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Board Work Blog

Posted on August 24, 2016 by James A. Rice, Ph.D., FACHE

 

Recent discussions with board chairpersons have surfaced 5 important challenges they anticipate for the coming year:

1.    How much to invest in IT systems?

2.    How to support your CEO, but also hold them accountable for stretch performance goals?

3.    How to earn respect among physicians as colleagues in a shared journey for population health gains?

4.    How to set and manage goals for our board performance improvement?

5.    How to recognize and reward board work?

Each challenge will be the focus of a future “Board Work Blog

As you wait to see the next Blog, ask your CEO and fellow board members, “What are our 5 most challenging issues we are likely to be dealing with in the coming year?

  • Perhaps a merger or strategic alliance?
  • Perhaps a partnership with a local public health department or a Federally Qualified Health Center (FQHC) to better serve high risk and poor populations in your region?
  • Perhaps a whistle blower law suit on your physician contracting or patient billing arrangements?

As you sort through your board’s priorities, you might want to listen to the insights from John Leifer in Trustee Magazine about board work style[1]. He recently shared 5 very sensible imperatives for board chairpersons as they seek to lead boards prepare for the challenges of the future:

1.    Communications: establish a culture of trust among hospital leaders to speal the truth and challenge conventional wisdom.

2.    Culture: encourage an open study of the organization’s core values, and engage in conversations about how to support such virtues as:

  • Fairness
  • Equity
  • Dignity
  • Humility
  • Mutual respect
  • Passion for excellence

Value-Drive: Study perceived value of all services to the community, and then map actions to optimize quality, accessibility and efficiency.

4.    Environment: Study market needs and pressures and make sure plans are aligned with these requirements.

5.    Governance: Continuously improve your processes, and cultivate board members that define and follow a personal plan that furthers the organization’s mission.

  



[1] Leifer, John, Trustee, July-August 2016, page 24

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Top Business Leaders Report on Commonsense Governance Principals

Posted on August 4, 2016 by James A. Rice, Ph.D., FACHE

 

Recently, a committee of top business and financial leaders, including Warren Buffett, CEO of Berkshire Hathaway, and Jamie Dimon, CEO of JPMorgan Chase & Co., issued the Commonsense Corporate Governance Principles. These principles support strong independent boards, transparency, and long-term value creation, and in the process, build increased shareholder confidence. They will likely spark an important dialogue between boards and stakeholders about improving corporate governance practices.

As you and your board leaders review these principles, have a conversation at your next board meeting about how you might want to enhance your policies or code of conduct to continuously strengthen your governance model?!

All the best in your journey to accountable care and accountable governance.

 

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10 Successfully Designed Physician Leadership Academies

Posted on July 25, 2016 by James A. Rice, Ph.D., FACHE

 The move to clinical integration needs more than smart care management protocols. You need to find, develop, support, review, and reward a new generation of physician leaders. Physician leadership development, however, is easier to talk about than to accomplish. Ten examples of effective “Physician Leadership Academies” are profiled for your leaders to emulate in out own local planning and program refinements.

To secure the needed number and quality of physician leaders, hospital boards are authorizing increased investment into the formation and enhanced operation of physician leadership academies.

The scope and nature of physician leadership academies have expanded substantially during the past five years to support physician leaders in their successful achievement of three classic performance imperatives:

  • Align physicians’ time and talents to deliver a superior patient-care experience in a coordinated continuum of care system;
  • Encourage physician engagement for the design of new medical care protocols that yield enhanced clinical quality outcomes and cost effectiveness; and
  • Earn service volume gains from better designed and managed clinical service lines, referral support systems, and physician co-ventures in new high-tech and high-investment diagnostic and surgical centers. 


Successful designs for physician development programs can be studied in these 10 health systems:

1. Baylor Scott & White Health – STEEEP® Global Institute

2. Carilion Clinic

3. Cleveland Clinic – Samson Global Leadership Academy

4. Dignity Health

5. Florida Hospital

6. Legacy Health

7. Beaumont Health

8. Sanford Health

9. Sutter Health

10. UnityPoint Health


Physician leadership associations can also help1Through associations, physicians can strengthen their ability to effectively lead both clinical and nonclinical healthcare colleagues and advance as leaders in the healthcare delivery system.

The primary organizations that serve these purposes are the American Association for Physician Leadership (AAPL); the American College of Healthcare Executives (ACHE), in part through its Physician Executives Forum; and the American Hospital Association's Physician Leadership Forum.



 

5 Actions Boards Should Consider to Lessen the Disruptiveness of CEO Turnover

Posted on July 25, 2016 by James A. Rice, Ph.D., FACHE

Hospital CEO turnover rates continue to disrupt organizational stability. Boards should consider five actions for Leadership Continuity. 

“Elevated turnover among hospital CEOs seems to be a feature of the current healthcare environment,” says Deborah J. Bowen, FACHE, CAE, ACHE's president and CEO. 

 

Hospital CEO turnover in 2014 decreased to 18 percent, and remains among one of the highest rates reported in the last 15 years, according to a recent report by the American College of Healthcare Executives. The turnover rate in 2012 was 17 percent, and in 2011 and 2010 it was 16 percent. The annual rate has fluctuated between 14 and 18 percent in the decade prior to 2013.

Excellent management continuity is essential for organizational success, yet too many boards and C-Suite leaders fail to follow a disciplined roadmap to plan, prepare, and promulgate an organized process to replace a CEO or other senior C-Suite Executives.

A strategic thinking board benefits from a focused, forward-looking plan to help assure a good outcome for the organization, whether the new leader comes from the current management team or is recruited from outside.


Here are five actions for boards and leaders to discuss in the boardroom:

 

Action 1: Study Factors that Contribute to Turnover

Action 2: Document the Risks of Unplanned Executive Departures

Action 3: Map Departure Scenarios for C-Suite

Action 4: Build Simulation of Leadership Transition Plan

Action 5: Adopt an Emergency Continuity Policy

 

Action 1: Study Factors that Contribute to Turnover

 

It has become clear in the ACHE that key factors driving the turnover rates are:

o   The continuing trend of consolidation among organizations,

o   The increasing demands on chief executives to lead in a complex and rapidly changing environment, and

o   Retirement of leaders from the baby boomer era.

 

Their findings serve as a reminder for healthcare organizations to ensure they have appropriate strategies in place—including robust succession planning—to successfully manage senior leadership changes.

  

Action 2: Document the Risks of Unplanned Executive Departures

 

The lack of a pre-planned leadership continuity strategy exposes the organization to some significant and disruptive risks:

1.     Confusion among community leaders about the strategic path for the organization

2.     Uncertainty and eroding morale among middle managers

3.     De-celebration among physicians to push for clinical integration initiatives

4.     Weakened negotiation influence with payors

5.     Unfocused compliance with billing and physician contracting oversight

6.     Loss of other senior executives in C-Suite

7.     Loss of momentum to earn market position against active competitors

 

Action 3: Map Departure Scenarios for C-Suite

 

Having a leadership transition process in place helps to relieve potential anxieties on the part of the Board, departing CEO and other senior executives, as well as physician leaders, staff, and the community at large. Invest a few hours with an experienced adviser to identify likely departure scenarios, and then map positive and negative implications of each. Common scenarios could be:

o   The CEO retires

o   The CEO becomes incapacitated by health or scandal issues

o   The CEO is recruited away to another organization

o   Multiple senior executives in the C-Suite announce planned moves to other systems

Seek input on the implications for such scenarios from such diverse stakeholders as board members, physicians, middle managers, payers, strategic alliance partners, and others.

  

Action 4: Build a Simulation of a Leadership Transition Plan

 

Boards can review the implications from alternative departure scenarios and develop a simulated process of how they would/should respond, before, during and after each of the potential departure scenarios. This simulation work, in advance of its need, helps minimize the risks and maximize the benefits of leadership team changes.

 

The obligation to have on your shelf or in your files a well-articulated continuity plan is clear:

o   You can know how your leadership team will assure a continuing sequence of qualified people to move up and take over when the current generation of managers and key people retire or move on.

o   Your governance leaders will more likely be able to continue to exercise good stewardship and to know that management excellence is not dependent on the good health or good behavior of any given individual.

o   You will be more likely to define how the organization can properly develop and nurture its human capital for organizational success

 

An effective Leadership Continuity Planning process should have these 10 steps:

 

1.     Initial fact-finding about the age, career plans and timing of possible change for each C-Suite member.

2.     Design board involvement in all scenarios and contingency situations

3.     Map the ideal competencies needed not just within the CEO position, but in all senior executive and physician leadership posts

4.     Interview & assess team members about needed personal and professional development requirements for the next 3-5 years

5.     Develop leadership team profiles and position descriptions that anticipate the needs of your strategic plan, competitor threats, and strategic alliance opportunities

6.     Update your annual leadership performance assessment and management processes

7.     Discuss alternate implications of changes in senior management on middle management, medical staff continuity, and the performance of the physician enterprises

8.     Model alternative executive compensation models

9.     Explore ways to strengthen your executive and board member onboarding processes

10.  Develop clear communication plans for each unique internal and external stakeholder that can be update easily when needed for various continuity situations and strategies

  

Action 5: Adopt an Emergency Continuity Policy

 

While designing a long range continuity process within certain scenarios is a healthy discipline for boards, it is also imperative to update your Emergency Continuity Policies and Process.

According to The Governance Institute, just 24 percent of hospitals and health systems keep their succession plans current—and some consultants say that’s a rosy figure. More than half of healthcare organizations admit they have no succession plan—20 percent higher than other industries—even though two out of five new corporate CEOs fail in the first 18 months. And just 15 percent of freestanding hospitals know who their next CEO will be, compared with 60 percent of businesses. 

A plan for the unplanned departure of a CEO covers, at a minimum, four actions:[1]

 

1. Who will step in to run the place right now? The board has three choices: an executive already on staff; an outsider who can serve as an interim CEO until the board can find a permanent leader, a search that usually lasts at least four months; or a management firm that can keep the hospital running.

2. How much authority will the interim CEO have? A plan for an unexpected CEO vacancy should outline performance expectations for the interim CEO and any limitations on the stand-in’s authority.

3. How will we choose the permanent CEO? Once the hospital or health system is in the capable hands of a trusted interim administrator, the board must quickly turn its attention to the months-long job of finding a new CEO. A good emergency plan outlines such first steps as: It identifies the executive search firm chosen by the board to handle the task, and it might name internal candidates whom the board can consider as possible candidates for the vacated position.

4. How will stakeholders be informed to minimize distractions and disruptions? Board leaders should have a crisis communication plan on the shelf that can be refined based on the current situation and context.[2]

 

Turbulent Waters. Uncharted Pathways. An Untested Compass.

Posted on July 25, 2016 by James A. Rice, Ph.D., FACHE

 

Just as these factors can frustrate a successful expedition in a strange land, so will they cause health system boards to uncover difficult risks in their transition from volume to value situations. Our work with boards across the US finds a baker’s dozen of 13 key risks facing the work of hospital and health system boards.

The Conference Board understands that any business is exposed to risks that can threaten its ability to execute its strategy. For this reason, strategy and risk oversight are inherently connected. Today, more than ever, the board of directors is expected to thoroughly assess key business risks and ensure that the enterprise is equipped to mitigate them.1

At Gallagher Integrated, we have identified these 13 risks:2

1.     Physician Contracting

2.     Relationships among board, medical staff and administrative leaders

3.     Accreditation

4.     Philanthropy and donor relations

5.     Population health management

6.     Tax-exemption

7.     Stakeholder engagement

8.     Executive oversight

9.     Quality of care oversight

10.   Payer contracting

11.   Capital financing

12.   Talent erosion

13.   Strategic Alliances

 

Practical dimension of these risks and how to remove or reduce them can be found in this downloadable resource:

How prepared is your board to manage and mitigate these risks? Which risks are the most important for your context in the coming year?


Contact our advisers to explore how to develop a customized Risk Mitigation Plan for your organization by emailing info@ihstrategies.com
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