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How Health Systems are Right-Sizing Their Boards

By Philip Betbeze  
   September 07, 2016

Recalibration takes time
CHI's board, though it is responsible for a system with operating revenues of $15.2 billion reported in fiscal year 2015, faces challenges similar to those with which almost all hospital and health system boards are having to come to grips.

"An increasing number of boards are asking the question: 'Are we structured in competency, number, and culture to lead a nine- or 10-figure business going forward?' The time it takes to recalibrate can be fairly significant."

Michael Peregrine, a partner with McDermott Will & Emery in the law firm's Chicago office, and an expert in corporate governance, says smart boards are spending considerable time and effort in self-evaluation, and in determining from a size and composition perspective whether it is well situated to lead the institution in the challenges ahead. Peregrine says he was not involved in CHI's work.

"An increasing number of boards are asking the question: 'Are we structured in competency, number, and culture to lead a nine- or 10-figure business going forward?' The time it takes to recalibrate can be fairly significant," he says.

Much of the upheaval can be attributed to the mushrooming competencies required to effectively run the business, especially as many aspects of the care continuum that hospitals and health systems once cheerfully ignored are increasingly important strategically as the clinical and financial incentives for outcomes-based reimbursement align. That drives the need for innovative acquisitions and partnerships, and sows the seeds for board overlap and confusion.

"All of a sudden the competencies required to run this business are really diverse—there are lots of structures and partnerships," says Peregrine.

Boards have to evaluate how to effectively provide oversight. Does it have the right people, expertise, and perspective, and are they engaged? Do some committees and legacy boards need to be merged or disbanded?

Philip Betbeze is the senior leadership editor at HealthLeaders.


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