organization 2. Ensure the quality of clinical care and customer service 3. Protect the financial health of the organization 4. Ensure effective executive leadership and management 5. Develop, improve, and perpetuate an effective governance function 6. Reflect the community served and strengthen relationships with key stakeholders These can be shared among governing bodies 17

20 Great governance: more than great process The enterprise must perform better. Goals are more likely achieved. The community is better served. The enterprise s vitality is stronger. 18

21 Great Governance: more important now than ever before: 1. Continued scrutiny from Medicare and Medicaid auditors; 2. Challenges to tax-exempt position in society 3. Boards becoming tired and stale, more difficult to recruit 4. JCAHO is stepping up the rigor of its accreditation process; 5. More assertive States Attorneys General reviewing board decisions on mergers and acquisitions; 6. Proactive board role in quality & safety; 7. Bond Ratings more sensitive to role of boards in : 8. Strategic planning 9. Physician relations 10. CEO continuity; 11. Bond covenants more stringent for board reporting; 12. Media interest in boards more energized due to prominence of hospitals; 13. Escalating D&O insurance rates; 14. Physician tensions pressing into the board room for expanded co-optition and co-ventures; and 15. Multi-million dollar capital needs surfacing in board agendas for I.T. new facilities, new technologies and new nursing working capital pools. 19

22 Five deadly myths about governance 1. Great board members are born, not made; 2. Great board members make great boards; 3. Bigger boards yield greater diversity of thought, expertise and community leverage; 4. Commitment to process improvement applies to clinical and administrative processes, but not to governance; and 5. Trust within The Triangle is not based on Truth 20

23 What are the building blocks for effective governance? 1. Job description, accountabilities 2. Ideal board member profile of needed attributes 3. Orientation 4. Ongoing education 5. Culture for great meetings 6. Dashboard Information for decisions 7. Processes for planning, budgeting and management support 8. Community relations & advocacy 21

24 Building Blocks for Great Governance? Board Information System Excellent Committees Size & Structure of Board Board Composition KSA Matrix Market Needs & Strategic Plans Great Meetings: Calendars Agendas Board Job Descriptions Terrific Orientation Process Excellent Ongoing Education Program Ongoing Assessment and Refinement The Board intends to continuously review and refine its work in all these areas to assure the effective governance of the community s assets entrusted to its use for community and patient health gain 22

25 Engagement: Board Art and Science Stakeholder Engagement Matters Smart Governance is Collaborative Governance 23

26 Our environment demands a bold vision, excellent strategy execution, and great governance Building our future on solid pillars of: Service, Quality, Growth, Finance & People 24

27 5 Performance Pillars support efforts to achieve our vision Our strategy requires synergistic work among all of our five pillars; work that is grounded on and built from our commitment to our mission, values and principles Vision 2030 Finance Growth Quality Service People Principled Passion Values Guided Mission Based 25

28 Common priority issue areas for strategic planning & investments Governance participants often cite actions for performance in these priority issue areas: 1. Enhancing patient and visitor loyalty with excellent customer service (Pillar 4 Service) 2. Enhancing our culture as the preferred regional employer with excellent employee pride and loyalty (Pillar 5 People) 3. Enhancing our collaboration with other area health providers (Pillar 1, 2, 3, 4, 5) 4. Enhancing our culture driven toward quality outcomes and patient safety (Pillar 3 Quality) 5. Protecting our financial vitality with processes to add or drop services (Pillar 1 Finance) 6. Expanding physician pride and loyalty with our services and programs (Pillar 5 People) 26

29 Classic Model Needs Refinement Recent studies of governance effectiveness indicates all is not well Oversight applied sporadically, too much-too little Too many wondering if role is irrelevant: Why am I here? What difference do I make? Are we really guiding, or gliding? 27

30 Common board problems: Performance Problems: Dysfunctions of groups: rivalries, domination by a few, one-way communication, bad chemistry Disengaged: not well informed, not much desire to learn, weak participation, poor attendance Do not know roles & responsibilities. Lack job description Purpose Problems: Not just confused, but dissatisfied with their role Some work very episodic (meeting is not governing) Some work intrinsically unsatisfying (fiduciary often passive) Some work undemanding (ceremonial Monarchy) Some rewarding but not encouraged (strategy developmentexecution micro-management) 28

31 Three Modes of Governance: Type 1 Fiduciary Goal: protect assets. Ensure resources used efficiently & effectively in pursuit of mission Type 2 Strategic Goal: guide organization from present to preferred future Type 3 Generative Goal: shape the other two modes. Define the future. Frame the questions. Look for cues and clues New research from Harvard s Chait, Ryan and Taylor Governance as Leadership: Reframing the works of Nonprofit Boards, (Wiley,2004) 29

32 Comparing Type 1 and 2 Modes: Type 1 Governance: Management defines problems and opportunities; develops forma plans. Board listens and learns, approves and monitors Board structure parallels administrative functions Board meetings process driven. Protocol rarely varies Staff transmits to board large quantities of technical data from few sources Type 2 Governance: Board and management think together to discover strategic priorities and drivers Board structure mirrors organization s strategic priorities Board meetings content-driven. Protocol often varies. Board and staff discuss strategic data from multiple sources 30

33 Type 3 Mode: Seeking meaning Strategic partnership with management, but not micro-management Changing the agenda of meetings (more qualitative discussion, less reports), the venue (meeting on a bus), the sources of information (invite in patients and care givers) Boundary spanners: inside and outside Making sense of past to shape the future 31

34 It boils down to The Q Factor The art of asking probing questions Sense-making with management Great boards seek first great questions rather than rushing to fast answers What are some of the great questions for modern hospital and health system boards? 32

35 Fiduciary Role Questions 1. What do we hold in trust, and for whom? 2. What are the fiduciary, but non-financial roles of our boards and committees? 3. How do we know the organization is fulfilling its mission? 4. Does a proposed initiative effectively advance our mission? 5. What safeguards do we have in place to avoid well publicized fiduciary failures? 6. If we held an annual stakeholders meeting, what would we say about the fiduciary performance and the board s effectiveness as a steward? 7. What is the evidence that we are a trustworthy organization? What are some examples of times in which we earned the title trustworthy? 8. What are our major financial vulnerabilities? What are we doing as an organization and a board to address them? 9. Even though we are not bound by Sarbanes-Oxley, are there some provisions we should adopt? 33

36 Strategic Role Questions 1. Is the business model of this healthcare system viable over the next years? If not, what has to change? 2. What forms of healthcare should we emphasize as an organization with multiple missions (care, teaching, research, employer, capital mover) 3. Can we flourish in a neighborhood in decline? If not, do we move or stimulate re-development? Do we know our neighbors? 4. Do we remain frustrated with Stark Laws that strangle innovation with physician relationships or lobby for change in the ground rules? 5. How do we make an impact on health gain as well as health care when few payers pay us to do it? 6. How fast do we adopt new science to enhance our quality, versus invest in process improvements and optimizing use of our current technologies? 7. How can we assure we don t just satisfy, but actually delight our patients, visitors, physicians, payers, politicians and employees? 34

37 Generate new thoughts by new questions Generate new questions by occasionally conducting different style meetings, retreats-advances, study tours, participants, town hall meetings, White Coat visits to clinical areas, Community Plunges, Meetings-on-abus, Learn from modern group engagement tools and techniques. High EQ, not more than IQ (Engagement Quotient) 35

38 Generative Questions: Build time for reflection and sense-making: 1. What three adjectives or short phrases best characterize this organization? 2. What will be most strikingly different about this organization in five years? 3. What do you hope will be most strikingly different about this organization in five years? 4. On what list, which you can create, would you like this organization to rank at the top? 5. Five years from today, what will this organization s key constituencies consider the most important legacy of the current board? 6. What will be most different about the board or how we govern in five years? 7. How would we respond if a donor offered a $50 million endowment to the one organization in our filed that has the best idea for becoming a more valuable public asset? 8. If we could successfully take over another organization, which one would we choose and why? 9. What headline would we most like to see about this organization? 10. What is the biggest gap between what the organization claims it is and what it actually is? 11. What should be atop the board s agenda for next year? 12. What external factors will most affect the organization in the next 24 months? 13. Are we using the best balanced scorecard to rack our performance? 14. Are we benchmarking against the right comparative players? 15. What is the most valuable action we could take to be a better board, committee or member? Promote Robust Dialogue, not always Robert s Rules of Order 36

39 Why have Mix of Board Types? 1. Mix of Roles and Contributions 2. Need to Optimize Community Engagement 3. Exploding Enterprises in Accountable Care 4. Need for Many Competencies 5. Work Load Needs to be Shared 6. Moderate Numbers Making Decisions 7. Tax-Exemption Pressure 37

40 System Board Foundation Advisory Council Physicians Hospital Senior Living Health Center Home Health Need Governance Authority Matrix Competency Mapping Themed Meeting Calendar Smart Group Charges and Work Plans Board Self-Assessment 38

41 Thank You! The Conversation Begins Jim Rice Cell: Minneapolis

42 How should we enhance our board and governance structures, systems, style to guide our future strategic initiatives? What should we start, stop and continue? 40

43 We should start... Actions We Should Start, Stop and/or Continue We should continue... We should stop... 41