American College of Healthcare Executives

Transcription

1 American College of Healthcare Executives Reference Manual For the ACHE Board of Governors Examination in Healthcare Management 2005 by the American College of Healthcare Executives. All rights reserved. No part of this document may be reproduced in any form without the written permission of the American College of Healthcare Executives. (02/05)

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3 Table of Contents EVALUATION iii INTRODUCTION 1 WHY BECOME A DIPLOMATE IN THE AMERICAN COLLEGE OF HEALTHCARE EXECUTIVES? 2 CHAPTER I 3 General Requirements for Advancement to Diplomate 3 Application Criteria 4 Education 4 Position 4 Continuing Education 5 Category I (ACHE Education) Credit 5 Category II (Non-ACHE Education) Credit 5 Participation and Leadership 6 References 6 Structured Interview 7 Application Review 8 What Happens after You Submit Your Diplomate Application? 8 Possible Decisions by the Credentials Committee 8 Authorized 8 Deferred 9 What Can You Do If You Are Deferred? 9 How Can You Get a Reconsideration? 11 CHAPTER II 13 The Board of Governors Examination in Healthcare Management 13 General Comments 14 Exam Administration 15 Site Selection Form 15 Which Exam Site Should You Select? 15 Cancellation Policy 16 Arrival Time on Exam Day 16 Rules of the Exam Room 16 Length of the Exam 17 Exam Development and Scoring 18 Exam Development 18 Exam Scoring 19 Notification of Results 19 Exam Retakes 20 CHAPTER III 22 Preparing for the Exam 22 The Exam 23 Overview 23 Definition of Knowledge Areas 24 ACHE Questions 26 Exam Outline 26 Generic Core 170 Questions 28 ACHE Manual for the Board of Governors Examination in Healthcare Management i

4 CHAPTER IV 31 Review of Exam Knowledge Areas 31 Governance and Organizational Structure 32 Human Resources 40 Finance 45 Healthcare Technology and Information Management 72 Quality and Performance Improvement 78 Laws and Regulations 86 Professionalism and Ethics 94 Healthcare 103 Management 110 Business 119 CHAPTER V 125 Study Hints and Mock Questions 125 Study Hints and Practical Tips 126 Mock Questions and Key Word Indicators 128 CHAPTER VI 139 Sample Test and Answers with Solutions 139 Sample Test 100 Questions 140 Answer Key/Solutions 163 Additional Questions 192 INDEX 209 ADDDENDUM 210 The following updated documents can be found in the About ACHE section of ache.org. Ethical Policy Statements Ethics Self-Assessment Code of Ethics Bylaws Regulations Governing Admission, Advancement, and Recertification ii ACHE Manual for the Board of Governors Examination in Healthcare Management

5 Evaluation In an effort to continuously improve the products ACHE offers its membership, we would like you to evaluate the Reference Manual for the Board of Governors Examination in Healthcare Management. Once you have completed your study efforts using this manual, we ask that you complete the following page and fax it back to our offices, along with any other comments, at: fax: (312) Division of Membership 1 N. Franklin St., Ste Chicago, IL ACHE Manual for the Board of Governors Examination in Healthcare Management iii

6 American College of Healthcare Executives Reference Manual Evaluation Form We would like you to evaluate the Reference Manual for the Board of Governors Examination in Healthcare Management. Please circle the number that most closely approximates your feelings using the scale provided. Please fax the evaluation form back to our offices at (312) Circle only one response on each line. Strongly Agree Agree Neutral Disagree Strongly Disagree 1. Accessing the Manual was simple. 2. The material was logically organized. 3. The Manual was written in a concise and readable format. 4. The figures used were easy to understand. 5. The Manual s content is current. 6. The Manual provides a realistic preview of the Board of Governors exam. 7. I will use the Manual as a reference Please fax completed evaluation form and any comments to: (312) iv ACHE Manual for the Board of Governors Examination in Healthcare Management

7 Introduction This manual has been developed to familiarize you with and help you prepare for the Board of Governors Examination in Healthcare Management. The examination is reviewed along with suggestions for studying. You are provided with an overview of each of the 10 knowledge areas on the examination as well as a list of study points. A sample test is included along with an answer key that is broken down by knowledge area. You can use the sample test to assess your areas of strength and weakness and to target those areas where you need to concentrate. As part of the application process, you will be required to participate in a structured interview with a Fellow prior to being authorized to sit for the written exam. To help you prepare for the interview, ACHE s Bylaws; Regulations Governing Admission, Advancement, and Recertification; and the Code of Ethics are presented along with an overview of the credentialing program and ACHE s Ethical Policy Statements. You will be expected to be thoroughly familiar with these documents when you complete your structured interview with your Fellow reference. After a careful and conscientious review of the materials in this manual, you should be well prepared to meet the challenge of advancing to Diplomate status. We sincerely hope that the information presented will help you in your advancement. We welcome suggestions that will help us to update the program and serve you better. If you need additional information, please contact ACHE s Division of Membership at (312) ACHE Manual for the Board of Governors Examination in Healthcare Management 1

8 Why Become a Diplomate in the American College of Healthcare Executives? The healthcare environment has undergone considerable change over the last decade. How do healthcare executives stay in control and ahead of the changes that are rocking the field? One answer is professional development and a commitment to lifelong learning. Professional development is the process by which you broaden your management skills and talent through self-assessment, self-development, and continuing education. One important aspect of professional development is advancing to Diplomate status. To advance to Diplomate status, you must have an authorized advancement application on file and you must successfully complete the Board of Governors Examination in Healthcare Management. Once you have earned Diplomate status, you have earned the right to refer to yourself as board certified in healthcare management and an ACHE Diplomate. We encourage you to use this language on your resume, press releases, business cards, letterhead, and any other communications where you want to let others know of your accomplishments. Remember to use your CHE credential. This credential represents your personal commitment to excellence in healthcare management. You worked for it. Now let it work for you. You owe it to yourself to make your professional advancement a priority. 2 ACHE Manual for the Board of Governors Examination in Healthcare Management

9 Chapter I General Requirements for Advancement to Diplomate

10 General Requirements Application Criteria Education To apply for advancement to Diplomate, you must have: a) post baccalaureate degree plus two years healthcare management experience; or b) bachelor s degree plus five years healthcare management experience. Position You must be employed in a healthcare executive management position or in a healthcare management-related position of equal responsibility in an acceptable health service parent or subsidiary organization or program, or in an acceptable organization or program influencing the operations, growth, and development of organizations, services, and/or programs of the health delivery system. Examples include acceptable positions in hospitals or health-related organizations or activities such as association management, consulting, government affairs, healthcare marketing/planning, or HMO/PPO management. Positions in other sectors of the healthcare field such as post acute care, mental health, medical group management, ambulatory care, or home care also qualify. Of course this list is by no means exhaustive. After a thorough review of your position description and organizational chart, a judgment is made on the appropriateness of that position for entry into ACHE. While entry-level positions are eligible for admission to ACHE, they are not necessarily appropriate for advancement. 4 ACHE Manual for the Board of Governors Examination in Healthcare Management

11 General Requirements Continuing Education Candidates for advancement are required to have attended at least 12 hours of continuing education over the most recent two-year period. These programs may be either Category I (ACHE education) or Category II (non-ache education) programs. Category I (ACHE Education) Credit: This includes educational programs, seminars, institutes, the annual Congress on Healthcare Management, and conferences conducted by ACHE. Specially designated ACHE self-directed programs are also included. All Category I (ACHE education) programs carry the statement: This program has been approved for [X] hours of Category I (ACHE education) credit toward advancement or recertification in ACHE. Category II (Non-ACHE Education) Credit: Face-to-face continuing education programs offered through other organizations are eligible for advancement credit to be determined by ACHE s Credentials Committee at the time of application review. To qualify, these courses must address a topic directly related to management practice, be sponsored by an organization qualified to present such continuing education programs, and present a sufficient number of contact hours to address the topic. You should maintain a record of participation in these programs to submit with your application for advancement to Diplomate. Note the program title, provider, and length in contact hours. You are encouraged to use your judgment to determine if a program will qualify. Note that formal university or college education courses that are required for attaining a degree do not qualify as Category II credit. ACHE Manual for the Board of Governors Examination in Healthcare Management 5

12 General Requirements ACHE will consider awarding Category II credit for preapproved interactive or self-directed educational programs conducted or sponsored by any organization qualified to provide educational programming in management. Participation and Leadership You are evaluated in two categories of participation and leadership over the previous two years: 1) participation in ACHE and healthcare activities at the community, state, regional, or national level, examples of which include annual meetings, Advancement Information Sessions, healthcare executive group meetings, and state and local hospital or healthcare association meeting breakfasts and luncheons, among others; 2) community, civic, or public service activities, including the Lions Club, United Way, professional women s groups, scouting, etc. Be sure to include leadership in the profession, including membership and elective and appointive offices with healthcare associations such as the Heart Association, state hospital/healthcare associations, the Red Cross, etc. By fulfilling this requirement, you have an opportunity to fully participate in your community and the healthcare system. You can become a valuable resource to the community, your colleagues, and the profession. References You will be asked to present the names of two ACHE affiliates who understand your background and credibility as a healthcare management professional. One reference must be an ACHE Fellow and the second can be a Diplomate or a Fellow. 6 ACHE Manual for the Board of Governors Examination in Healthcare Management

13 General Requirements Structured Interview Because we value the opportunity for ACHE Fellows to interact with Members, every Diplomate candidate will be required to participate in a structured interview with one of your Fellow references (or your only Fellow reference if your second reference is a Diplomate) prior to being authorized to sit for the exam. This interview can be arranged at the convenience of both parties face-to-face is strongly recommended, but via telephone is acceptable if a face-to-face meeting is not feasible. The interview questions will be listed on the reference form that comes with the Diplomate application. You should forward the reference form to the Fellow prior to your interview and make a copy for yourself so that you can refer to the questions during your interview. You will also be expected to be thoroughly familiar with ACHE s Bylaws; Regulations Governing Admission, Advancement, and Recertification; and the Code of Ethics as well as with ACHE s credentialing program and ACHE s Ethical Policy Statements. ACHE Manual for the Board of Governors Examination in Healthcare Management 7

14 General Requirements Application Review What Happens after You Submit Your Diplomate Application? Once we have received your application, it is reviewed by ACHE staff to make sure it is complete. It is then presented to the Credentials Committee. This committee, composed of ACHE Fellows, will review the application and apply the criteria for advancement. Thereafter, the Credentials Committee will recommend that your application be authorized or deferred. You will be informed of their in approximately 7 days after the application is submitted. Possible Decisions by the Credentials Committee Authorized: This decision means that your application is complete; you have met the criteria to take the Board of Governors Examination in Healthcare Management. You will receive a site selection form listing all scheduled paper-and-pencil offerings of the Board of Governors exam as well as your option to take the exam at one of the Prometric testing centers across the country. Details of the exam, including a functional outline, will be included. If you are taking the exam in the paper-andpencil format, you will receive notification from ACHE of the date, time, and location well in advance of the exam. If you schedule your exam at one of the Prometric sites, Prometric will provide you with the date and time of your exam. Once you select a testing option, you will return the form to ACHE with the $ registration fee. ACHE will send confirmation of your payment within five business days of receipt at ACHE. Neither ACHE nor Prometric will allow you to register to take the exam until payment has been received at ACHE. 8 ACHE Manual for the Board of Governors Examination in Healthcare Management

15 General Requirements Keep in mind that applications are valid for only two years. You must complete the examination process within two years of submitting the application to avoid having to submit another application and go through another committee review. Deferred: This decision means that either a portion of your application was incomplete or you have not yet fulfilled all the necessary requirements. The problem is usually in regard to documentation of your community leadership and participation, continuing education, position, or a missing reference. You will be informed of the specific area(s) in which a question exists. If you have any questions, you are strongly encouraged to contact the assistant director, credentialing, in the Division of Membership. What Can You Do If You Are Deferred? The first thing you need to know is that you do not need to resubmit an application. Refer to your letter of deferral to find out exactly why you were deferred. If you were deferred for: CONTINUING EDUCATION - CATEGORY I (ACHE EDUCATION) OR CATEGORY II (NON-ACHE EDUCATION), you must: 1) Attend the specified number of Category I or Category II contact hours. 2) Submit a letter listing evidence and dates of your attendance in continuing education and request immediate reconsideration of your application. ACHE Manual for the Board of Governors Examination in Healthcare Management 9

16 General Requirements COMMUNITY/CIVIC PARTICIPATION, you must: 1) Become involved in some aspect of your community through active participation in civic and public service activities. 2) Submit a letter requesting immediate reconsideration, listing evidence and dates of your involvement in community affairs. HEALTHCARE PARTICIPATION, you must: 1) Become involved in some aspect of healthcare affairs beyond the scope of your position through active participation in local, state, regional, or national healthcare activities. 2) Submit a letter requesting immediate reconsideration, giving evidence and dates of your involvement in healthcare affairs. Often, candidates are deferred only because they fail to include activities in which they already are involved. You can avoid this problem by being thorough in completing your application. MISSING OR UNSATISFACTORY REFERENCES, you must: 1) Contact any missing reference(s) and have them send another reference form. If your reference has misplaced the form, contact the Division of Membership and we will be happy to supply additional reference forms. 2) Refer to the reference requirements and submit a new reference to the Division of Membership if your previous reference was found ineligible. ACHE will send this individual a confidential inquiry to complete and return. 10 ACHE Manual for the Board of Governors Examination in Healthcare Management

17 General Requirements How Can You Get a Reconsideration? Once you have fulfilled the requirement(s) for which you were originally deferred, you should submit a written request for reconsideration to the Division of Membership. Since your application has already been acted upon by the Credentials Committee, there will be only a summary review of this additional information. Reconsideration requests are acted upon quickly. It is to your advantage to request reconsideration at the earliest possible opportunity. ACHE Manual for the Board of Governors Examination in Healthcare Management 11

18 General Requirements Notes: 12 ACHE Manual for the Board of Governors Examination in Healthcare Management

19 Chapter II The Board of Governors Examination in Healthcare Management

20 The Exam General Comments Considerable change in the healthcare delivery system over the last several years has resulted in a broader ACHE membership base in terms of age, education, employment, and career path. The Board of Governors exam must be fair and equitable to candidates from these diverse backgrounds. It must meet stringent educational testing standards to make sure that it is current and valid. To ensure that the exam is valid, current, and fair, it is revised annually. The revision process ensures that the credentialing program is fair to candidates from a wide variety of healthcare management settings. A professional examination service is retained to assist the Examinations Committee with the development of the new exam. In addition, content experts in each of the 10 knowledge areas are contracted to develop new exam questions. The result is a carefully structured, fair, and valid examination that addresses the needs of healthcare managers from a wide variety of backgrounds and settings. The Board of Governors Examination in Healthcare Management consists of a 170-question, multiple-choice, generic examination covering general knowledge of management principles in 10 healthcare knowledge areas. 14 ACHE Manual for the Board of Governors Examination in Healthcare Management

21 The Exam Exam Administration Exam Registration Form As soon as your application for advancement to Diplomate is authorized, you will receive an exam registration form, which serves to notify you of your testing options. The exam registration form, which lists the paper-and-pencil exam site for the year and allows you to request a Prometric testing center, will be mailed to you in plenty of time for you to select the most convenient exam location. Which Exam Site Should You Select? The examination is offered at Prometric testing centers across the country. Once authorized to take the exam, you will be able to schedule your computer-based exam at your convenience. The paper-and-pencil exam will continue to be offered twice during ACHE s annual Congress on Healthcare Management in March for those candidates who prefer that method of testing. ACHE Manual for the Board of Governors Examination in Healthcare Management 15

22 The Exam Cancellation Policy If you need to cancel your exam registration for the paper-and-pencil examination, we ask that you call the Division of Membership as soon as possible. You can reschedule for a computer-based examination, or receive a refund of your examination fee. If you need to cancel your exam registration with Prometric, please follow Prometric s cancellation policy. You will be assessed a cancellation fee equal to the examination fee if you fail to provide notice of cancellation to Prometric according to their cancellation policy. You have 90 days from the date on your confirmation letter to take the exam. Arrival Time on Exam Day The exam begins promptly at 8:00 a.m. for the paper-and-pencil exam. Plan to arrive at the exam room no later than 7:45 a.m. This will give you enough time to locate your seat and relax a little before the exam begins. Prometric will provide you with arrival time information for the computer-based exam. Rules of the Exam Room At the paper-and-pencil examination, a staff member from ACHE will administer the examination and answer procedural questions only. An honor system is in place during the examination; candidates are expected to adhere to that system. No discussion of the examination is permitted during the course of the day. Smoking is not allowed in the examination room. Prometric will inform you of the rules of the testing centers upon registration. 16 ACHE Manual for the Board of Governors Examination in Healthcare Management

23 The Exam Length of the Exam Both the paper-and-pencil exam and the computerized exam last four hours. ACHE Manual for the Board of Governors Examination in Healthcare Management 17

24 The Exam Exam Development and Scoring Exam Development ACHE cares about the validity, reliability, and credibility of the Board of Governors exam. Healthcare management experts spend 6 to 10 months annually engaged in a careful, deliberate process as they develop the exam for the current year. Each year, the Examinations Committee reviews the outline of the exam to make sure that it is up-to-date with current healthcare management trends and issues. When the Committee identifies a need to write new exam questions, ACHE Fellows and Diplomates offer assistance. Experts in health insurance, healthcare law, and other disciplines also provide guidance. Working within the parameters developed by professional testing consultants, the Examinations Committee and other credentialed ACHE affiliates then construct multiple-choice questions covering specific knowledge areas. Requirements are strict as every question must be based on an identifiable published authority. As writers submit questions, ACHE judges how appropriate they are for the examination. Those questions that pass this initial evaluation are then entered into the formal question review process, where a panel of experts reviews the questions. After the panel gives its approval, the questions are edited and reviewed by a professional consultant and then filed into a question bank for future use. The Examinations Committee pilot tests the items stored in the bank to ensure validity and reliability. Additionally, ACHE s professional exam consultants regularly analyze the performance of the exam questions. From this analysis, the questions that appear to be obsolete or produce statistically poor results are dropped from the question bank. 18 ACHE Manual for the Board of Governors Examination in Healthcare Management

25 The Exam To ensure a timely, workable, and useful examination, ACHE repeats this extended process at the end of each examination year. Exam Scoring On the paper-and-pencil examination, you will record your answers on computerized answer sheets. The answer sheets are sent directly to ACHE s testing consultant for scoring. Scores are currently derived on a criterionreferenced basis; that is, candidates are measured against a predetermined standard of performance, rather than being compared with other candidates. On the computer-based exams, your answers are input into Prometric s database and sent directly to ACHE s testing consultant. Notification of Results ACHE annual exam cycle begins at Congress each year. After the Congress exam, results are sent to ACHE s testing consultant for analysis and pass point setting. This analysis takes approximately eight weeks to complete. Therefore, scores are not available between March and April. If you take the paper-andpencil exam at Congress in March, you will be notified in 8-10 weeks. If you take the exam at a computerized testing center, you will receive your exam results immediately at the testing center. Passing the exam is quite an achievement. To honor that achievement, ACHE will have a Diplomate certificate printed for you. You are encouraged to use the credential CHE after your name, which stands for Certified Healthcare Executive. You will also receive information on the annual Convocation ceremony, at which you will be formally recognized. ACHE Manual for the Board of Governors Examination in Healthcare Management 19

26 The Exam Exam Retakes If you do not pass the exam given at Congress, you will receive with your notification letter a computerized analysis of those areas that gave you trouble on the exam. If you do not pass the exam at a computerized site, you will immediately receive a computerized analysis. You must have an authorized Diplomate application on file with ACHE before you may retake the exam. When you schedule to retake the exam, there will be a $200 retake fee. This fee is due before you retake the exam. 20 ACHE Manual for the Board of Governors Examination in Healthcare Management

27 The Exam Notes: ACHE Manual for the Board of Governors Examination in Healthcare Management 21

28 Chapter III Preparing for the Exam

29 Preparing for the Exam The Exam Overview The exam begins with a short biographical data questionnaire that takes less than five minutes to complete. The exam consists of 170 multiple-choice questions covering 10 healthcare knowledge areas. Each question has four possible answers, but only one is correct. A candidate s reported score on the written exam equals the total number of correct responses. Therefore, it is to your advantage to answer every question even when uncertain of the correct answer. There is no penalty for incorrect answers. No credit is given for questions with more than one response. Definitions for the 10 knowledge areas are found on the next few pages, followed by information on the exam s ACHE questions and an exam outline. A review of the knowledge areas starts on page 31, Chapter IV. The review includes an overview of each knowledge area followed by a list of specific knowledge required in each area. It is suggested that you thoroughly review and understand the subject matter outlined in each knowledge area section. Throughout Chapter IV are study suggestions. Mock questions, hints on taking multiple-choice examinations, and a key word identification exercise are included in Chapter V. Chapter VI, beginning on page 139, includes a sample exam to help you assess your performance in each knowledge area and to target the areas that need strengthening. ACHE Manual for the Board of Governors Examination in Healthcare Management 23

30 Preparing for the Exam Definition of Knowledge Areas The knowledge areas identified as pivotal for the practice of healthcare management are defined below. Governance and Organizational Structure This area deals with the development and analysis of the organizational structure and with delineating responsibility, authority, and accountability at all levels of the organization. Functions include the development and implementation of policies and procedures for the governance process. Human Resources This area deals with assessing the need for and the supply of professional and other personnel. Functions include recruitment, selection, training, compensation, and evaluation of such personnel and examining ways to evaluate productivity and monitor accountability for results. Finance This area deals with the planning, development, establishment, analysis, and assessment of financial management processes for an organization s capital, budget, accounting, and related reporting systems. Healthcare Technology and Information Management This covers both management information and clinical information systems, including computer-based support for management, assessing how current technologies and major innovations are changing the way healthcare executives 24 ACHE Manual for the Board of Governors Examination in Healthcare Management

31 Preparing for the Exam manage, using information systems for short- and long-range planning, using clinical information systems, and information systems acquisitions. Quality and Performance Improvement This area deals with the development, implementation, and evaluation of organizational accountability including TQM/CQI programs, quality assessment and assurance philosophies, policies, programs, and procedures. Laws and Regulations This area deals with identifying and interpreting the impact of government regulations and law on the organization; identifying the need for and working with others to develop new regulations and laws; investigating, monitoring, documenting, and enforcing existing statutes; and maintaining communication and cooperation with both public and private organizations. Professionalism and Ethics Professionalism deals with the development, monitoring, and maintenance of procedures to ensure that the needs of professional staff are met. Ethics includes identifying, monitoring, and disseminating codes of professional conduct; understanding the implications of ethical decisions, providing procedures to monitor standards of behavior within the organization; and determining, maintaining, and monitoring accountability procedures. ACHE Manual for the Board of Governors Examination in Healthcare Management 25

32 Preparing for the Exam Healthcare This area includes a broad range of organizations and professions involved in the delivery of healthcare. Included are managed care models, healthcare trends, and ancillary services provided. Management This area covers general management principles, planning, organizing, directing, and controlling in addressing overall organizational objectives. Business Knowledge that pertains to specific areas/concepts of the organization (e.g., marketing, business planning, strategic planning). ACHE Questions Effective with the pen-and-paper examination given at ACHE s Congress on Healthcare Management and all computerized examinations beginning in June 2002, Bylaws and Regulations Governing Admission, Advancement, and Recertification will no longer be part of the examination. ACHE s Code of Ethics, however, will still be included in the examination. Exam Outline The exam is composed of a 170-question, multiple-choice generic core exam assessing the candidate s general knowledge in each of 10 healthcare knowledge areas. Questions are developed based on knowledge statements that 26 ACHE Manual for the Board of Governors Examination in Healthcare Management

33 Preparing for the Exam have been derived from a validation study completed by a representative sample of members of the profession. The knowledge statements under each of the following knowledge areas represent the specifications for which the exam questions were constructed. One to three questions were developed for each of the statements. Therefore, by becoming familiar with these knowledge statements, you will get a general overview of the content of the test questions. ACHE Manual for the Board of Governors Examination in Healthcare Management 27

34 Preparing for the Exam Generic Core 170 Questions KNOWLEDGE AREA PERCENTAGE # OF QUESTIONS Governance and Organizational Structure 6% Knowledge of governance theory (e.g., mission and values, relationships with board of directors) 2. Knowledge of governance structure (e.g., bylaws, articles of incorporation, fiduciary responsibilities) 3. Knowledge of medical staff relationship to governing body and facility operation 4. Knowledge of legislative issues and advocacy processes Human Resources 11% Knowledge of performance management systems (e.g., performance-based evaluation, rewards system, disciplinary policies and procedures) 6. Knowledge of recruitment techniques 7. Knowledge of selection techniques (e.g., interviews) 8. Knowledge of labor relations strategies 9. Knowledge of staffing methodologies and productivity management (e.g., acuitybased staffing, flexible staffing, fixed staffing) 10. Knowledge of employee satisfaction measurement and improvement techniques 11. Knowledge of motivational techniques Finance 10% Knowledge of basic accounting principles (e.g., accounts receivable, cash flow) 13. Knowledge of financial management and financial analysis principles (e.g., balance sheets, income and cash flow statements, ratio analysis) 14. Knowledge of operating budget principles (e.g., fixed vs. flexible, zero-based 15. Knowledge of capital budgeting principles 16. Knowledge of reimbursement techniques 17. Knowledge of fundamental productivity measures (e.g., hours per patient day, cost per patient day, units of service per man hour, PMPM) Healthcare Technology and Information 7% 12 Management 18. Knowledge of the role and function of information technology in operations 19. Knowledge of the changes in information systems and technology trends 20. Knowledge of security requirement for information management (e.g., HIPAA) 21. Knowledge of information technology (e.g., e-commerce, Internet, intranet) Quality and Performance Improvement 11% Knowledge of benchmarking techniques 23. Knowledge of medical staff peer review and disciplinary processes) 28 ACHE Manual for the Board of Governors Examination in Healthcare Management

35 Preparing for the Exam 24. Knowledge of risk management principles and programs (e.g., insurance, education, safety, injury management, patient complaint) 25. Knowledge of performance and process improvement (e.g., CQI, TQM, QA/QI) 26. Knowledge of customer satisfaction principles and tools 27. Knowledge of clinical pathways and disease management 28. Knowledge of utilization review and management regulations Laws and Regulations 10% Knowledge of human resources laws and regulations (e.g., labor law, wage and hour, FMLA, FLSA, EEOC, ERISA, workers compensation) 30. Knowledge of confidentiality principles and laws (e.g., credentialing, intellectual property, peer review) 31. Knowledge of corporate compliance laws and regulations (e.g., physician recruitment, billing and coding practices, antitrust, conflict of interest, EMTALA) Professionalism and Ethics 8% Knowledge of professional codes of ethical behavior (e.g., ACHE, Hippocratic Oath, AMA) 33. Knowledge of patients rights and responsibilities 34. Knowledge of ethics committees roles, structure, and functions 35. Knowledge of cultural and spiritual diversity for patients and staff as they relate to healthcare needs 36. Knowledge of conflict of interest situations as defined by organizational bylaws, policies, and procedures Healthcare 14% Knowledge of healthcare and medical terminology 38. Knowledge of healthcare trends 39. Knowledge of managed care models, structures, and environment (e.g., group, staff, IPA, PPO) 40. Knowledge of the acute care sector 41. Knowledge of the ambulatory care sector 42. Knowledge of the interaction and integration among healthcare sectors 43. Knowledge of ancillary services (e.g., lab, radiology, therapies) 44. Knowledge of nursing, physicians, and allied health professionals roles Management 11% Knowledge of implementation planning (e.g., operational plan, management plan) 46. Knowledge of contingency planning (e.g., emergency preparedness) 47. Knowledge of organizational (systems) theory and structuring (e.g., span of control, chain of command, interrelationships of organizational units) 48. Knowledge of management functions (e.g., planning, organizing, directing, controlling) 49. Knowledge of leadership styles/techniques 50. Knowledge of mediation, negotiation, and dispute resolution techniques ACHE Manual for the Board of Governors Examination in Healthcare Management 29

36 Preparing for the Exam Business 12% Knowledge of basic statistical analysis 52. Knowledge of strategic planning principles 53. Knowledge of basic business contracts (e.g., legal and financial implications) 54. Knowledge of marketing principles and tools (e.g., market analysis, market research, sales, advertising) 55. Knowledge of techniques for business plan development and implementation 56. Knowledge of principles of public and community relations 57. Knowledge of the functions of organizational policies and procedures 30 ACHE Manual for the Board of Governors Examination in Healthcare Management

37 Chapter IV Review of Exam Knowledge Areas

38 Governance and Organizational Structure Governance and Organizational Structure Governance Governance is defined as a shared process of top-level organizational leadership, policy making, and decision making. Although the governing board has the ultimate authority and accountability, the CEO, senior management, and clinical leaders are also involved in top-level functions. Thus, governance is not a board only activity, but rather an interdependent partnership of leaders. 1 Purpose of the Governing Board The governing board is accountable to the owners of the organization and must attempt to identify and carry out their wishes as effectively as possible. There are clear differences in governing boards depending on whether the organization is for-profit or not-for-profit. In for-profit organizations, the focus is on maximizing profit. Board members of for-profit corporations are more likely to be compensated for their efforts. In a not-for-profit organization, the owners are the members of the community served. Not-for-profit board members are generally not compensated for their efforts. 2 Governing boards also differ when the organization is owned by a larger entity such as a university, government agency, or multihospital system. A committee or group from the larger organization performs the board functions in these organizations ACHE Manual for the Board of Governors Examination in Healthcare Management

39 Governance and Organizational Structure Regardless of the type of ownership and control, the following is a list of essential board functions: 4 1. Appoint the chief executive. 2. Establish the mission, vision, and long-range plan. 3. Approve the annual budget. 4. Appoint members of the medical staff. 5. Monitor performance against plans and budgets. Composition of the Governing Board The composition of the board differs by type of ownership. Traditionally, many governing board members of not-for-profit organizations have been selected from members of the community. Business and community leaders who have special skills are commonly chosen. For-profit organizations draw members from investors (owners), physicians, and, to a lesser extent, from the same groups as not-for-profit boards. 5 Much of the governing board s work is done by committee. Standing committees usually include executive, professional staff, human resources, quality assurance/improvement, finance, planning, public relations and development, investment, capital equipment and expenditure, and nomination. Increasingly, committees on ethics are also being added to many governing boards. The executive committee is the most powerful. It receives reports from other committees, monitors policy implementation, and provides interim decision making. The executive committee has continual monitoring responsibility and authority over the organization. 6 ACHE Manual for the Board of Governors Examination in Healthcare Management 33

40 Governance and Organizational Structure Relationship to the CEO One of the governing board s responsibilities is to recruit, select, and evaluate the CEO. The CEO assembles and organizes resources and develops the systems to carry out programs and policies approved by the governing board. The CEO s performance should be assessed regularly by the governing board. Performance is best measured against predetermined objective standards mutually identified and accepted by the CEO and governing board. Employment contracts for CEOs are increasingly common in healthcare organizations. These contracts set the terms of employment, including severance. The Triad The governing board delegates authority to the CEO, who acts as its agent and exercises that authority to achieve organizational objectives. 7 Since most healthcare delivery organizations have a medical/professional staff, governance becomes more complex. The CEO, governing board, and professional staff are known as a triad. The three entities are also sometimes referred to as the threelegged stool. Effective governance is increasingly a function of how well the board chairman, CEO, and medical staff president communicate and jointly approach the challenges of the healthcare organization. Recently, the American College of Healthcare Executives, American Hospital Association, American Medical Association, and Ernst & Young conducted the Partnership Study to better understand the roles of these key players of the governance team. 8 Participants in the study were leaders from general medical surgical, not-for-profit, state or local governmental hospitals. The study cited the following roles for the team: Board Chairmen: More than three-quarters of the board chairmen were elected to a definite term usually two years. However, 68 percent can be re-elected and 34 ACHE Manual for the Board of Governors Examination in Healthcare Management

41 Governance and Organizational Structure there is no limit to their tenure. Fewer than 10 percent are compensated for their roles. When asked to describe their major responsibilities on the board, or the board s major responsibilities, board chairmen say they are involved in the following activities: ensuring the hospital provides high-quality healthcare (85 percent), evaluating the CEO s performance (77 percent), and developing the hospital s strategic plan (74 percent). CEOs: Slightly fewer than half (46 percent) of the CEOs have employment contracts, and those who do typically have two-year contracts with an average severance of 12 months. Two-fifths of CEOs are voting members of their boards, although it is less common for CEOs of small hospitals to have voting privileges. Overall, 27 percent of the CEOs believe they always should represent their medical staff s interests to the board. Twice as many board chairmen and 40 percent of the medical staff presidents agreed. Although only 17 percent of the CEOs believe they should encourage medical staff representatives to discuss their hospital concerns with board members, 27 percent of board chairmen and 30 percent of the medical staff presidents hold this view. Medical Staff Presidents: Most medical staff presidents do not have limits on their terms in the position. This is particularly true at smaller hospitals (99 or fewer beds), where 87 percent do not have limits. Nearly all medical staff presidents (86 percent) state that a major part of their jobs is to represent the medical staff to administration. Seventy-three percent say it is their job to represent the medical staff to the board. A similar percentage of board chairmen and CEOs see these as key to the medical staff president s role. Both board chairmen and CEOs believe medical staff presidents should be more involved in strategic planning than the medical staff presidents indicate is actually the case. About 45 percent of medical staff presidents say strategic planning is a major part of their jobs, compared with 62 percent of board chairmen and 66 percent of CEOs who say it should be part of their jobs. ACHE Manual for the Board of Governors Examination in Healthcare Management 35

42 Governance and Organizational Structure Reports to the Board Reports to the board need to present measures of the processes and performance areas that are most critical to the organization s mission, vision, and strategic and operational goals. These measurements are frequently reported indicators of the organization s key strategic initiatives and critical processes. Reports generally include the following major topics: financial position, revenues and costs, clinical quality and appropriateness review, service volumes and environmental changes, and progress reports on ad hoc committees and ongoing projects. 9 Reports should also include evidence of how well the organization performed in meeting its own expectations. Reported measures should include established expectations, tolerance limits of variation, and highlighting of variance that exceeds those limits. This is not necessarily the same information as presented to management (e.g., it may be simplified), and it does not have to be the same as other like organizations (which may have different missions and financial constraints). Reports on these measures are generally made in aggregate since board members have limited time to review information and have global, not technical, expertise. Board s Function Regarding Quality of Care The board has the ultimate responsibility for quality of care in the organization. The board relies on peer review to carry out this function. The clinical staff should conduct peer review; management should ensure this is not too costly and should contract for peer review with external agencies. 36 ACHE Manual for the Board of Governors Examination in Healthcare Management

43 Governance and Organizational Structure Setting the Organization s Mission and Vision Generally, missions are statements that identify in broad terms the purposes for which the organization exists. Responsibility for the mission statement rests almost exclusively with the governing board and specifies the community served and services offered. The mission may also include financial constraints. 10 The mission is the foundation for all organization planning and is not frequently changed. The vision is broader, more emotionally and morally based, and more difficult to achieve than the mission. The mission expresses what the organization is committed to do, while the vision is broader. The vision should make clear what the organization hopes to achieve, what constraints it recognizes, and how it does business. 11 Together, these statements represent the most central desire of the owners and, as such, become the benchmark of all subsequent planning decisions. Revisions to the mission and vision statements require formal board action. Implementing Policies and Procedures A key element in the governance process is the development of policies. Policies are officially expressed or implied guidelines for behavior, decision making, and thinking within the organization. They help organizations attain objectives and, thus, must be consistent with the organization s mission. 12 Procedures are guides to action. Unlike policies which are guidelines to behavior, decision making, and thinking procedures guide actions for specific situations. Formal procedures give directions to employees in performing their duties. 13 ACHE Manual for the Board of Governors Examination in Healthcare Management 37

44 Governance and Organizational Structure General policies apply to the entire organization and are formulated by senior management. Procedures generally apply to a specific unit or department and are formulated by department managers, so long as they are consistent with general policy. Effective boards set and monitor the system for making policy decisions. Endnotes 1 Bader, B. S. CQI Progress Reports: The Dashboard Approach Provides a Better Way to Keep Boards Informed about Quality. Healthcare Executive. (September/October 1993): Griffith, J. R. The Well-Managed Community Hospital (4th ed.). Chicago: Health Administration Press, Chapters 2 and 3. 3 Griffith. Chapter 3. 4 Griffith. Chapter 3. 5 Griffith. Chapter 3. 6 Rakich, J., Longest, B., and Darr, K. Managing Health Services Organizations. Baltimore: Health Professions Press, Chapter 7. 7 Rakich, Longest, and Darr. Chapter 7. 8 Weil, P. and Douglas, S. Partnership Study. Healthcare Executive. (September/October 1993): Griffith. Chapter Griffith. Chapter Griffith. Chapter Rakich, Longest, and Darr. Chapter ACHE Manual for the Board of Governors Examination in Healthcare Management

45 Governance and Organizational Structure 13 Rakich, Longest, and Darr. Chapter 7. Study Guidelines Understand the role of the governing authority in establishing policy, providing management direction for the organization, achieving organizational goals, establishing standards for quality of care, selecting and hiring the CEO, and approving the budget. Understand how progress toward goals is measured. Know the functions of the CEO, including supporting external and board relations, the internal organization, and the medical/professional staff. Understand the components of an organization s bylaws. Know the internal and external members that should be included on the board of both for-profit and not-for-profit organizations. Understand the structure of the board and how the structure differs between community, for-profit, not-for-profit, and sectarian healthcare organizations. Understand the relationship between the CEO and the board. Understand the role of the board in setting the organization s mission statement and establishing the long-range plan. Understand the basic elements of a strategic plan, including the mission and vision statements, goals, and objectives. Understand the rules for operating as a tax-exempt organization. Understand the role of committees within healthcare organizations. Key board committees include: - ethics committee - executive committee - finance and budget committee - medical staff relations committee - nominating/evaluating committee - planning committee - quality assessment/improvement committee ACHE Manual for the Board of Governors Examination in Healthcare Management 39