LWW/NAQ

NAQ-D-14-00056

December 2, 2014

8:38

Nurs Admin Q Vol. 39, No. 1, pp. 18–22 c 2015 Wolters Kluwer Health | Lippincott Williams & Wilkins Copyright 

Trustee The Basics of Boards Gail E. Latimer, MSN, RN, FACHE, FAAN The health care environment has changed but the future remains uncharted. Organizations are keenly aware of the need to chart their course with an eye on addressing the Institute for Healthcare Improvement Triple Aim. Today health system boards are under growing scrutiny to prepare the organization to meet the demands of the new world of health care. The 2010-2011 American Hospital Association survey of 1000 nonfederated community hospitals found that only 6% of board members were nurses. The reasons for this disconnect are many but will not be addressed in this article, but one major reason is the limited expertise of nurses serving in the role of trustee. This article will address the basic operations of boards and the role and responsibility of a trustee. Key words: board operations, corporate governance, nurse trustee, trustee role, trustee selection

T

HE HEALTH CARE environment has changed, but the future remains uncharted! American health care will and continues to experience the most unprecedented changes since World War II when medical schools were first established. Health care enterprises need to carefully navigate the uncharted waters with 1 foot on the shore and 1 foot in the boat. Health care reform has introduced many new challenges across all segments of the health care delivery system. From value-based purchasing which focuses on outcomes and quality to initiatives addressing care coordination, population health, and patient engagement, health care is in the midst of major transformation. Organizations are keenly aware of the need to chart their course with an eye on addressing the Institute for Healthcare Improvement Triple Aim: improving the patient experience of care, improving the health of the population, and reducing the per capita cost of health care. As hospitals

and health care enterprises shift from a focus on illness to wellness, they have become the center of a growing array of community health and health care services looking to extend their reach and capture their markets. Thus, today health system boards are under growing scrutiny to prepare organizations to meet the demands of the new world of health care as well as those they serve. In this country, women are the primary consumers of health care. They make up half the US workforce and more than 75% of the workforce in health care.1 The 2010-2011 American Hospital Association survey of 1000 nonfederated community hospitals found only 6% of board members were nurses, a predominately female health care profession.2 The reasons for this disconnect are many but will not be addressed in this article, and one major reason is the limited expertise of nurses serving in the role of trustee. This article will address the basic operations of boards and the role and responsibility of a trustee.

Author Affiliation: Siemens Healthcare, Malvern, Pennsylvania. The author declares no conflict of interest.

CORPORATE GOVERNANCE

Correspondence: Gail E. Latimer, MSN, RN, FACHE, FAAN, Siemens Healthcare, 51 Valley Stream Pkwy, Malvern, PA 19355 ([email protected]). DOI: 10.1097/NAQ.0000000000000073

The Center for Healthcare Governance defines governance as what the board does and how the board does its work.3 In the health care sector, hospital and health system boards

18 Copyright © 2015 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/NAQ

NAQ-D-14-00056

December 2, 2014

8:38

Trustee: The Basics of Boards support the mission to improve the health of the community. They can have significant influence over strategic planning, setting priorities, and defining stretch goals. However, boards are increasingly being held accountable for the hospital’s performance as it relates to quality, safety, and finance.4 Trustees are well advised to understand their fundamental governance responsibilities. They are accountable for acting consistently with the Articles of Incorporation, the bylaws, and applicable laws and regulations. Many nonprofit hospitals have a charitable purpose to focus on the preservation of the health status of the community they serve. This may qualify the organization to benefit from the Internal Revenue Code of 501(c).3 Under most state statutory or case laws, the trustee serves as a stakeholder (owner) agent. In contrast, boards of for-profit organizations, who govern on behalf of shareholders, know their primary obligation is to increase shareholders value.3 Whether stockholder or stakeholder boards, they are accountable to an organizational owner and the trustees act on the owner’s behalf (The differences are identified in Table 1). Individual board members are fiduciaries of the organization. The duties of a fiduciary are

19

the highest imposed by law on any person.5 At all times, board members must act in the corporation’s best interest, ensuring that the organizational resources are used in a reasonable, appropriate, and legally accountable manner.3 Fiduciary duties include the Duty of Care (making responsible decision and providing appropriate oversight), Duty of Loyalty (avoiding conflict of interest or self-interest), and Duty of Obedience.5 The matters the board oversees typically include the definition of the mission and vision, value development, and strategic planning; quality and safety performance; financial oversight; Chief Executive Officer selection, performance, evaluation, and succession planning; risk identification and oversight; communication and accountability; and its own governance. The board’s role is to govern, not to manage the day-to-day operation of the organization because this is the role of the Chief Executive Officer and management. The board oversees the performance of the management of the affairs of the enterprise. BOARD OPERATIONS All boards desire to function as a high performing team with a culture of transparency.

Table 1. Stockholders/Stakeholdersa Stockholders in TaxPaying Organizations Stockholders have a divisible financial interest in the organization represented by shares of stock; if the organization were sold, residual net equity would be distributed to stockholders on a pro-rata basis. Stockholders are easily identified: those who have purchased shares of stock and are listed by the organization’s registered agent. A commercial corporation’s stockholders share the goal of wealth enhancement.

a From

Stakeholders in TaxExempt Organizations Stakeholders are a collective that the organization is designed to benefit and whose interests must be protected/advanced. Members of this general class do not have a divisible financial interest in the organization. If the organization were sold, individual stakeholders would not receive pro-rata distributions. Stakeholders are typically vaguely defined in the organization’s charter and bylaws (eg, for a hospital, “the community”). Various stakeholder groups of nonprofit organizations generally want very different things that often conflict with one another.

Pointer.5

 C Used with permission of American Hospital Association’s Center for Healthcare Governance.

Copyright © 2015 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/NAQ

20

NAQ-D-14-00056

December 2, 2014

8:38

NURSING ADMINISTRATION QUARTERLY/JANUARY–MARCH 2015

Trustees need to challenge the status quo and ask the hard questions in this environment of ambiguity. One technique boards may institute is to request a board member to represent the “devil’s advocate” role. In this role, a board member presents arguments for or against the proposed solution. This stimulates dialog, new thinking, and decision-making. Regularly boards need to take time to reflect or conduct a root cause on how they make their decisions. Are the right questions being asked? Decisions and the pace of change can change dramatically with board member to board member dialog. One best practice is to plan 80% of the board agenda to dialog on a specific topic and to question the issue or solution needing a response. Increasingly boards are leveraging technology to facilitate meetings. eGovernance can limit the need for travel while also increasing the availability of board members, ultimately supporting greater efficiency and effectiveness. While the impact of this approach has not been evaluated, it is being utilized with greater frequency. Best governance practices that a board may adopt include the following: defining its own governance agenda by deciding what issues are to be addressed by the entire board and which are to be reviewed at the board committee level; monitoring the governance metrics; engaging in continuing board education; and evaluating the performance of the entire board, including peer review of the individual trustee.3 Most health care boards operate with a committee structure to assist in performing the work of the full board. The committees may consist of the following: Executive/ Governance, Compensation, Quality and Patient Safety, Finance, Strategic Planning, Compliance, and Nominating. Unless the articles of incorporation or the bylaws dictate standing committees, the board can decide the number, composition, and work of the committees. The Executive Committee may be empowered to set policy or make decisions on the board’s behalf for specific circumstances. Committee members may not be full board

members. Membership on committees provides an opportunity to build core skills required for governance and to evaluate the potential of future trustees as well as their fit with the board culture. Advisory boards that engage community leaders are another avenue to support trustee succession planning. THE TRUSTEE One of the most important governance elements of the board is the composition, size, turnover, nominations, and recruitment process of trustees.3 In the past, the board members were usually businessmen, friends, colleagues, and donors who represented the community. Today, boards are becoming more focused on selecting a broad and diverse membership. Some are looking beyond their communities to bring in specific expertise and diversity of thought, given the complexities of today’s environment. One of a health system board’s most fundamental and important responsibilities is monitoring and improving quality. To accomplish this, the clinical voice must be represented. Traditionally, physicians have been member of boards. A 2011 American Hospital Association survey found 20% of board members were physicians.2 Nurse leaders bring expertise in monitoring and improving quality and should be sitting with their counterpart physicians at the governance table. However, as stated earlier, nursing only represents 6% of board members.2 As priorities shift to areas such as Accountable Care, population health, and care coordination, boards may consider recruiting trustees from social services, human welfare agencies, insurance, risk management, information technology, mergers and acquisitions, and school systems. Another constituency to bring to the table is the perspective of the patient. As the health care consumer, the patient trustee can provide the unique perspective of the patient as well as the community, something that cannot be underestimated. Boards are better representatives of these communities when their membership reflects

Copyright © 2015 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/NAQ

NAQ-D-14-00056

December 2, 2014

8:38

Trustee: The Basics of Boards the people of their communities. To increase diversity, boards need to set targets. Depending on the bylaws, board members may be elected or selected. Most health system board members are not compensated for their board role, but they may be expected to participate in fundraising activities that support the system. Some boards identify a donor level for every trustee, and in addition board members may be expected to help raise funds to the benefit of the system. The term of the trustee is usually defined in the bylaws. Terms are usually staggered allowing for one-third of the board to turn over at any time. This allows for diversity of thinking, new expertise, and fresh perspectives.

Table 2. Individual Trustee Core Competenciesa Personal capabilities Accountability Managing complexity Achievement Organizational orientation awareness Change Professionalism leadership Relationship building Collaboration Strategic orientation Community Talent development orientation Team leadership Impact and influence Information seeking Innovative thinking Knowledge and skills Health care delivery and performance Business and finance Human resources

SELECTION OF THE TRUSTEE Typically boards have selected members on the basis of careful evaluation of who would be a good trustee, an informal approach. Today boards are taking a more rigorous tack. The nominating committee should present candidates selected on the basis of the targeted diversity, needed competencies, and the individual’s high standards and willingness to commit to the long-term success of the organization he or she will govern. Building a competency-based governance approach fosters a high-performance board culture. The Center for Healthcare Governance individual trustee core competencies are listed in Table 2. ROLE OF THE TRUSTEE A trustee must fulfill the responsibilities and requirements of his or her role as a board member. This includes attending board meetings and committee meetings, reviewing the board information packets prior to the meetings, upholding fiduciary obligations, complying with legislation and regulatory agencies governing the organization, adhering to bylaws and policies, and working collaboratively and respectfully with other board members.3 Participating in the board orientation session and accessing ongoing and continuous edu-

21

a From

Cornwall and Totten.6

 C Used with permission of the American Hospital Asso-

ciation’s Center for Healthcare Governance.

cation is a critical part of the role of the trustee. This education should emphasize aspects of the core business of the organization and might also include shadowing a nurse and/or pharmacist in a health care setting to get a full understanding of the care delivery process. Trustees are accountable for developing an understanding of the top issues facing health care organizations and can take advantage of various means of education, such as formal education programs offered by the American Hospital Association Center for Healthcare Governance, and Web-based courses provided by many industry leaders. In addition, at least quarterly, the board meeting agenda should include an educational component addressing current topics or trends in health care as well as topics addressing effective board performance. CONCLUSION As the uncharted and often turbulent waters of health care transformation continue to

Copyright © 2015 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

LWW/NAQ

22

NAQ-D-14-00056

December 2, 2014

8:38

NURSING ADMINISTRATION QUARTERLY/JANUARY–MARCH 2015

unfold, the role and importance of the trustee and the board will be even more critical. We know that health care tomorrow will look very different from today. Risk and ambiguity will continue, as organizations look to rein-

vent themselves. Boards that broaden their assets through increased diversity and expertise from new areas impacting care delivery will help to set the course for a successful future.

REFERENCES 1. McDonagh K, Saunders N. Clearing the path. Trustee. 2011;63(8):41-42. 2. Prybil LD, Dreher MC, Curran CR. Nurse on boards: the time has come. Nurse Leader. 2014;12(4):48-52. 3. Anning DK, Entin FJ, Totten MK. The Guide to Good Governance for Hospital Boards. Chicago, IL. The American Hospital Association Center for Healthcare Governance; 2009. 4. Izaui C. Transforming Care Delivery to Focus on Patient Outcomes: Why Boards Matter. Chicago, IL. The

American Hospital Association Center for Healthcare Governance; 2012. 5. Pointer DD. Best Practice Guideline Board Legal Fiduciary Duties. Chicago, IL. American Hospital Association Center for Healthcare Governance; 2005. 6. Cornwall DJ, Totten MK. Competency-Based Governance Enters the Health Care Boardroom. Chicago, IL. American Hospital Association Center for Healthcare Governance; 2010.

Copyright © 2015 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.

Trustee: the basics of boards.

The health care environment has changed but the future remains uncharted. Organizations are keenly aware of the need to chart their course with an eye...
73KB Sizes 0 Downloads 3 Views