The clinical, financial, marketplace and strategic demands placed on healthcare organizations today leave little room for trustees who lack critical experience, insight and leadership skills. That is why hospitals and healthcare systems must get as serious as other private and public companies about developing professional governing boards. They must make a formal commitment to recruit, retain and educate trustees to expertly steer their organizations through the next tumultuous decade. Eventually, they also must pay their trustees.
Two major factors contribute to inadequate governing boards.
An outdated thought process. Few hospitals and systems have yet to challenge the notion that board composition must reflect the community. That notion hinders most healthcare organizations in their efforts to create boards with the right mix of skills and expertise. Many hospital and system chief executive officers and boards continue to rely solely on their local network to fill board positions, giving insufficient thought to how well-qualified or committed their choices might be for such a demanding job.
Yet as boards streamline and the number of board positions decreases, greater will be the need for trustees with focused healthcare knowledge and governance experience.
An example of a system that has sought to change the usual way of doing things is Oakwood Healthcare, a five-hospital system based in Dearborn, Mich. It is deliberately identifying trustees with core competencies critical to the system, such as finance, human resources, joint ventures, legal issues and marketing, according to President and Chief Executive Officer Gerald Fitzgerald. It has searched throughout its metropolitan Detroit service area of 1 million people to find individuals from other service industries to sit on the board.
Already, says Fitzgerald, the system has tapped leaders of several Detroit-area corporations, including an automated teller machine company, a banking system, two auto companies, a major steel company and a major utility, as well as a university chancellor and professor, judges and the president of a large union.
Lack of professionalism. The second pressing concern for healthcare boards is trustee professionalism-how well trustees prepare for, understand and discharge their roles and responsibilities. That has a direct bearing on how an organization achieves its strategic goals, competes successfully in its market and attracts the right executive leadership.
Hospitals and systems should identify individuals who understand how healthcare governing boards should work, are knowledgeable about the intricacies of healthcare delivery and payment, and are willing and able to make a time commitment to governance efforts.
Seattle-based Providence Health System, which extends from Anchorage, Alaska, to Burbank, Calif., has consciously created a board of individuals with "boardsmanship," says Board Chairwoman Sister Karin Dufault. Individuals are cultivated-from both within and outside the system's four-state reach-based on an appreciation for the system's mission and values, managed-care and quality improvement knowledge, and their prior board experience.
Among the 11 board members are an internationally recognized nursing leader, a family practice physician with executive experience in for-profit and not-for-profit organizations, and the former CEO of another national Catholic system. The system has been particularly interested in trustees who have handled transformations in large, geographically dispersed organizations, says President Hank Walker.
In the next decade, we predict more hospitals and health systems will begin aggressive campaigns to attract professional trustees. Not only will healthcare providers compete for the best executive talent but also for the best governing talent-seeking trustees with specific or hard-to-find credentials from outside the organization's local or regional market. Retained searches for board members will become as routine as executive searches today for CEOs and other senior managers.
Finally, in the coming years successful healthcare organizations will provide board members with what is unmentionable today: compensation. Like their Wall Street counterparts, not-for-profit hospitals and systems will consider board compensation as much a financial investment in their future success as the salaries and bonuses paid to executive leaders.