Results of a new survey call into question whether hospitals have the right ethnic and gender balance of trustees to become true "community-care networks."
Only 5.8% of the 887 trustees surveyed at 50 not-for-profit hospitals are African American, 0.8% are Hispanic, 0.2% are Asian and none are American Indians (See chart), according to a survey conducted for The Governance Institute, a La Jolla, Calif.-based trustee and physician educational group.
Total ethnic representation on the 50 hospital boards, which had an average of 18 members, was 6.8%. By contrast, 29% of the general population are from minorities, according to data from the U.S. Census Bureau.
Some 18% of the surveyed board members are women, a percentage that's far less than the percentage of females in the general population. However, 94% of hospital boards had at least one female member, compared with only 53% of corporate boards, said Dennis Pointer, a governance consultant and a professor of health services, research and policy at San Diego State University. Mr. Pointer conducted the study for The Governance Institute.
"The American Hospital Association and a variety of other groups are promoting the notion of community health and community benefit as part of hospitals' expanding role, but that hasn't shown up on the board to reflect the constituency base of the hospital," said Charles Ewell, president of The Governance Institute.
Hospitals could do a better job of recruiting minority trustees, Mr. Ewell said. "Skills should be first, but community mix second. A board that is heavily tilted runs a risk of being out of touch with the community."
The 50 not-for-profit hospitals surveyed are members of the Governance 100, a membership group affiliated with The Governance Institute. The group plans to survey the same hospitals every two years to track changes over time.
At each hospital, the chief executive officer, the board chairperson and the board staff coordinator were asked 200 questions regarding board composition, configuration, leadership, process, meetings, committees and performance. The hospitals' average size is 412 beds, and they are located in metropolitan areas.
Of the 50 hospitals, 78% are non-secular, 16% are church-affiliated, and 6% are run by local governments. Some 10% of the facilities are owned by systems.
In the survey, about 50% of CEOs rated board performance either highly effective or effective, while 62% of chairpersons gave boards the two highest ratings. Some 22% of CEOs said boards were either moderately ineffective or very ineffective, while 14% of chairpersons gave boards those low ratings.
Chairpersons are traditionally more optimistic about governance than CEOs, Mr. Ewell said. "It's the opposite for operations."
However, 49% of CEOs also said the board performed at a higher level than two years ago; only 37% of chairpersons said performance had improved.
"CEOs wanted to see improvement whether there is or not," Mr. Ewell said. CEOs are looking for improvement because many have spent money on educational activities for board members, he added.
Many governance experts decry the lack of time boards spend on governance issues. The survey found that CEOs and board chairpersons spend only five hours per week on hospital board work (See chart).
"I was struck by how little time is spent for CEOs and boards," Mr. Ewell said. "I would have thought CEOs spend 25% to 30% of their time on board work."
Mr. Ewell said the finding makes him wonder whether there might be a correlation between time spent with boards and double-digit CEO turnover.
Another reason for the surprisingly low amount of time spent on board work could be that the typical chairperson also serves on an average of 3.6 other boards, and the CEO serves on 3.2 different boards, Mr. Ewell said.
"If CEOs and chairmen are on (other) boards, it would dilute the amount of available time. They may be spreading themselves too thin," Mr. Ewell said.
Another surprising finding was that an average of 20% of trustees are absent at each meeting, Mr. Ewell said. "CEOs tell me that attendance is good. It's a problem related to (lack of) time. That's the underlying problem (for many boards)."
Board members said they spent an average of five hours a
year on outside educational activities, such as seminars and conferences, and an average of 20 hours on in-hospital education, including retreats, said Mr. Pointer.
Hospital boards in the survey had an average of six committees, which Mr. Ewell said may be too many. The top six committees are finance (93% of all hospitals), executive (79.2%), planning and marketing (79.2%), medical and clinical quality (64.5%), nominating (45.8%), and human resources and personnel (31.2%).
Mr. Pointer recommends five committees: executive, goals, finance, quality, and executive management and performance.
Only 2.2% of boards have a full-time board coordinator. The majority, 55.6%, have an administrative assistant who spends an average of 30% of his or her time on board preparation. About 35% of boards have a designated secretary to provide support services.
"As hospitals merge and get bigger, governance coordination takes more time, and hospitals and systems are adding that position (board coordinator)," Mr. Ewell said.
He added that hospital administrators need to spend more time preparing for board meetings.
In addition, 72% of hospitals have no line-item budget for board education. "This indicates a sporadic, non-systematic approach to board development," Mr. Ewell said. "Hospitals should consider setting up an annual board development plan with a budget for recruitment, orientation, continuing education and performance assessment."
On compensation issues, 4% of board members were paid cash for board service. Those trustees were paid from $25 to $50 per meeting. Some 98% are awarded travel expense reimbursement. Other fringe benefits include service upgrades when trustees are hospitalized (33%) and travel reimbursement for spouses or guests (69%).
About 76% of the trustees surveyed are employed. Of those, 13.8% of trustees work in financial services, 10.9% are in manufacturing, 9% are in small business, 9% are in the legal field, 6.6% are in education, and 6% have religious backgrounds. Only 1.7% work in the insurance sector, and 1.8% have some accounting experience, the survey showed.
When it's time for trustees to be renominated, CEOs and board chairpersons agreed on most traits that are important, such as personal and professional integrity, which ranked the highest. Of 30 surveyed traits, CEOs and chairpersons ranked fund-raising ability as the least important.
Mr. Ewell said fund raising was the most important trait 20 years ago. "As hospital budgets have become so big, fund raising is no longer able to carry the day," he said. "It's lucky if a hospital can raise 0.5% of its budget through fund raising."
About 78% of boards now set term limits for trustees. Ten years ago, few hospitals had term limits, Mr. Ewell said. Terms generally are for three years, with most boards allowing two or three terms.
"Term limits are good. It clears the underbrush and doesn't let people get lazy on the job," Mr. Ewell said.
"Inside" directors, excluding medical staff, account for 6% of trustees in the survey. Nearly 77% of those inside directors are CEOs. Medical staff members account for 16% of trustees (See charts).
Most "outside" directors, 87%, reside in the hospital's primary service area, and 76% are employed. Some 16% are retired, and 8% don't work.
Only 2% of board chairpersons are inside directors; 7% are medical staff members. Some 70% of chairpersons are employed, 20% are retired, and 10% are unemployed.
By Jay Greene