iProtean—Mission & Strategy

iProtean—Mission & Strategy

 

As strategists, the vital skills for the board are: ask, listen, assess. (Punit Renjen, Board Chair, Deliotte LLP, “Exceptional Boards,” Leadership Excellence, March 2012)

 

Boards play vital roles for the organization and must work as a team with management to direct the organization to long-term success.  It begins with board members being stewards of a community asset; that is, the hospital/health system organization.  Board members must ensure a balance between meeting community needs with maintaining the financial integrity and strength of the organization in the long term.

 

Board members must also be strategists.  By exercising the dual roles of stewards and strategists, boards provide direction to the organization and set the path for that direction—offering important counsel during strategy formulation, rollout and ongoing adaptation to market developments.

 

In the iProtean course Introduction to Mission & Strategy, Marian Jennings, Todd Sagin, M.D., and Jeffrey Bauer, Ph.D. discuss mission and strategy as core responsibilities; the differences between for-profit and not-for-profit hospitals in the context of “mission;” the role of the board in setting strategic direction, mission, strategy and tactics; and the role of the strategic planning committee.


Marian Jennings, M. Jennings Consulting

When I think of the mission of the organization, I immediately think also about the vision of the organization.  The mission is a statement of intent, a statement of purpose, why we exist.  The vision of the organization is how are we going to carry out that mission, so it’s a statement of what we are going to do, while the mission statement is a statement of why we exist.  So they’re very different and complementary and what we want to do is we want to make sure that we establish a clear strategic direction with meaningful measures that would tell us this is how we know we’re accomplishing that direction, that convince us as a board that we are carrying out our mission.

 

Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

As a board member, you are a fiduciary for the community, to assure that your hospital or health system is carrying out the objectives for which it was established.  We call those objectives the mission of the organization.  As you provide oversight to management and the medical staff, you have an important function to make sure that these elements of the institution are promulgating its purposes, its mission.  When you look at financial performance, when you look at quality performance, when you look at individual performance of management, when you look at strategic goals, all of these things should be taking place to further the ultimate purpose or mission of the institution.

 

Marian Jennings, M. Jennings Consulting

An organization cannot spend too much time discussing its mission and vision, and being extremely clear about its mission and why it exists, and allowing the mission to drive the strategic direction and not just think, “Well, if I do all the right things then maybe I’ll figure out what my purpose is.”

 

Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

It’s important for board members to constantly reflect on the mission of the hospital as they discuss and consider various strategies for moving the institution forward.  Is part of your mission to provide the broadest array of services in your community?  Is part of your mission to provide easy access of services to all segments of the community?  If so, as you implement specific strategies you must constantly revisit your mission and ask yourself the question, does this strategy adequately achieve those purposes for which we have dedicated this institution?

 

The hospital board needs to make sure that the institution, the hospital or the health system, is acting consistent with the needs, the wants and the goals of the community.  This may sound self evident, but many hospitals are enterprises that can easily become focused on the desires and needs of those who work there and in particular those of the medical staff, and sometimes lose sight of what’s important to community members.

 

Jeffrey Bauer, Ph.D.

Strategy is the purposeful response to anticipated change, and no one but the board and executive management of the hospital has the responsibility for strategy.  In the long run, the issues of terminating a program or reallocating resources, moving in new clinical directions, developing partnerships, those are the responsibilities of the people who are asking the big questions.

 

Marian Jennings, M. Jennings Consulting

When a board member ends his term as a board member, he should assess whether he has served the community well and whether the hospital is in a financially stronger position than when he became a board member.  Use this as your guiding light:  always put the community’s needs first, but make sure that when your final term is up, the person who will take your seat is inheriting an organization with greater financial flexibility than the one you inherited.  If you do this, then you have done an excellent job as a board member.

 

“By playing their role as strategists and risk and scenario planners, boards can assist management in mapping a firm’s ultimate destination.” (Punit Renjen, Board Chair, Deliotte LLP, “Exceptional Boards,” Leadership Excellence, March 2012)

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.

iProtean—Strategic Planning

Hospital executives are in high gear preparing their organizations for the implementation of the structural components of the Affordable Care Act (ACA)—accountable care organizations, bundled payments, medical homes and more.  For example, some hospitals are preparing applications for the Center for Medicare and Medicaid Innovation’s Bundled Payment for Care Improvement, and those applications are due in June.

 

But these executives face a greater degree of uncertainty today than just a few months ago—will ACA stand or will it be overturned?  The Supreme Court will present its ruling on the constitutionality of all or parts of the ACA, also in June.

 

So the question is, “now what?”  The consensus is that whatever the Supreme Court decides, the structural components of health reform will remain a compelling argument for the industry.  If ACA is overturned, hospitals should and will focus their efforts on private sector initiatives. (Francois de Brantes, “An Update on Bundled Payments: Overview of Public and Private Sector Initiatives,” HFMA Virtual Healthcare Finance Conference, April 2012.)

 

In the iProtean course Strategic Planning, Marian Jennings (M. Jennings Consulting) and Jeffrey Bauer, Ph.D. discuss how to plan during periods of uncertainty, the role of the board in that process, short- and long-term strategic planning,  financial analysis, the importance of setting priorities, plan integration and implementing the plan.

 

Marian Jennings, M. Jennings Consulting

Will reform stay; will it be overturned? . . . There is so much uncertainty, and no one knows for sure what will happen.

 

At this point, it is important that both our strategic planning and our financial planning take into account not only risk . . . but also uncertainty and how we deal with uncertainty so it doesn’t paralyze us but allows us to move forward prudently, recognizing that the future is unclear.

 

So how do we incorporate all these uncertainties into the strategic planning process?  It is important to start by articulating a set of assumptions for what we believe will likely happen in our market.  There has been a lot of work done on uncertainty and planning by people at the Harvard Business School and other organizations.  They have developed a framework that articulates categories of uncertainties.  One of those categories is what we call “residual uncertainties.”  Those are uncertainties that cannot be researched away.

 

On the national level a residual uncertainty is if and how healthcare reform will play out and what will happen with payments, what will happen with physicians.  We don’t know.

 

One of the ways to deal with residual uncertainties is to agree as a board on some of the indicators that would be signs of the way things are likely to go—early indicators or trigger points.  You would say, “Let’s keep our eye on this  event and if we see it happen, it tells us as a board that it’s a sign that the trend is moving in one direction versus another.” Or, what would be a precipitating event in your environment that would mean you have to go back and examine your whole strategic direction?  Would it be that on the federal level, Medicare fundamentally changes the payment system—or now, doesn’t change the payment system as specified in the ACA—or announces an across-the-board 25 percent cut?  I think almost everybody would have to go back and say, “We have to reexamine our strategic direction.”

 

Uncertainty is a given in our environment; we can’t wish it away.  We can’t wait for things to become clearer.  For example, we shouldn’t hope that maybe in several months we’ll see how things are heading and then we’ll know what to do.  We have to act.

 

A good plan is based upon a set of assumptions about how we anticipate our environment unfolding in our local market and at the state and federal level. So please spend the time to be clear about your assumptions about the future.  Recognizing uncertainty but incorporating it into our planning assumptions and into our strategic direction is a prudent way to move forward.

 

Jeffrey Bauer, Ph.D.

It is critically important that strategic planning be an ongoing process.  The realm of possibilities is constantly expanding, the environments in which you work are constantly changing.  Have objectives, have them written down and keep fine-tuning it.  The idea of a fixed plan is absolutely out the window.  The only way you’re going to survive in the 21st century is to have a perpetual strategic planning process.

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.

iProtean—Hospital-Physician Alignment

In mid-2011 Deloitte Center for Health Solutions surveyed a nationally representative random sample of U.S. primary care and specialist physicians to record their attitudes toward health reform and how it may affect the future practice of medicine.  Among the findings were that physicians are split as to whether health reform is a good start or a step in the wrong direction, and that many physicians consider a practice in a large integrated health system or a concierge medicine practice a viable alternative to private practice.

 

Deloitte noted in its report that “physicians recognize that private practice is decreasingly a career choice/option for most due to increased administrative complexity and regulatory compliance. Therefore, they are likely to affiliate with a ‘trusted partner’ that provides income security, administrative support and clinical autonomy within reason.”  (Physician Perspectives about Health Care Reform and the Future of the Medical Profession, December 2011.  Deloitte Center for Health Solutions.)

 

The iProtean course Hospital-Physician Alignment presents an overview of hospital-physician alignment in today’s health reform environment.  Healthcare experts Dan Grauman (DGA Partners), Robin Nagele, J.D. (Post & Schell), Anjana Patel, Esq. (Sills Cummis & Gross), Brian Wong, M.D. (The Bedside Trust) and Monte Dube, Esq. (Proskauer) discuss the historic relationship between hospitals and physicians, different alignment strategies and alignment models, benefits and pitfalls and the critical role of the board.

 

Brian Wong, M.D., The Bedside Trust

When we think about physician-hospital alignment, do you ever get this image that it feels like herding cats, that you’re trying to move the physicians in a certain direction . . . and the physicians, being rugged individualists, are just moving in every direction . . . it’s hard to get them moving in the same direction. I think a big part of that is a belief that’s ingrained [in them] almost from the beginning of medical school that we’re all unique individuals, that we’re autonomous and therefore fairly independent.

 

So when you combine this mindset of independence and autonomy, and self-direction, and then superimpose on that an institutional or system or organizational perspective that says we need to be moving together, for many physicians it’s a very foreign concept, and a very tricky and problematic issue.  It’s heightened now because of the environment of healthcare reform and of new incentives and regulations moving us towards greater integration and accountability.

 

Anjana Patel, Esq., Sills Cummis & Gross

Hospitals try to get the physicians to think like them—how can we save money, how can we at the same time maintain quality so when this patient is discharged, he’s not going to be readmitted.  So the whole point of alignment has been trying to get physicians to think along those lines.  Health reform, with the ACO model and especially if bundling is introduced, is basically going to force hospitals and physicians to work well together because at the end of the day, if Medicare sets the bar and the bar is, “We are going to value quality; we are going to value the efficient healthcare provider,” then commercial payers obviously will get on board with that.  Patients want that.  There is too much pressure for hospitals and physicians not to work well together.

 

Dan Grauman, DGA Partners

Increasingly physicians are looking to join perhaps a group or some other kind of model.  Clearly most hospitals need to have some flexibility and offer different options.  I’ve seen hospitals have different philosophies about this.  Some believe that the employment model is the one that is ultimately going to prevail and are working hard towards developing a larger and larger owned physician enterprise . . . Others operate in communities where the physicians are working hard to preserve autonomy and the historic preferred way of working in a voluntary medical staff, but they still need to be more collaborative and integrated.  So they’re trying to link through perhaps more thoughtful contractual arrangements like a co-management agreement where the physicians get involved in a very active way in helping to manage a particular clinical service at the hospital.

 

Brian Wong, M.D., The Bedside Trust

If you’ve seen one physician-hospital aligned organization, you’ve seen one physician-hospital aligned organization.  Every market place, every medical community has unique features in play—some which lend themselves more towards the employment of physicians, some which lend themselves towards lesser degrees of integration, management and the like.  The driving force, not necessarily the best force, but the driving force is the economics of healthcare.  I think that the economics are driving physicians to reexamine and reevaluate, “Is this really working for me?”  Many of them are beginning to conclude that it is not working.

 

On the other side of this, hospitals are saying, it would be so great if we could in fact integrate with our physicians, if we could be aligned with our physicians, if we had the same agenda.  After all, we’re all trying to take better care of our patients.  Wouldn’t it be better if instead of a hospital viewpoint to take care of patients and a physician viewpoint to take care of patients, that we sat across the table and tried to work out what is going to work out best—not so much for my organization, not so much for my practice, but rather what is going to work out best for our patients?  I would like to see that as the overarching imperative behind affiliations, associations and integration formation strategies.

 

Monte Dube, Esq., Proskauer

Your physicians will greatly appreciate it if you come to them with a full menu of options for potential alignment.  To the extent the hospital is perceived as pushing a particular type of arrangement, I think it’s likely you are going to get push back from your physicians.  Explain to them what the options are, discuss honestly and transparently with them what the pros and cons are of each, and then come to a common understanding about where on the continuum of alignment your organization and the physicians want to go.

 

Hospitals and physicians never get to the closing of a successful transaction unless and until several things happen.  Obviously you need to find a common structure and financial relationship that is perceived to be a win-win, but long before you ever get to the legal documents, the ground work has to be laid on the cultural values and trust issues.  That is to say, the physicians need to go into the transaction believing that the hospital will be a partner with them in a way that will be mutually advantageous.  Similarly, the hospital needs to go into the transaction with the understanding that their new physician partner may come to them with a different historical sense of value.

 

Robin Nagele, J.D., Post & Schell

One of the critical things that boards need to understand is that this needs to be a true partnership with the physicians on their staffs.  The changes, the development of clinical protocols, the changing way in which medicine is going to be delivered, can only be done with the leadership of the physicians.  They are the ones who have the know-how to understand how care should be delivered rationally.  They also have the stature within the physician community to get people on board. . .

 

Individual board members may be thinking, okay, what is my role in helping the hospital or the health system determine the path it wants to take in order to achieve better physician alignment?  The board’s role is an oversight role and I think in the most effective boards, it involves creating a dialogue with your senior executives, with your physician leaders, in a structured way, in the context of the board meetings, to say, we need to be thinking ahead.  We need to be thinking strategically over the next five years, over the next 10 years .. .   Saying to management, use the expertise of the medical leadership in working through these different issues . . . get the legal advice you need, get the business advice and the clinical advice and come back to us with a proposal we can react to and discuss.

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.

iProtean—Bylaws, Policies and Conflict of Interest

Hospitals have done relatively well in managing board-level conflicts of interest in the last several years, both as a matter of internal necessity and because of increasing demands from the IRS.  In today’s environment, however, new questions concerning “constituent” interests have surfaced.

 

“Constituent” interests refer to situations when individuals elected to a joint venture board may be perceived to represent specific constituencies of the joint venture, thus possibly overriding their fiduciary duties to the joint venture itself.  “Constituent interests are particularly prevalent in healthcare,” according to the authors of a recent publication in AHLA Connections.  A noteworthy example of a venture with multiple investments and, thus, possible constituent interests, is the Accountable Care Organization. (Peregrine and Schreck, “Managing Constituent Interests in Healthcare Joint Ventures,” AHLA Connections, March 2012)

 

In the iProtean course Bylaws, Policies and Conflict of Interest, healthcare attorneys Monte Dube, Elizabeth Mills and Robin Nagele, and healthcare governance expert Lawrence Prybil, Ph.D. discuss the parameters of conflict of interest at the board level.

 

Monte Dube, Esq., Proskauer

What does the law say, both not-for-profit corporation law and IRS rules and regulations, about managing conflicts?  It’s really simple.  And you should have this procedure set forth either in your corporate bylaws or in a special separate conflict of interest policy. First, conflicts are allowed.  How do you manage them?  Number one, they need to be disclosed . . . annually, in writing.

 

Robin Nagele, J.D., Post & Schell

One of the things the IRS looks at when assessing whether a hospital is entitled to its tax exemption is the possibility for conflicts of interest within the board, and also the transparency of the board’s decision-making process.  Basically, the notion is the IRS doesn’t want the hospital’s executives and its board to be doing insider deals that will benefit people affiliated with the hospital and its board members, and to be making decisions in a way that is perhaps taking inappropriate factors into account, such as the personal relationships, the family relationships, the business relationships that individual board members may have or individual executives may have.

 

Monte Dube, Esq., Proskauer

Not-for-profit, tax-exempt hospitals are allowed to have conflicts of interest at the board level.  In fact, it’s the rare hospital board that doesn’t have some conflicts of interest at the board level . . . Conflicts though aren’t per se bad.  On the contrary, the law anticipates that your hospital will have conflicts of interest.  The key is to manage the process of conflicts appropriately.  It is all about process.  Managing conflicts appropriately is all about disclosure and allowing the board to take action without the conflicted board member’s vote being part of the ultimate decision-making.

 

If you are one of the thousand or so governmental hospitals in America that is owned and operated by a city, a county or a district, you may well have unique and special laws which apply to how you may navigate the conflict of interest problem.  Make sure you talk to your counsel so you know the rules of the road.

 

Elizabeth Mills, Esq., Proskauer

It takes a lot of talent and interest to be a hospital trustee.  Particularly in less populated areas, there may not be a lot of people in town who are able or willing to take on that role.  In many cases, there will be conflicts on the board.  People who are on the board will provide services to the hospital, perhaps because they are the only ones in town who provide that service.

 

Having a conflict is not bad.  Having an unmanaged conflict is bad.  That is why you need to identify potential conflicts and then address those in the particular situation in which they arise.  For example, if you need to buy equipment from a vendor who is on your board, he or she doesn’t participate in the discussion or the vote on who to buy that equipment from, but that doesn’t mean that person is a second-class board member.  It just means in this particular case we have to manage the conflict very transparently so that everyone—the attorney general, the IRS—knows that we are taking these steps to act in the best interests of the hospital.

 

Robin Nagele, J.D., Post & Schell

The IRS is also looking for transparency, and there may be state law requirements as well.  Some states have sunshine laws that require all board deliberations to occur in a public setting.  The transparency requirement is certainly a function of the IRS process . . . Again, [this is] all part of a larger picture in which the government wants to make sure that decision-making is rational, objective, based on the facts and not based on any secret agendas or undo influence from within the board room.

 

Lawrence Prybil, Ph.D., University of Kentucky

The guiding principal is when in doubt, declare a conflict of interest and absent yourself from any decision-making that could be criticized—either where you could be criticized or the hospital could be criticized.  To be meticulous in disclosures and honoring your conflict of interest policy is the best prescription for avoiding problems.

 

For a complete list of iProtean courses, click here.

 

iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here.

 

For more information about iProtean, click here.