Better Information for the Board.

EXECUTIVE SUMMARY

Healthcare managers are making quicker, riskier decisions in an increasingly competitive and regulated environment. Questions have been raised regarding the accountability and performance of boards of these organizations, as board members are not always selected based on their competencies to guide such decisions. Adapting mission and strategy and monitoring organizational performance require information that boards get mostly from management. The purpose of this study was to examine the information that boards regularly get to carry out their functions.

I obtained board documents from four not-for-profit hospitals and health systems in different boroughs of New York City. At each institution, I conducted one-hour interviews with at least three board members and three top managers. I also attended at least one board or executive committee meeting and one additional meeting, usually of the finance committee.

Principal findings were that the boards get too much data, the same data that management gets, and little comparative data on performance of similar bench-marked organizations. Board members and managers are satisfied with the information that board members get and have no plans to improve their system of shaping, or the quality of, information.

Key recommendations to boards and managers are: (1) boards must take greater responsibility for identifying the information that they get and how they wish to get it, (2) managers must ensure that measurable objectives are developed, against which organizational performance can be evaluated, (3) boards must get information that is targeted and shaped to better fit board functions, (4) managers must develop information sets for main service lines, (5) boards must get information on the expectations and satisfaction levels of key stakeholders, (6) boards must get better and more focused information on performance of benchmarked institutions, and (7) boards must get less hospital operating data on a monthly basis.

INTRODUCTION

This article is divided into seven sections: (1) issues and concerns in healthcare management literature about boards and the information they get, (2) purpose and methodology of the study, (3) what interviewees said are the main functions of their governing boards, (4) what interviewees said about the information that their governing boards get, (5) a discussion of interviewees' observations on main board functions and the adequacy and processing of the information their boards get, (6) recommendations for improving that information, and (7) limitations of the study and suggestions for future research.

Issues and Concerns About Boards

Governance is a system for making important decisions, and the board is that part of the organization that under state law designs or participates in the governance system (Kovner 1999). Self-perpetuating not-for-profit boards lack the accountability that for-profit boards have to shareholders and that government has to voters. Critical questions have been raised regarding the accountability and performance of boards of not-for-profit organizations and regarding the quality of the information they receive to carry out board functions (Umbdenstock and Hageman 1990; Pointer, Alexander, and Zuckerman 1995). Although not everyone agrees with Carver (1990) that boards should function as the owners of these organizations, there is a general consensus that board functions should include guiding long-range strategic decisions, evaluating organizational and management performance, and managing the board (Bowen 1994; Carver 1990; Pointer and Ewell 1994; Kovner 1999). Boards are also engaged, to varying extents, in fundraising. According to Sofaer, Lammers, and Pourat (1991), little is known about how hospital and health system boards actually function or about any correlation between board and organizational performance.

The environment facing healthcare organizations is changing rapidly. These organizations are facing more competition, increasingly managing more risk, and facing more demanding customers. Not-for-profit hospitals and health systems are becoming larger and more complex, often merging to obtain sufficient bargaining power with managed care organizations, many of which are national, investor-owned corporations (Kovner 1999).

Pointer, Alexander, and Zuckerman (1995) suggest that the boards of large not-for-profit healthcare organizations will be increasingly responsible for a more-or-less integrated network of organizations rather than a single institution and that board functions and activities will change accordingly. They suggest that rather than making decisions about management actions, such as approval of construction plans, budget changes, physician privileges, and response to malpractice events, boards will be increasingly shaping and making complex strategic decisions, such as investment in recruitment of primary care physicians, clinical integration in merged or affiliated organizations, and investment in information technology and in radical improvement of quality and service to customers.

Issues and Concerns About the Information Boards Get

Griffith, Sahney, and Mohr (1995) suggest that boards cannot implement effective decision-making processes without information about expectations and satisfaction levels of key stakeholders. Little research, other than a survey conducted by Ernst & Young (1997), has been done to document the kinds of information not-for-profit boards regularly receive. For example, only one listing for "governance information" appears and three of 266 pages are devoted to the topic in Pointer and Ewell's (1994) authoritative work on hospital and health system governance. In Pointer and Orlikoff's (1999) 292-page book Board Work, six citations and nine pages are devoted to the topic, which shows increasing emphasis. Orlikoff and Totten (1996) identified the following common flaws in board information:

1. Reports and information do not flow from or support the explicitly defined role of the board on the issue.

2. There are no guidelines regarding what information should be reported to the board or how it should be reported.

3. Reports provide data, such as clinical indicators, but not information, such as trends or projections.

4. Meeting minutes are used as a vehicle for providing information to the board (e.g., the finance committee minutes are used as the financial report to the board).

5. Too much material is presented in the reports.

6. Governance reports are simply management or medical staff information with a new title.

7. Ineffective report formats blunt the board's understanding of important information.

8. Thick board agenda packets are distributed to board members so close to the scheduled meeting that they do not allow board members time to read all the material.

9. Significant amounts of material are routinely distributed to board members for review at the board meeting.

Neither the Ernst & Young (1997) survey nor any of the other literature referenced here provides evidence that not-for-profit hospital and health system boards regularly get the information they need to carry out their functions as owners of, or decision makers in, these organizations. Of course many of these boards have never explicitly reached agreement on the main functions of the board nor have they specified or shaped organizational objectives against which board performance can be evaluated.

METHODS

The purpose of the study was to find out what kinds of information boards currently get and to determine whether this information is adequate for boards to carry out their functions.

Study hospitals were selected from all not-for-profit hospitals in New York City. Officials at the United Hospital Fund (UHF) and the Greater Hospital Association of New York City (GNYHA) recommended ten out of 47 not-for-profit hospitals, some of which are in each of the city's five boroughs. The study sample was limited to four hospitals because of funding constraints, so hospitals in two of the five boroughs were combined for selection purposes. The UHF and GNYHA officials were asked to recommend hospitals that had not been recently merged, were not suffering an acute financial crisis, had top leadership with length of tenure over two years, and whose job security was not known to be precarious. I asked the CEOs of seven hospitals to participate until the desired sample of four hospitals in the different boroughs was attained. The characteristics of this convenience sample, therefore, limit the generalizability of the study findings to other hospitals in New York City or elsewhere.

The four study hospitals ranged in size, from under 250 beds to over 1,000 beds, and in ambulatory visits, from less than 130,000 to more than 1.5 million. Operating results of these institutions ranged from millions of dollars in surpluses to millions of dollars in losses. The boards of the study hospitals ranged in size from under ten to over 50 members. The board members interviewed included all four board chairs and at least two other board members selected by the CEO at each hospital. The managers interviewed included all four chief executive officers and at least two other managers selected by the CEO at each hospital and health system, such as the chief operating officer, the chief financial officer, and the medical director. Interviewees were assured of confidentiality. I conducted 28 interviews using two structured questionnaires--one for board members (12) and one for managers (16). I took notes and transcribed them after the interviews were concluded. I then systematically reviewed the interviews and the responses by question to identify themes. Responses from the interviews were selected to support the themes.

RESULTS

Main Board Functions

Regarding main board functions, the interviewees said that their boards (1) are involved with setting organizational mission and with shaping and monitoring strategic direction, and (2) provide oversight of finances and quality of care. A third board function specified by some board members at three of the four study hospitals, usually cited after the other two main functions are referred to, is for board members to act as advocates for the community with the hospital and for the hospital with the community.

There was a lack of agreement among interviewees across and within hospitals on main board functions or concerning the priority of board activities within any function. Below are sample responses (each represents a different hospital) from board members regarding the main board functions at their hospital:

      "The board reviews reports of subsidiary committees and votes yes or no.
   The board does mainly finance and planning to keep the place afloat. We
   have a bunch of experienced guys in corporate finance who understand
   numbers and business planning."

      "The main functions of our board are to set policy [and] give direction
   on the mission of the hospital and the community. We follow our mission and
   the plan we set out eight to ten years ago as modified. The board
   represents the community."

      "The main function of the board is to select the CEO. We provide vision
   and oversight. Here, we focus on the community to provide the finest
   healthcare possible.... We don't focus so much on teaching but on clinical
   care."

      "The main board function is to comply with the Joint Commission mandate
   as a board--to conduct the oversight function. Operationally, we must
   understand how the hospital is run, know about specific problems, and offer
   solutions to problems. The board advises, assists, and plans for the
   future."

There was also a lack of consensus among top-manager interviewees, as shown in their responses below:

      "The main functions of the board are to see that assets are used in the
   best interest of the community and to fulfill the mission. The board has a
   philanthropic function as well to advance goals and objectives, but we have
   never been adept at this."

      "The main functions of the board are to provide financial and quality
   oversight and to approve strategic direction."

      "The main functions of the board are to be community advocates in the
   hospital [and] to provide advice and counsel. Our board does not do much
   fundraising."

      "The main function is to ensure that the institution continues to carry
   out its mission, vision, and goals. This is done by getting direct reports
   from the medical staff who runs the hospital on a day-to-day basis and
   getting information from the community we serve, listening to presentations
   from speakers outside the organization, and interacting with government and
   political bodies."

Adequacy of Information In response to the question "Do boards get adequate information to carry out their functions?", interviewees said they are generally satisfied with the information that their boards are receiving; as shown in the sample responses below, representing different hospitals:

      "The information they get is wonderful."

      "The information we get is pretty good."

      "The information is adequate."

      "The board gets adequate information."

Only one board member (out of 12) said that the information board members get is insufficient to carry out their functions, which he cited as "determining mission and determining policy in pursuit of that mission." This board member said that he had raised this problem with management, who agreed to the facts but never followed up.

Boards said they receive a great deal of information about hospital finances, and managers said they get the same information. Board members are also beginning to get more of the same information about quality as managers do. Generally, boards get little information about performance in main lines of business, such as heart, cancer, and women's health, or relative to performance of similar and best-practicing institutions. Board members get little information regarding expectations of physicians and customers and how well these stakeholders perceive their expectations are being met.

Finance and Quality

Interviewees responded that their boards get a lot of data on finance and quality. Here are sample responses regarding information the board gets on finances:

      "I get more information than anyone else--detailed financial stuff. The
   executive committee gets condensed financial statements. Not much happens
   that we don't know about. Management runs things by us. Our financial
   reports are concise, informative, and allow for comparative analysis. The
   auditor attends board meetings."

      "Days in accounts receivable and cash position is a management issue.
   Management does share with the board that we're like other hospitals in the
   city. Our numbers are scary for people not used to healthcare...."

Here are sample responses regarding information the board gets in order to oversee quality:

      "At the medical-executive meeting, I present every month as president of
   the medical staff. I tell them what is important to physicians in the
   community. System problems are discussed through the quality assurance
   committee."

      "We meet every month ... to improve appointment of physicians and not to
   rubber stamp. We get the packet [and] set up charts highlighting areas we
   think are important, such as new and old malpractice; peer reviews; and
   standard of care met, unmet, and questionable. Charts are randomly picked
   based on results, and incidents, CME credits, and meeting attendance are
   reported to the state. We have returned some names for reconsideration to
   departmental chiefs, and some aren't resubmitted. The chairs see that we're
   trying to help them."

Interviewees did not generally suggest that their boards should get information on finances and quality other than what they currently receive.

Top Management and Board Performance

Board members and top managers were asked whether the information that their boards get is adequate to monitor board and management performance. Top management is evaluated once annually at all study hospitals by a special board committee that reviews management compensation. Following are some responses about information the board gets regularly to evaluate top-management performance:

      "We get information on hospital performance. What we don't get is
   [information on] management performance compared to a peer group. We've
   talked about it. The CEO feels that other people's numbers aren't reliable
   enough to make apples-to-apples comparisons."

      "The chair tells us what's going on."

Evaluation of board performance is required by the Joint Commission on Accreditation of Healthcare Organizations and is done once annually at all study hospitals by board members by filling out questionnaires. The data from this evaluation are assembled by management and presented to the board or to a board committee. Following are some responses about information the board gets regularly to evaluate its own performance:

      "We keep attendance. If you miss 50 percent of the meetings, you're out.
   Al age 70, you become trustee emeritus. There is an annual written
   evaluation. Each member is asked to comment on him or herself, other
   members, and the chair. They can sign it or it is anonymous. We send people
   to seminars. There is an annual board retreat, where we try and get
   trustees and physicians together."

      "We do an annual assessment. Board members get a packet in the mail,
   which is compiled and shared. We look at fundraising and at projects if
   board members are so engaged."

Interviewees did not generally suggest that their boards should get more adequate information on top management and board to help evaluate their performance other than what they currently receive.

Participation at Board Meetings

Board member participation was observed at the meetings I attended. I wanted to find out whether board members were passive receivers of information presented by top managers or whether they asked critical questions and actively participated in the discussion. At the four board or executive committee meetings I attended, each generally lasting two to two and one-half hours, board members participated actively in the discussion. They asked questions or made comments on the average of 25 questions or comments per meeting, or nine per hour. At one finance committee meeting, board members asked questions or made comments (mostly asked questions) on 70 occasions. Following are some of the questions asked at this finance committee meeting:

      "Are we sharing losses?" (On a joint project with another provider)

      "Is the change in the reserve budget going to distort our monthly
   numbers?"

      "Do other [organizations] make money in home care?"

      "How does the interest we get compare with what we pay out on the
   bonds?"

      "Did the physical facilities committee vote on this?"

Following are some comments made by board members at the same finance committee meeting:

      "We want to make the last three months' figures as accurate as
   possible."

      "The assumptions that management has made are conservative and correct.
   Cumulatively, they will not all happen, however; the effects would be too
   Draconian for all hospitals. We must take that into account in our
   budgeting."

      "I have read articles about his company--that it is overextended with
   staff and finances in question. We must cover the downside if something
   happens to our partner and we are stuck."

Interviewees did not generally suggest that their boards should participate differently at these meetings.

CONCLUSIONS AND DISCUSSION

Main Board Functions

No consensus was articulated on what the main board functions are in the four study hospitals, and no measurable objectives were specified at any hospital against which board contribution to the organization could be evaluated. Main board functions at the four hospitals, according to the interviewees, compare with what is specified in the literature referenced here, as shown in Figure 1.

FIGURE 1: Main Board Functions

Literature Views               Interviewee Views

Shape mission and review
 strategy                      Shape mission and review strategy
Evaluate organizational and
 managerial performance        Oversee finance and quality
Manage board affairs           Advocate for and to the community

Interviewees appeared to equate evaluating organizational performance with monitoring finance and quality data. "Managing board affairs" may have been omitted from the Interviewee Views column as a main board function because the interviewees may have misinterpreted the question as "What are the main board functions other that managing its own affairs?" "Advocate for and to the community" may have been cited by long-term board members as a main board function because it was a main function years ago when hospitals were smaller and more community oriented. And perhaps the board member functions as a community advocate or a hospital advocate to the community.

Adequacy of Information

Regarding information that boards get on mission and strategy, there was little discussion of these topics at the board meetings I attended. (Mission and strategy were discussed, however, at one hospital's subcommittee meeting on strategy.) Rather, the focus at these board meetings was on obtaining funding for proposed expansions or renovations or responding to financial and regulatory threats. Three of the four study hospitals lacked measurable objectives against which the board could measure hospital performance. (The fourth hospital had 109 measurable objectives, which precluded meaningful discussion of many of these objectives given the limited time of board meetings.)

But is the information that boards are getting on finance and quality adequate for board members to carry out their functions? The data that boards receive are often voluminous. Although the data may be the same that managers get, the information usually has not been shaped to fit the board's oversight function; therefore, boards lack information. For example, at the first hospital the board does not get financial information about market share, return on investment, or customer satisfaction by line of business. At the second hospital, the quality assurance committee does not examine in any detail the processes of care and how these compare with best-practice institutions. At the third hospital, the quality committee reviews documented cases of bad performance but does not sort out differences in care processes to encourage practice to meet higher standards of care. It seems questionable that managers and the board at the fourth hospital decided that managers not share basic financial information with board members when the hospital is in serious financial difficulty.

Regarding the board's function as an advocate for and to the community, boards did not discuss, at the meetings I attended or in the interviews, health problems in the community or hospital strategies to improve community health. Interviewees did not comment on the adequacy of the information their boards receive on their hospital's role as an advocate for community health.

Because interviewees did not say that evaluating performance of top management and the board is a main board function, it is not surprising that board members at all study hospitals (1) do not receive information regularly to monitor such performance or (2) had few suggestions on making the information they do receive "more adequate."

Processing of Information

An emerging trend at all study hospitals is the specialization and development of board committees. Committees, such as those on quality and finance, have fewer members than the board itself, allowing greater discussion in depth. Committee members build up special expertise. Committees function almost as separate boards, with the full board ratifying, rather than fully discussing, committee decisions. At two hospitals, the number of annual full board meetings had been reduced in recent years. At another hospital, the CEO advised the executive committee to act as a board and believed that it was in the executive committee meetings, "rather than at board meetings, where the action occurred." Better discussions can be facilitated by fewer and more informed board members meeting as a committee. But given the number of board committees, committees increase board fragmentation.

Board members are unpaid, the time they choose to spend on hospital and health system affairs is limited, and the information that they are asked to make sense of is often voluminous. Therefore, we cannot expect them to process all the information they receive. Hospital and health systems operations are maddeningly complex, and board members usually are not selected based on their competencies in processing this complex information. Board agendas are crowded, and time spent on any agenda item is limited. See Figure 2 for the agenda of a pilot hospital in this study. The agenda includes the amount of time each item is allotted.

FIGURE 2: Agenda of a Medical Center Board Meeting, March 1999

* Dinner                                (40 minutes)
* Call to order. Approval of minutes    (10 minutes)
* Chair report                          (20 minutes)
* Treasurer report                      (20 minutes)
* Nursing home report                   ( 5 minutes)
* Health Science Center report          ( 5 minutes)
* CEO report                            (15 minutes)
* Y2K presentation                      (40 minutes)
* Performance improvement report        ( 1 minute)
* Medical director report               ( 1 minute)
* President of medical staff report     ( 1 minute)
* Legal counsel report                  (15 minutes)
* Next meeting. Adjournment             ( 2 minutes)

The agenda in Figure 2 is typical for the study hospitals. At all board meetings I attended, many topics were listed on the agenda, but little time was spent on them, and emphasis was given to reporting on current events rather than on shaping and overseeing strategic and comparative performance. The usefulness of special presentations at board meetings is limited in providing boards with adequate information. This is illustrated by the following remarks of one board member:

   "We do get reports on special topics and ask questions for our
   understanding, but we are not told what the field says nor are we asked for
   our direction. They give us information for which we have no need,
   authority, nor opportunity to decide."

RECOMMENDATIONS TO BOARDS AND MANAGERS

There are two alternating reactions to the data presented to the board. First, board members and top management are satisfied with the information that their boards get and believe that nothing drastic needs to be done, at any of the four hospitals, until "there is a problem." Second, boards do react. Despite their current satisfaction with the information they receive, boards are aware that their organizations are becoming larger and more complex and are facing greater risk and more demanding customers. In this case, assuming a skilled and experienced board, it makes sense to give board members the proper and necessary information to help them better carry out their functions. This is the premise upon which the following three recommendations on improving that information are based.

1. Shape Mission and Review Strategy. Boards should take greater responsibility for getting better information. In short, boards must behave as if they are owners of the institution. Boards are not likely to object to getting better information, especially when the costs of obtaining the data are relatively modest. On the other hand, based on the study data, these boards do not see getting better information at least as a high priority.

Boards need better information on the expectations and satisfaction of institutional stakeholders such as physicians and customers. Institutions with high performance as seen by stakeholders will increasingly disseminate this information to purchasers to gain market share and to attract and retain the services of key physicians and nurses. Generating this kind of information is not yet seen as an important management priority, even in larger hospitals and health systems, and managers may fear negative results, which they see as a reflection on their own performance.

2. Evaluate Organizational and Managerial Performance. Boards should see that measurable objectives are developed by management, against which organizational performance can be evaluated. Some subset of these objectives are reported regularly as critical performance indicators. Best-performing hospitals and health systems in the nation are beginning to specify objectives, and one of the study hospitals is already financially rewarding managers based on their goal attainment. On the other hand, the board's specifying and agreeing upon such objectives is costly in time, particularly initially, and raises conflict. And when top management is risk-averse and no outside benchmarks are used, this can result in managers setting goals that are too low.

Boards need to integrate information on finance, quality, and service performance in main lines of business, especially as physician chiefs of large healthcare services become more sophisticated and as greater demands are placed on them for operating results. These physician managers will be more likely to demand this information and information about competitors, which is necessary to run what many of them perceive as their businesses. Such information will be costly to generate because accounting systems currently do not track clinical operations in this way and most large hospital organizations are not designed and managed as a set of highly autonomous medical divisions.

Boards need better information on benchmarks and standards in the industry, rather than rely only on their own historical and budgeted performance in making operating comparisons. Leadership wants to know best-practice potential in comparable circumstances to gain market share, but fair comparisons may be constrained by the limited number of similar institutions.

3. Manage Board Affairs. Boards should see that they shape and target the information, such as is displayed in focused performance dashboards. (See Table 1 and Figure 3 for two versions of an example.) One of the study hospitals has already moved in this direction for certain indicators and another has developed a longer list of clinical performance indicators, which is regularly distributed to the board. However, performance scorecards are easier to develop than to make effective use of and to keep regularly updated so that indicators and benchmarks are most appropriate. Up to now, most boards and top-management teams have not ranked performance scorecards as a major board priority.

TABLE 1: Proposed Medical Center Performance Scorecard

                               Actual      Target      Variance(3)
                                YTD         YTD
                                1998(1)     1998(2)

Financial
Excess of Revenues over
 Expenses                      $2.709m     $1.076          60%
Cash and Investments           $7.802      $6.758          13%
Number of Discharges           17,324      17,348         (.1%)
Medical Loss Ratio (HP)        72.42%      80.85%          11%

Growth and Development
Case Mix Index                  1.32        1.38           (4%)
Number Inpatient Surgical
 Procedures                    3,882       4,373          (12%)
Ambulatory Care Visits
 ('000s)                       438.7       409.7            6%
Managed Care Member Months
 ('000s)                       456.2       497.2           (8%)

Quality
Significant Patient
 Incidents (LMC)                 0           0              --
Cesarean Section Rates         21.6%       20.7%           (4%)
% Patients without Pressure
 Sores (ALH)                     96%        95+%            1%
Immunization Rate (HP)           82%         87%           (6%)

Customer Satisfaction
 (Highly Satisfied)
Inpatients (LMC)               3.32(4)      3.51           (5%)
Outpatients (FHC)                88%         90%           (2%)
Employees                        80%         95%          (18%)
Health Plus Members              97%         99%           (2%)

(1) Represents actual figures.

(2) Targets chosen based on a variety of sources such as the institution's strategic plan, NY State Department of Health data, or the comparative database used by a national company performing patient surveys.

(3) Percentages are determined by dividing the actual number into the difference between actual and target. For example, the actual Medical Loss Ratio (72.42%) divided by the difference (8.43%) = 11%.

(4) Scale of satisfaction is 1 to 4, where 4 = very satisfied. Source: Lutheran Medical Center. 1999.

[Figure 3 ILLUSTRATION OMITTED]

Boards need less information on operating statistics on a monthly basis. Boards will grasp the value of being given better and less information, particularly if they are willing to restructure their meetings to make more effective use of their time together. On the other hand, some board members may be unwilling to give up the voluminous information they now receive because they will be "missing something."

LIMITATIONS OF THE STUDY

Generalizations from the above recommendations are constrained as they were generated from a study based on four New York City hospitals. Moreover, I interviewed only a minority of board members and top managers at each hospital and attended only two or three board and committee meetings at each site. Further research is needed, surveying a larger number of hospital and health systems and validating and describing in depth the best practices of top-performing boards.

References

Bowen, W. 1994. Inside the Boardroom: Governance by Directors and Trustees. New York: Wiley.

Carver, J. 1990. Boards That Make a Difference. San Francisco: Jossey-Bass.

Ernst & Young LLP. 1997. Shining Light on Your Board's Passage to the Future. Chicago: Ernst & Young.

Griffith, J. R., V. K. Sahney, and R. A. Mohr. 1995. Reengineering Health Care: Building on CQI. Chicago: Health Administration Press.

Kovner, A. R. 1999. "Governance and Management." In Health Care Delivery in the United States, 6th edition by A. R. Kovner and S. Jonas (eds). New York: Springer.

Orlikoff, J. E., and M. K. Totten. 1996. Trustee Workbook 49 (6).

Pointer, D. D., J. A. Alexander, and H. S. Zuckerman. 1995. "The Governance Challenge: Preserving Community Mission with Integrated Health Systems." Frontiers of Health Services Management 11 (3): 9-10.

Pointer, D. D., and C. M. Ewell. 1994. Really Governing: How Health System and Hospital Boards Can Make More of a Difference. Albany NY: Delmar.

Pointer, D. D., and J. E. Orlikoff. 1999. Board Work. San Francisco: Jossey-Bass.

Sofaer, S., J. Lammers, and N. Pourat. 1991. "What Do We Really Know About the Impact of Boards on Nonprofit Hospital Performance?" The Journal of Health Administration Education 9 (4): 425-442.

Umbdenstock, R., and W. M. Hageman. 1990. "The Five Critical Areas for Effective Governance of Not-For-Profit Hospitals." Hospital & Health Services Administration 35 (4): 481-492.

PRACTITIONER APPLICATION

Robert S. Curtis, DHA, president and CEO, Cardinal Health System, Muncie, Indiana 

Through a series of well-publicized events, for-profit corporations have learned to understand that as corporate citizens much is expected of them, not only by their shareholders but by the general public as well. In the wake of recent antitrust actions, price fixing, scandals, and promises not kept, corporations have belatedly come to recognize, through the loss of public trust, their responsibilities as good citizens. For better or worse, not-for-profit healthcare organizations are in an industry that is undergoing profound and rapid change. Much of what is driving this change is the direct result of healthcare organizations' lack of recognition of their role as good corporate citizens and their accountability to the broader public.

Historically, the major decision makers (i.e., healthcare executives, physicians, and to some extent trustees) in the provision of healthcare were given the public's trust in determining what programs and services were best for their communities. These same decision makers were then not even held to the same minimum standards expected by shareholders of for-profit corporations, let alone held accountable by their communities. In some respects, advantage of trust and the expectations of those sewed were ignored. In part because of increased consumer education and access to health information we now have an empowered public that is more knowledgeable and demanding in its expectations for individual healthcare. This more knowledgeable and participative public is calling into question our prior strategies, as well as our business practices and the quality of services we provide. It is demanding accountability from a public asset. As a result, healthcare organizations, and increasingly their boards, are coming under scrutiny not only by state and federal authorities but also by their communities.

As stewards of what is arguably a community's most important asset, boards have both a moral and a legal obligation to carry out their duties in a responsible manner and to ensure that their organizations are good citizens in the delivery of healthcare. First and foremost, boards must reach a consensus on and understanding of their role in ensuring the performance of a public asset in the community. Once the board understands its role, only then can it determine the type of information necessary to carry out its role as a steward of the community's healthcare assets. To paraphrase the Cheshire cat in Alice and Wonderland, "If you don't know what your role is, then any information will help you carry it out."

The responses of the participants in Dr. Kovner's article point out the need for healthcare executives to educate their boards more on their role as trustees for the community's health and ensure that they are provided with the right information to carry out that role. We are all becoming increasingly accountable to the public for our actions and if we do not adequately address the issues posed in Dr. Kovner's study, then we will continue to come under increased scrutiny.

It may now be time to take that next step and ask our communities what they expect from their healthcare organizations and trustees. Until we ask such a question and encourage the community's participation, we will continue to lack public trust that will drive increased regulation and accountability by state and federal authorities.

For more information on this article, please contact Dr. Kovner at: [e-mail]. This study was supported through a grant from the United Hospital Fund of New York.

Anthony R. Kovner, Ph.D., professor, Robert F. Wagner Graduate School of Public Service, New York University