Boards of hospitals and healthcare systems put a high value on ethics and evaluating their performance, and they also tend to emphasize board-member education and the selection of members from outside the system, according to a survey by the Governance Institute, La Jolla, Calif.
The great majority of hospitals and health systems surveyed have in place policies aimed at preventing conflicts of interest. Some 93% of respondents have a written definition of conflict of interest for board members, and 95% require board members to complete an annual written disclosure statement. Some 62% of respondents said they had encountered a conflict situation during the past two years.
Overall healthcare organizations appear to be ahead of the general business community in terms of responsible and accountable governance, said Karma Bass, who oversaw the survey of 77 healthcare systems. "There are things that motivate people on nonprofit boards. They feel an obligation to the community because the organization's assets are held in trust," Bass said.
Boards of healthcare organizations are likely to perform an annual evaluation of their performance -- 66% do -- and they follow up with education for board members. About 67% of the hospitals and systems surveyed said they require board members to undergo more than 10 hours of formal board education a year, and the average board member received 18 hours per year. In some cases, board members had more than 40 hours of education annually.
According to the survey, hospitals and health system boards are comprised mainly of independent members, a stark difference from many for-profit corporations. However, new governance standards issued by the New York Stock Exchange will require boards to have a majority of independent directors.
Hospitals and health systems are ahead of the curve. About 76% of hospital and health system board members don't hold full-time administrative positions at any level of the organization, 18% are physicians and 6% are members of management. "Having independent board members is key in them playing their oversight role," Bass said.
In addition, healthcare organizations take steps to prevent their board members from becoming entrenched. About 88% of respondents limited the number of consecutive terms for board members, with roughly two-thirds having a limit of three consecutive terms and one-third having a two-term limit.