Governance in a Hurry

Carrie Vaughan, for HealthLeaders Magazine , January 13, 2009
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A new president, reimbursement shifts, and a struggling economy add up to a quickening pace of change in healthcare. Will your board be able to keep up?

The concept of change is a given in healthcare. Technological and clinical advancements alter the way care is delivered. Regulations and reimbursement structures continually shift.

But the current healthcare climate is changing exponentially. The 44th president of the United States takes office this month. Economic challenges abound. Credit markets remain tight. And Medicare's hospital trust fund is projected to be insolvent by 2019. Some of these events have already yielded casualties, with some hospitals shutting their doors and other healthcare facilities laying off employees, cutting service lines, and filing for bankruptcy.

Healthcare organizations must react to these constantly shifting market dynamics if they want to survive. "Everything is moving faster," says Tim Rice, president of Lakewood Health System in Staples, MN.

"Opportunities, when they do arise, all require a careful review and assessment. But if it takes a considerable amount of time, today some of these opportunities are lost."

It's not just clinicians and administrators who must be adaptable, however. As with just about everything in healthcare, organizational agility should start at the top with the board of directors. Unfortunately, hospital boards historically have not been particularly nimble, says William K. Cors, MD, vice president of medical staff services with The Greeley Co., part of HealthLeaders Media's parent company, HCPro Inc. "Boards are well-meaning people who in many organizations are inherently conservative and slow to act," he says. The result? Getting a project approved can take years. But that doesn't have to be the case.

Beyond meetings
It took a mere three months for Lakewood's board of trustees to approve the construction of a new $42 million hospital facility. One of the keys, Rice says, was communication between the C-suite and the board outside of the traditional meeting structure, leaving only action items for the 90-minute weekly meetings.

Rice provides board members with a hefty board packet that includes the president's report, which contains background information about the hospital's initiatives. Additionally, Lakewood also has the flexibility to add meetings if circumstances warrant. "We met with the board on this new facility during different phases of development. We did have special board meetings, but I think only three, up to the process of making the decision to build," says Rice.

Hospital administrators provided trustees with analysis of the construction project, followed by a presentation with more in-depth financial figures, before finally presenting the implementation plan that contained three deliverables outlined by the trustees—namely that Lakewood had to increase its net income to ensure that it could cover the debt at the time of construction, obtain a critical-access hospital designation, and get public approval for the project. Lakewood met its targets and now boasts a 25-bed critical-access hospital, 100-bed long-term care center, an assisted living facility, an Alzheimer's unit, and a 10-bed behavioral health unit.

Building trust
For smaller projects that don't require a substantial capital outlay, like contracting with a new physician, the administration doesn't have to wait for board approval. "When an opportunity comes up, we'll keep the board informed, but we don't have to wait until the next board meeting to make a decision," says Rice.

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