What the industry can learn from federally qualified health center boards

As health systems consolidate and grow, their boardroom priorities have increasingly focused on finance, fundraising and policy. In the process, the governance of many organizations has moved away from having the kind of community input some experts say can lead to better patient services and increased market share.

Health system governing bodies seeking to share decision-making power with community members can look to lessons learned by leaders of federally qualified health centers, who must overcome hurdles to participation when populating their boards with patients.

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“We’ve seen [the industry] evolve from totally community boards to, over time, as systems consolidate, boards with directors who bring specific business, financial and healthcare backgrounds,” said Michael Peregrine, a partner at McDermott Will & Emery who advises health system boards on their fiduciary duty and best governance practices.

“I think the boards that balance the needs for diversity, subject-matter expertise and just plain-old common sense are the ones that are most successful,” Peregrine said.

Community-driven care

Federally qualified health centers—community health centers governed by the Health Resources and Services Administration—were created as part of President Lyndon Johnson’s “war on poverty” to improve public health and wellness among underserved groups. By law, more than half of their board members must actively receive care from them.

To find these consumer representatives, some health centers host community meetings where patients can nominate candidates, on whom the board then votes. Other boards have a nominating committee to recruit members or rely on centers’ clinical teams to select patients who could fill the role.

The model, when executed correctly, ensures organizational strategy is aligned with the needs of the broader community, said Megan Douglas, associate professor of community health and preventive medicine at Morehouse School of Medicine in Atlanta. It also helps health centers tailor solutions and services to locals’ needs, she said.

“We can be smart and have all this data and technology, but if there is no buy-in [from patients], then it is not going to work,” she said.

The structure creates a layer of accountability, said Daniel Wolfson, executive vice president and chief operating officer of the ABIM Foundation, a nonprofit dedicated to medical professionalism and physician leadership.

“It changes the conversation when you have patients that represent the community [on boards]—not just the bankers,” Wolfson said.

Consumer representatives on the board at East Boston Neighborhood Health Center, which serves nearly 120,000 patients throughout the city’s eastern and southern neighborhoods, usually steer the conversation to access issues, President and CEO Greg Wilmot said.

For example, during its annual needs assessment last year, the board identified demand for behavioral health capacity in East Boston. The board directed the executive team to construct an urgent care center specifically for behavioral health needs, which will operate with extended hours and be connected to the health center’s emergency department, Wilmot said.

“It was a recognition that behavioral health was a chronic issue that was exacerbated during COVID, and the data showed that,” Wilmot said. “The board said we need to be doing something about this, and it led to a decision to make a multi-million-dollar investment to create that service.”

Rita Sorrento, a consumer member and retired teacher who serves as board chair, began working with the center after seeking counseling services for her students. She said the board comprises people with various backgrounds, including government, law enforcement, education and social services.

“We all bring different aspects to the conversation,” Sorrento said. Her perspective as a teacher, for example, led her to urge the center to prioritize pediatric mental health.

Compliance with the federal regulation does not always equal true representation, said Brad Wright, chair of the department of health services policy and management at University of South Carolina.

Federally qualified health centers typically serve low-income and underinsured patients, who may not be able to expend the time and energy needed to help steer the organization on a volunteer basis. Many of their consumer board members, by contrast, have higher incomes, Wright said.

Health center boards find it particularly difficult to appoint representatives from underserved populations, such as agriculture workers or people experiencing homelessness, said Rachel Gonzales-Hanson, interim president and CEO of the National Association of Community Health Centers. Once on the board, consumer representatives can experience further barriers to participating, potentially resulting in high turnover.

Health center boards must often work to recruit and retain individuals by offering flexible meeting schedules and access to transportation and technology, Gonzales-Hanson said.

HealthLinc, a health center in northern Indiana, tries to reduce costs and make meetings accessible, CEO Beth Wrobel said. The center provides laptops and in-home internet access for its consumer board members, along with conducting some meetings virtually.

“We want them to be involved so they can improve care for our patients, and we make it easier for them to do it,” she said.

The balance of power

The Health Resources and Services Administration designed federally qualified health centers’ governance models to give decision-making power to patients, with financial experts present to guide the board through the complexities of the business of medicine. But power dynamics associated with education, culture and wealth can infiltrate the boardroom, Wright said. A few members could end up dominating the agenda.

“Small groups tend to recreate the same kinds of social class-based hierarchies that exist in the broader community,” he said.

The National Association of Community Health Centers offers online or in-person training for board members about healthcare regulations and fiduciary duties. It also breaks down managed care contracts, value-based care models and other topics consumer members need to understand to make informed decisions. In addition, the association trains executive teams and board chairs on how to drive participation from consumer members and ensure all perspectives on the board are being considered and valued.

In Northern California, Shasta Community Health Center designed an orientation for consumer members to ensure they understand the dynamics of the business. CEO C. Dean Germano said some directors have experienced homelessness or are single parents to young children. Their insights on the experience of vulnerable populations are vital, he said.

Shasta established an internal “buddy system” between consumers and more experienced experts to help ensure collaboration and equal distribution of governing power. Shasta also provides training to board leadership on how to engage members equally. The executive team highlights a different program at every monthly meeting, so board members understand the depth of the center’s operations, Germano said.

“You have to invest in the education component,” he said. “Unless you come out of healthcare, it’s an intimidating business. We want our board members to feel like they’re growing.”

Beyond federally qualified health centers

Some health system governors have sought to bring community input into the decision-making process through advisory boards, which don’t typically have organization-wide voting power but can amplify patient perspectives.

Michele Richardson, vice chairperson of Charlotte, North Carolina-based Advocate Health, said the newly merged system’s approach to community participation is evolving. Each of Advocate’s 10 hospitals in Illinois has a governing council, consisting of local religious leaders, philanthropists, businesspeople and patients, who meet twice a year.

“These are folks who can tell us [about] the patient experience as we start thinking about systems and strategic innovation,” she said. Representatives from the governing councils sit on regional boards, from which the system-level fiduciary board recruits members, Richardson said. Members of the fiduciary board are compensated. Richardson declined to comment on whether members on lower-level boards are paid.

Richardson, who served on a community board at Advocate South Suburban Hospital early in her career, noted the importance of keeping perspectives balanced.

“One of the challenges as you grow a system is that there are certain skill sets that you really need on your board. You need deep financial expertise. You need to have people who understand technology, the legal and compliance aspects, and understanding risk and strategy,” she said. “We’re in a discovery phase to figure out what is most efficient. We want to use people’s talents in the right way, but we have to stay connected.”

Having community members on fiduciary boards could increase uptake and help health systems capture market share, potentially increasing their bottom line, Douglas said. Federal statute forbids federally qualified health centers from paying board members. But health systems that aren’t bound by the same rules could compensate consumer representatives for their service to the board, she said.

“That expertise should be valued and compensated in the same way that anyone else is,” she said.

She and other policy experts note that governance alone won’t necessarily lead to improved patient engagement and population wellness.

Regulators need to adjust financial incentives to better support boards making decisions to improve population health, said Dr. Marshall Chin, a professor at UChicago Medicine who studies payment and delivery system reforms to close disparity gaps.

For example, federally qualified health centers receive funding specifically earmarked to address social needs, Chin said. Either directly or through partnerships, they can provide transportation services so people can make it to their appointments, food for people who are hungry and housing for people that need it.

By contrast, payment models within the existing fee-for-service reimbursement system traditionally do not incentivize similar programs, which can put business decisions in competition with community wellness and support initiatives, Chin said.

“If there aren’t incentives or regulations that are put into place to ensure that the money flows to improving community health as opposed to shareholders, for example, that presents a problem in terms of the payment system not being designed to improve community health,” he said.