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How Does Your Board Stack Up?

Carrie Vaughan, for HealthLeaders Media, September 12, 2008

Hospital boards aren't known for being the most engaged and active. And many are not prepared or equipped to adequately perform their duties as trustees of the organization. Historically, hospital board members served as a link to the community and their primary function was to secure resources for their hospitals to operate. Then, in the 1970s, court rulings found hospital boards legally accountable for the fiscal management and quality of services delivered. That served as a wake-up call for many CEOs and hospital trustees. The advent of the DRG system in the 1980s, increased competition, consumer-driven healthcare, and a push for hospital transparency, further demonstrated the need for governing boards to be actively involved—not only in fundraising and community relations efforts, but also in setting the direction of the organization, establishing goals, and holding hospital leadership—and themselves—accountable for the hospital's performance.

Great strides have been made on this front in the past 30 years—and yes, there are even some hospitals that are taking the lead. I have spoken with a few. They are changing their governance structure, enhancing board education, seeking out board members with expertise in areas like finance and quality, and adding rigorous oversight measures. Still, the vast majority of hospital boards is struggling to keep up with the challenges of running a healthcare organization in today's market.

One of the first steps to improve the effectiveness of your hospital governing board is to figure out what you are working with. What are your board's strengths and weaknesses? A recent study conducted by researchers at the Health Research & Educational Trust, aims to help senior leaders and trustees do just that. The report, An Empirical Taxonomy of Hospital Governing Board Roles, surveyed 1,334 hospitals and placed their governing boards into five categories based on their level of involvement in key areas of governance—mission and strategy setting, performance evaluation and oversight, and external relations. The categories are:

  1. Strategic active boards. Focus on setting the mission and strategy. These boards tend to have a relatively small number of trustees and operate in hospitals that are small, located in poor or rural areas, and have a high level of public ownership. This group represented 143 hospitals.
  2. Evaluative and strategic active boards. Focus on mission and strategy setting, and evaluation and oversight. These boards tend to operate in urban facilities. This group (303 hospitals) also had the lowest number of hospital beds per thousand people.
  3. Balanced active boards. Undertake all three roles—mission and strategy setting, performance evaluation and oversight, and external relations—with a relatively equal emphasis given to all three. These hospitals tend to be larger, system/network members, or teaching institutions. They are usually located in urban areas, have the highest per capita income, and the highest level of hospital competition. This was the largest group representing 564 hospitals.
  4. Strategic active and external boards. Focus on mission and strategy setting, and external relations. These hospitals tend to be larger, most likely nonprofit organizations, and/or teaching institutions, and they operate in areas with a high per capita income and high levels of medical or hospital resources. This group represented 239 hospitals.
  5. Inactive boards. Have a low level of activity in all three roles. This group represented only 85 hospitals, which tended to be the smallest hospitals and were most likely located in poor or rural communities, and had the lowest level of competition and physician supply.

This study helps provide a common language for CEOs and trustees to evaluate themselves, says Shoou-Yih Daniel Lee, PhD, one of the study's authors and an associate professor of health policy and management at the UNC School of Public Health. "You can look at the study as a mirror that could be put in front of hospital governing boards for them to know what they look like, and then to assess if they like what they see in the mirror. If they don't like [what they see], then maybe it can help them think about ways to change their image, to change their activity, to change their function," says Lee.

So which of these five categories yield the best performing hospitals—surely, the balanced active board, right? Well, that may not be the case and more research is definitely needed, cautions Lee. Hospitals have different missions, environmental challenges, and regulations. For example, some hospitals are serving a very disadvantaged patient population, and their board may need to focus more on external relations and reaching out to those patients than a hospital that serves a very affluent community. Governing boards and the administration should first determine what is the mission and focus of their hospital, and then they should build the board around those ideals, says Lee. "There should be some level of consistency between what the hospital is aiming to do and the function and activity of the board."

Still, I would argue that every board needs to have a strong evaluation and oversight component. And while most would agree with me, many experts say that it is easier said than done. Hospitals may not have the manpower, know-how, or resources to effectively focus on all three roles and maintain a high level of activity in all of those areas. Something has to give, they say, and in some cases it's the oversight role. But I'm not convinced that this is the area you want to skimp out on, especially since the governing board's responsibility—not only in areas of finance, but quality, as well—is coming under increasing scrutiny.

Editor's Note: We are gathering more than 40 senior-level healthcare executives to share their success stories at our annual Top Leadership Teams in Healthcare awards program. Don't miss your chance to mingle with your peers and exchange ideas. Please join us in Chicago October 16 and 17 for our Top Leadership Teams in Healthcare Conference.


Carrie Vaughan is leadership editor with HealthLeaders magazine. She can be reached at cvaughan@healthleadersmedia.com.

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