Hospital boards still playing catch-up on diversity

The Henry Ford Health System's hospitals and its health plan operate in the racially and ethnically diverse area of metropolitan Detroit. But until about seven years ago, the board members of the system and its subsidiaries were largely white despite leadership's desire to boost diversity.

“We weren't making progress, frankly,” said Nancy Schlichting, Henry Ford's CEO since June 2003.

In 2007, the Detroit-based system launched what is now a routine review of how closely the makeup of its boards reflects the communities it serves. Two years later, it established CEO compensation incentives tied to increased diversity in recruiting and hiring throughout the organization. Only 10% of the 900 hospitals and health systems surveyed by the Institute for Diversity in Health Management in 2011 tied executive pay to diversity goals.

Now Henry Ford's system-level board meets annually with the chairs and nominating committee members for each subsidiary board to review how closely membership reflects community diversity and how recruiting may address gaps. “We were really very intentional,” said Sandra Pierce, board chairwoman for the Henry Ford Health System and president and CEO of Charter One bank in Michigan.

As a result, across all of its boards, roughly 27% of Henry Ford's trustees now are non-white, compared with 19% in 2005. The share of female board members has remained fairly steady at a little more than one-third.

But at many other not-for-profit hospitals and health systems, not much has changed, governance experts say. Last year, 47% of not-for-profit hospital governing boards lacked even a single racial or ethnic minority member, according to the Governance Institute, a consulting group. While only 3% of boards lack female members, the median board makeup is three women among 13 board members. Two of the most recent American Hospital Association triennial governance surveys found that minority board members accounted for 9% of hospital directors and trustees in 2009 and 10% in 2011. The latest survey is currently underway.

Boards “in no way” reflect their communities, said Dr. John Combes, president of the AHA's Center for Healthcare Governance.

Over the next three decades, the U.S. will become a “nation of minorities,” with no one racial or ethnic group making up a majority of the population, federal projections show. Minorities accounted for 37% of the U.S. population in 2012, and that will increase to 57% by 2060.

As the nation becomes more diverse, hospitals' lack of diverse leadership grows more troubling, Schlichting said. “It's like we're not paying attention to the world we live in,” she said.

Henry Ford's systematic approach to greater diversification of its governing boards is one that is widely endorsed but too rarely practiced across the industry, governance experts say. Board diversity assessments, formal diversity policies and measures to track progress are needed among hospital boards and industrywide, they argue.

“If you never have a metric, then you're never held accountable,” said Connie Curran, founder and CEO of Best on Board, a healthcare board education and certification company. Explicit financial incentives for executives to expand diversity also help. “Number one, you get what you measure,” she said. “Number two, you get what you reward.”

The issue is about far more than just numbers. Homogeneous boards that fail to reflect the demographics of the communities they serve—by gender, race, ethnicity, age, geography and socio-economic status—risk excluding knowledge and experience that will better inform policies to improve patient care and provide services communities need, experts say. Increased diversity in governance and management is one of three strategies critical to eliminating healthcare disparities, according to a 2012 report issued by the AHA, the Association of American Medical Colleges, the American College of Healthcare Executives, the Catholic Health Association and America's Essential Hospitals.

That report recommended that hospitals develop formal recruiting strategies, establish and track metrics, and promote cultural competency throughout the organization to retain diverse recruits. “Support and acknowledgment by the board and senior leadership are required, and incorporating diversity efforts as part of an organization's strategic mission is critical,” the report said.

The American Hospital Association has called for boards to reflect the diversity of their communities within the next six years.

Besides addressing healthcare disparities, having a more diverse board strengthens overall hospital operations. “The whole point of diversity is diversity of perspectives that will allow a richer mix of viewpoints and sometimes differing views to enhance the quality of deliberations and quality of decisions,” said Lawrence Prybil, a professor of healthcare leadership and associate dean at the University of Kentucky College of Public Health.

At Catholic Health Initiatives, the 13-member system board includes 10 women and two African-American members, and the system's CEO is Kevin Lofton, who is once again on the list of Modern Healthcare's Top 25 Minority Executives. Christopher Lowney, CHI's board chairman, said the system board's diversity committee sets diversity goals and strategies and works with the boards at each of the system's 89 hospitals to achieve greater diversity among leaders and staff.

One reason for the sluggish progress on diversity nationally is slow turnover among board members, Combes said. Trustees and directors hold longer tenures than hospital CEOs—an average of nine years, compared with four years for CEOs.

More importantly, boards too often do not identify diversity as a major goal, unlike targets for financial performance and quality of care. In 2011, two out of three hospitals surveyed by the Institute for Diversity in Health Management and the Health Research and Educational Trust had no formal goal for their boards to reflect the diversity of their patients.

Experts say boards should incorporate diversity goals into the annual self-assessment, bylaws and committee charters and tools used for trustee and director recruitment. The Center for Healthcare Governance encourages hospitals to include diversity of race, ethnicity, gender, profession and age in board member selection criteria.

The Greater New York Hospital Association launched a networking effort nine years ago to connect hospitals with a more diverse field of governance candidates. Hospitals have recruited 30 new trustees or directors through the program, said Lee Perlman, the organization's executive vice president. “It doesn't happen by accident,” he said.

The degree to which a system's executives and board members strive for an inclusive culture matters a lot, said Vernetta Walker, vice president of consulting and training for advisory firm BoardSource and head of its diversity program. Inclusion must be social as well as functional. Adding a board member to be politically correct “doesn't pay off,” she said.

Henry Ford's Schlichting said she worked to expand her own professional network by meeting with a broader group of diverse board candidates. “I did a lot of lunches,” she said. It's a little like rolling a boulder downhill. As Henry Ford's boards become more diverse, the recruiting network grows broader and more diverse. “There are always talented people,” she said.

Still, limited board diversity across the country won't change as long as board members remain comfortable with a largely homogenous membership and they don't establish clear diversity targets, Best on Board's Curran said. So far, pressure for change from leadership has been lacking. “Mostly, I think that ignorance is bliss,” she said.

Follow Melanie Evans on Twitter: @MHmevans