Blog submission by Anne McGeorge, national managing partner of Grant Thornton LLP’s Health Care Practice
Health care as a business is changing dramatically. Between health care reform, shrinking reimbursements, accountable care, electronic health records, new technologies, growing scrutiny from regulators and other transformative aspects of health care, hospitals and health care systems are under more pressure than ever to adapt for the future. Effective governance is more important than ever, but what are the best governance features at leading health care systems?
We can answer this question based on many of the findings cited from a recent study Governance in Large Nonprofit Health Systems and an earlier study, Governance in High-Performing Community Health Systems. Led by Principal Investigator Dr. Lawrence Prybil, both studies examine health system governance structures, practices, and culture in relation to contemporary benchmarks of good governance.
Here are some of the highlights about what we learned from these organizations and their leaders:
There is clear recognition that, because the environment is increasingly difficult and the challenges are becoming greater, establishing and maintaining a strong, values-based leadership team is absolutely imperative. Executive leadership and clinical leadership are working as a team like never before. A strong bond between the CEO and clinical leadership is essential — especially now as integrated delivery networks are emerging as the model for the provision of high quality, cost-efficient patient care.
About the changing role of physicians…
We have learned from talking to physicians, especially physicians new to the profession, that most don’t want to be in a stand-alone private practice. They see integration as their future. This is a distinct shift from what we saw 10 to 15 years ago. Now, it seems like there is a much more positive attitude about teaming with hospitals.
There also are more administrative leadership opportunities for physicians within health care systems than in the past. A growing number of physicians are rising to executive ranks within hospitals. For example, many health systems have physician CEOs. Also, we see more physician organizations where physicians have their own board and make their own decisions as a physician organization, but are still affiliated with the hospital organization. This has worked well as it gives the physicians independence, while still maintaining their alignment with the health system’s mission and strategy.
About the challenges to integration and coordination…
A shared vision and consolidation of systems and metrics are essential, but these can be a challenge for large health systems with many disparate systems. Trying to consolidate and streamline processes and information systems is a huge undertaking. For example, I was at a client yesterday, whose organization has 120 different financial systems alone. As they evaluate how to streamline their technology solutions, they are trying to create a common dashboard that will bring together all of their data into consistent metrics for decision making. The challenge is streamlining information systems in a cost-efficient manner.
About the need for boards to think strategically…
One of the striking findings from our current study of governance in these large health systems, Governance in USA’s Largest Nonprofit Health Systems, is the growth in attention and focus at the board level on strategy and strategic thinking. The boards of all these large systems recognize that they need to refocus how they spend their time, which is their most precious asset. Boards are making deliberate efforts to carve out more time for strategy and strategic thinking, and lessen the percentage of time they allocate to shorter-term, operational issues. Among these health systems, nearly 30 percent of board meeting time presently is being devoted to strategy and strategic thinking.
Most boards need more training in how to think strategically. Some organizations — and I applaud them — are holding strategy retreats, where they have outside speakers and strategy consultants who help them challenge the status quo. Another area that can be helpful for boards is training on how to identify big-picture, enterprise-wide risks that will affect the organization, such as competitors coming into marketplace, not integrating physicians quickly enough, not reacting to changes quickly enough, etc.
About the future of health care…
Boards recognize that the world and the health care environment have changed dramatically, and that their systems too must change. The health care delivery model is gradually changing from a fee-for-service model to a model of preventive wellness and payments for quality outcomes, more like an HMO or capitated environment. We cannot just focus on providing acute inpatient care to those who come to our doorsteps. Instead, we need to be asking questions about how to accommodate the needs of a changing population and new financial realities. Ultimately, health systems need to evolve, or they will not survive for the long haul.
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Anne McGeorge is a featured expert in the iProtean courses Introduction to Governance, Compliance, Board Effectiveness, Board Culture, Recruitment and Orientation, CEO Selection and Compensation, and Tax-Exempt Status & Community Benefit. She has worked extensively with large health systems, academic medical centers, managed care organizations, coalitions and purchasing organizations, health care private equity firms, and physician practices. She also focuses on helping clients with establishing community health needs assessments and board governance benchmarking. Look for her comments on tax-exempt status of hospitals in next week’s blog.
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