At the Helm

What community hospital boards want from their CEOs

When I walked into Schuylkill Health—a two-hospital system in a small, rural community—early last year, their story was similar to those of many of the community hospitals we work with: rapidly declining margins, fear of closure, and a disenfranchised medical staff. And a strained relationship between management and the Board of Directors was making it even more difficult to overcome these hurdles.

After the Board decided to bring in Marc Lory as Interim CEO, the relationship began to improve—something both parties attribute to helping Schuylkill Health implement and realize $17 million worth of improvements.

I sat down with Marc and Tony Baran, Chairman of the Board, to discuss what aspects of the management-Board relationship proved vital to their success.

John Johnston: Tony, can you give me a little background on how you became involved on the Board of Directors for Schuylkill Health?

Tony Baran: Sure, I first joined the Board of Trustees at Good Samaritan Hospital by way of its Foundation. Then in 2008, I served on the committee that helped Good Samaritan negotiate the terms to merge with another local hospital and create Schuylkill Health. Three years later, I was elected Chairman of the Board.

JJ: You’re a business leader in the community; what is your motivation for being a hospital Board member?

Tony Baran: For me, I’ve lived in Schuylkill County my whole life. As a resident and businessman, I want what is best for the community—which is why I serve on the Board. Something that I think is often overlooked by management, though, is that I and many other Board members are not experts in health care. We read up on the industry as much as we can, but we need management to guide us sometimes on how we can best support them.

Marc Lory: You know, John, I completely agree with Tony. In my years managing various hospitals, one of the most valuable lessons I’ve learned is to engage the Board at every level. Whether it’s updating them on physician productivity, financials, the status of initiatives, or anything else, they want to hear it. This level of transparency earns the Board’s trust, and allows them to learn the business so they can be your partner in steering the organization.

JJ: Marc, having learned that lesson, what did you see as the most important thing to do right off the bat?

ML: I immediately made sure that I met with the chairman and vice chairman of the Board on a weekly basis to discuss everything from margins, performance, productivity, and beyond. The Board was encouraged to ask more questions, and seek more answers. And most importantly, we educated the Board on good governance and the kinds of questions they should be asking on a regular basis.

We also developed a Board-level Professional Care Committee to oversee quality performance, HCAHPS scores, publicly reported data, and medical staff credentialing.

TB: I’ll chime in here as well to say that having updates on our progress was absolutely instrumental to our success. When Marc joined us, we had so many different initiatives going on—redistributing labor, doing a better job in the revenue cycle, and looking at strategies to quickly increase revenue. With regular meetings between management and the Board, we’re finally able to give our opinions, know they’re heard, and get real feedback. Decision-making is now a team effort, with involvement at all levels of management.

JJ: So, is it fair to say that the onus is on management to communicate and engage the Board?

ML: Absolutely, and the CEO should take the lead. And as important as it is for the CEO to engage the Board, it’s just as important to engage the medical staff. When I started at Schuylkill Health, I developed a physician advisory group as an immediate way to show medical staff they would be an integral part of the organizational transition. As a result, the cultural change here has been astounding.

Schuylkill Health: Bouncing back for the sake of its community

With only 17 days cash on hand, this community hospital was nearing insolvency; but by quickly implementing margin improvement strategies, and improving the surrounding culture, they are now on the path to success.