July 18 webconference: The 3 biggest governance problems facing health systems (and how to fix them)

State of boards today: Most are 'chugging along'

To recap: Interviews with board members, management teams, and other stakeholders revealed a hospital and health system governance status quo that can fairly be described as "chugging along":

• Very few boards are a mess;
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• Most boards (plus committees, etc.) are reasonably well run; but
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• Anything beyond "reasonably well run" is basically a question mark.

Panning for examples of game-changing board contributions

To clarify what a next-level effective board could actually do, we searched for examples of difference-making board actions or inputs. We also looked for missed opportunities—times when board help would have made a big difference, even if that help never materialized.

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Proportionally speaking, this exercise was like panning for gold. Lots of rocks (i.e., standard governance activities), with only a few glimmers of game-changing contributions—but just because they were hard to find doesn't mean they didn't exist. For example:

• Boards have given CEOs strategy advice that they looked back on with gratitude. While plenty of CEOs do not want more strategy advice from their boards, some actively seek inputs and pushes. Those CEOs can cite examples of meaningful board strategy contributions and explain the difference they made. A repeated theme in this category was boards providing, "You're too close to this"-type advice, which kept management from developing target fixation on options that had begun to look less promising, would have been costly to pursue, and were ultimately tangential to core goals.
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• Some boards use their accountability and signal-sending power to drive transformational improvements. This one has data to back it up. When boards wade in to drive performance improvement, they get quantifiable results. Quality and patient experience are the two areas we found most often, but I'm thinking there are more initiatives that could use pedal-to-the-metal board transformation support. Boards do not have to touch the third rail of becoming "too operational" to do this; they can use their inherent accountability-enforcing and signal-sending power to get turnaround-magnitude results.
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• Decentralized boards anchor multi-market systems into individual communities. In geographically spread-out systems, we saw instances of legacy hospital boards—or recently retooled advisory boards—start to own relationships in specific communities. These boards are positioned to keep tabs on how the system is perceived in the community, surface and elevate unmet needs, and shore up critical relationships with local leaders.

With this much board potential available, why are we settling for 'just OK' today?

The governance universe is big. It spans many kinds of problems and solutions—from the granular and tactical to the political and emotional, all of which can boost or limit board potential.

But when we take a large step back, three root-cause issues deserve special consideration. These are the problems behind the problems. They lurk in the background and generate many related, more obvious issues—and they keep hospitals and systems locked into a "just OK" governance status quo:

1. Using 'good governance' practices as a proxy for effectiveness

The most common trap in governance effectiveness is defining "effectiveness" exclusively in terms of a widely accepted set of generic good-governance practices. I'm talking about familiar fundamentals such as:

• Putting more routine information into consent agendas to free up time for discussion;
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• Ensuring every committee has a charter; and
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• Winnowing down board membership to match industry average.

An overly narrow focus on fundamentals causes problems by taking up all the improvement energy and crowding out fully half of the effectiveness picture—and the missing half is the one that would critically identify, assess, and enable boards' ability to provide the specific types of help that your organization needs most at this particular moment in time.

This brings me to health systems' must-solve governance problem #2…

2. Defining board roles in vague, generic, and overly broad ways

Some board work, especially in the committee setting, is clear-cut. But other tasks have been allowed to remain nebulous—to the point where it is downright common for board members, in certain situations, to feel unsure what they are supposed to be doing. People who are merely going through the motions will not be able to deliver game-changing contributions.

The epicenter of board role vagueness is "giving input on strategy." No wonder board members and CEOs express skepticism about whether boards today can realistically provide hospitals and systems with strategy guidance. The problem is'’t only that the environment is becoming more complex—it's also that the strategy input role has always been ill-defined and under-supported. The gap is just becoming more painful.   

To consistently receive on-point strategy guidance, hospitals and systems need to solve the vagueness problem in all its permutations, especially:

• Board members lacking the specific skill of constructively engaging with a strategy proposed by others. This skill is teachable—but does not typically make it into board education or development today.
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• Board members being stretched a mile wide and an inch deep topically across the entire universe of complex issues that could affect health system strategy.
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• Management teams not identifying what specific types of input are needed, in advance—and not supporting board members with focused topical education to enable them to provide the needed input.

To be fair, all types of boards—for profit, nonprofit, health care and beyond—can suffer from role vagueness. But nonprofit hospitals and systems are especially prone to it due to their mix of mission- and margin-related challenges, in combination with all the ways that the health systems, in particular, have become larger and more complicated in the last decade.

Which brings me to governance issue #3….

3. Living with system-wide governance duplications and disconnects

If the board role is confusing within one board, it is even more so in a multi-board environment. And multi-hospital systems have tons of boards. We often see a main system or network board, hospital boards, community advisory boards, foundation board, clinic board, and more. (And that's not even getting into the world of committees.)

Consequences include:

• Hospital and community board members contribute their time and effort to work that has unclear parameters and value to the system;
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• Duplication and inconsistency across system-wide board and committee efforts, especially in quality, privileging, and credentialing; and
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• Opportunity cost—systems miss out on the relationship benefits of more explicitly retooled hospital or community advisory boards in strengthening relationships between communities and the system as a whole.

Solving the systemness problem in governance takes more than tactical changes. It takes actual structural redesign work, rationalizing the portfolio of boards and committees, and ensuring there is a differentiated role for each part of the governance ecosystem, with each new role fully spelled out, recruited for, and supported.

Summary and next steps

In closing, I want to acknowledge that fixing governance issues is complicated work. It's much easier to let a status quo governance approach tick along. But tackling underlying governance effectiveness rate-limiters could yield serious benefits to the organization. And given the extent and range of challenges that hospitals and health systems face today, tapping into that help will be worth the effort.