To discuss challenges boards face in fulfilling their fiduciary - - PDF document

Presented by John F. Tiscornia, MBA, CPA Estes Park Institute Senior Fellow Health Financial Planning & Governance

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 To discuss challenges boards face in fulfilling their

fiduciary responsibilities in these times of rapid change:

• financial stability
• strategic planning and
• information systems.

 To provide boards with questions to ask to assist in

fulfilling their responsibilities.

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 Healthcare Reform Environment  Some Governance Responses  Governance Challenges

• Agility in financial and strategic planning
• Meaningful relationships
• I.T. ‐‐ meaningful use
• Culture of accountability
• Board competence and culture

 Questions for Trustees

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In 2012, health industry organizations will connect in new ways with each other and their consumers as they wade through economic, regulatory, and political uncertainty.

PwC Health Research Institute | Top health industry issues of 2012

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

Value based purchasing becomes reality



Decreased utilization continues



Providers and insurers focus on population health



Increased investments in health informatics



Insurance exchanges: Health plans learn to compete in a new marketplace

Based on PwC Health Research Institute | Top health industry issues of 2012

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 Increase in committees  Increased IT budget  Focus on independence of directors  Streamline and clear governance structures  Focus on board competence and culture  Increase advocacy

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 A turbulent environment demands agile

• rganizations
• Finance will be the driver
• Clinical transformation will be at the heart
• Enhanced information systems will be essential
• The impact will be complex and enterprise‐wide

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Organizational Priorities

(Framework)

• Mission
• Reflect our Values
• Represent our Vision

Strategies

(include measurable goals)

• Represent decisions
• Choices of A, not B

I mplementation Plan

• Tactics
• Actions
• Timetables

Step 1 Step 2 Step 3 Order of Development

Board’s role

During Development

• Refine
• Challenge

After Development

• Endorse
• Monitor
• Delegate to

management

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The Board is responsible

for:

• Formulating the Vision

Determining the organization’s goals

• Guiding strategic direction
• Monitoring strategy
• Monitoring organizational risk

Management is responsible

for:

• Development of the Strategic

Plan

• Implementation of the

Strategic Plan

• On‐going operations
• Organizational risk

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• Strategic Importance

 Expand/Deferred Market  Develop Competitive Advantage

• Economic Contribution

 Revenue Enhancement  Cost Reduction F D G E C A Hi High gh Hi High gh Low Low B

 Agile organizations will rely more on physicians

• A critical mass of highly

competent physician leaders

• An organizational culture

within which they can lead

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Physician Whiplash Strengths

Medicine Leadership Strengths Prescribe and comply Lead Demand credibility ‐ then commit Immediate and short-term Short, medium and long- term results Outcomes focused Procedure/episode Complex processes with lots of stakeholders Highly intelligent and multifaceted Hard science Social science Exceptional learners “The” expert One of many experts Good under pressure Relating to sick/injured people Relating to healthy people with different needs and nature Sense of purpose and significance

Adapted from Physician Integration and Leadership Performance, Gordon White, The O’Brien Group

Agility in Planning

• Make leadership roles fit the work and desired outcomes
• f the organization
• Focus on capability, not representation
• Expand roles as capability increases
• Make room for new leaders and don’t burn out veterans
• Provide support and development for success
• Design flexible compensation models
• Be worthy of the physicians who are willing to lead

Hospital/ System Centric Physician Group Centric

Integrated Health System

Physician Centric

Agility in Planning: Essential Evolution of Cultures

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“However beautiful the strategy, you should

• ccasionally look

at the results.”

Winston Churchill

 Healthcare reform  Huge capital investments in IT will be required  Bundled payments and ACOs, will require Healthcare

systems to

• assemble the right components to deliver care cost

effectively

• align themselves with physicians

 The downturn in economy has put some formerly

stable organizations into distress.

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Respondents expect to…. Per Cent

 be involved in acquisition of a distressed

56% acute‐care hospital

• r other service provider; i.e., ASC

 be involved in acquisition of a healthy hospital

60%

• r other service provider

 acquire a physician practice

92%

 acquire diagnostic imaging centers and/or

4% ambulatory service centers

 believe access to capital to be the most challenging

65% aspect of an M&A process

Source: Hospitals and Acquisitions: Opportunities and Challenges Karen Minich Pourshadi, November 2010

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 Would the community be better served?  Are the missions and cultures compatible?  Will clinical integration equal better quality?  Will costs be reduced?  Will consolidation serve physicians and help physician

integration?

 Can infrastructure costs and investments be

spread over larger base?

 Will the access to capital improve?

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

Are we prepared for the impacts of Health Care Reform?



Are we establishing measurement criteria in a strategic planning process?



Have we established planned outcomes and performance metrics?



Do we have a plan for the organization will stay financially viable at all times?



Do we plan to discuss strategic plan progress at each Board meeting?



Do we spend 50% of the Board meeting on strategy?



Will we restructure the Board if necessary?

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Multiple Relationships: How Ready is your Organization?

 The HITECH act stipulates that, beginning in 2011,

healthcare providers will be offered financial incentives for demonstrating meaningful use of electronic health records (EHR).

 Starting in 2015, providers are expected to have adopted

and be actively utilizing an EHR in compliance with the “meaningful use” definition or they will be subject to financial penalties under Medicare.

 The ultimate goal of meaningful use of an electronic health

record is to enable significant and measurable improvements in population health through a transformed health care delivery system.

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 CEOs believe IT operating and capital budgets

86% will more than double by 2016 (Future Scan 2011).

 CEOs believe that hospitals will dedicate a

79% sizeable portion of their EHR budgets to train physicians on effective use of EHRs (Future Scan 2011).

 Hospitals expect that they will incur penalties

55% for not complying with MU by 2015

(AHA Trend Watch April 2010).

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 Hospitals have implemented Computerized

31% Physician Order Entry (CPOE) on at least one unit. Those hospitals typically have 20% higher staffing levels in IT than their peers without CPOE.

(Maestro analysis of HIMSS Analytics data, June 2011).

 Survey respondents say that

70% IT is still regarded in their institutions principally as a support function rather than a strategic one. (The

Economist Survey of U.S. Healthcare CIOs, October 2010).

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Building a Culture of Accountability

 Translate strategy into specific objectives  Coordinate actions across levels and work

units and follow up on progress.

 Provide accurate and timely

information to employees.

 Ensure that your actions are

consistent with organization

• bjectives, values, and

priorities.

 Clarify expectations and head

• ff potential problems.

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 Competencies of board members  Competence of the board as a whole  Agility in decision‐making  Succession planning

for leadership

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 Board development

• Understand healthcare industry
• Have sufficient information
• Understand role of governance and management

 Board culture

• Candid discussions
• Ask tough questions
• Hold management accountable

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 Are you asking the right questions?

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 Do we have the right board committees?  Is our strategic planning and process agile?  Is our strategic plan able to be flexible and responsive To

changes in the environment?

 Does the organization have the appropriate strategy and

models to integrate physicians into our healthcare system?

 Does the organization have a formal plan to develop our

physicians as leaders?

 Has the organization developed a culture of accountability?  Has the board developed criteria for potential partners?

For mergers? For Affiliations?

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 Does the board regularly have extended strategy

discussions?

 Is the IT budget clearly integrated into the

• rganization’s strategy?

 Does the board understand the environment, the

implications for the organization and the resulting chronic stress for CEO and senior leaders

 Does the board itself accountable for its knowledge

and support of the CEO and hold the CEO accountable for the execution of the organization’s strategy?

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