To discuss challenges boards face in fulfilling their fiduciary responsibilities in these times of rapid change: ◦ financial stability ◦ strategic planning and ◦ information systems. Presented by John F. Tiscornia, MBA, CPA Estes Park Institute Senior Fellow To provide boards with questions to ask to assist in Health Financial Planning & Governance fulfilling their responsibilities. 1 2 Healthcare Reform Environment In 2012, health industry organizations will connect in new ways with each other and their consumers as they Some Governance Responses wade through economic, regulatory, and political Governance Challenges uncertainty. ◦ Agility in financial and strategic planning ◦ Meaningful relationships PwC Health Research Institute | Top health industry issues of 2012 ◦ I.T. ‐‐ meaningful use ◦ Culture of accountability ◦ Board competence and culture Questions for Trustees 3 4 Increase in committees Increased IT budget Value based purchasing becomes reality Focus on independence of directors Decreased utilization continues Streamline and clear governance structures Providers and insurers focus on population health Focus on board competence and culture Increased investments in health informatics Insurance exchanges: Health plans learn to compete in a new Increase advocacy marketplace Based on PwC Health Research Institute | Top health industry issues of 2012 5 6
A turbulent environment demands agile Board’s role Organizational Priorities organizations Order of Step 1 (Framework) ◦ Finance will be the driver Development Mission During Development Reflect our Values Refine ◦ Clinical transformation will be at the heart Represent our Vision Challenge ◦ Enhanced information systems will be essential Strategies ◦ The impact will be complex and enterprise ‐ wide (include measurable goals) Step 2 After Development Represent decisions Endorse Choices of A, not B Monitor I mplementation Plan Tactics Actions Delegate to Step 3 Timetables management 7 8 8 Hi High gh The Board is responsible Management is responsible F G for: for: Strategic Importance D B Expand/Deferred Market ◦ Formulating the Vision ◦ Development of the Strategic Develop Competitive Advantage Determining the organization’s Plan C goals E ◦ Implementation of the ◦ Guiding strategic direction A Strategic Plan ◦ Monitoring strategy ◦ On ‐ going operations High Hi gh Low Low ◦ Monitoring organizational risk ◦ Organizational risk Economic Contribution Revenue Enhancement Cost Reduction 9 10 Agility in Planning Physician Whiplash Strengths Medicine Leadership Strengths Agile organizations will rely more on physicians Demand credibility ‐ then ◦ A critical mass of highly Prescribe and comply Lead commit competent physician leaders Short, medium and long- Immediate and short-term Outcomes focused term results ◦ An organizational culture Complex processes with Highly intelligent and Procedure/episode within which they can lead lots of stakeholders multifaceted Hard science Social science Exceptional learners “The” expert One of many experts Good under pressure Relating to healthy people Relating to sick/injured Sense of purpose and with different needs and people significance nature Adapted from Physician Integration and Leadership Performance, Gordon White, The O’Brien Group 11
Agility in Planning: Essential Evolution of Cultures Integrated Health System • Make leadership roles fit the work and desired outcomes of the organization • Focus on capability, not representation • Expand roles as capability increases Physician Hospital/ Physician • Make room for new leaders and don’t burn out veterans System Group • Provide support and development for success Centric Centric Centric • Design flexible compensation models • Be worthy of the physicians who are willing to lead “However beautiful the strategy, you Healthcare reform Huge capital investments in IT will be required should Bundled payments and ACOs, will require Healthcare occasionally look systems to ◦ assemble the right components to deliver care cost at the results.” effectively Winston Churchill ◦ align themselves with physicians The downturn in economy has put some formerly stable organizations into distress. 15 16 Respondents expect to…. Per Cent Would the community be better served? be involved in acquisition of a distressed 56% acute ‐ care hospital Are the missions and cultures compatible? or other service provider; i.e., ASC Will clinical integration equal better quality? be involved in acquisition of a healthy hospital 60% or other service provider Will costs be reduced? acquire a physician practice 92% Will consolidation serve physicians and help physician acquire diagnostic imaging centers and/or 4% integration? ambulatory service centers believe access to capital to be the most challenging 65% Can infrastructure costs and investments be aspect of an M&A process spread over larger base? Source: Hospitals and Acquisitions: Opportunities and Challenges Will the access to capital improve? Karen Minich Pourshadi, November 2010 17 18
Multiple Relationships: How Ready is your Organization? The HITECH act stipulates that, beginning in 2011, healthcare providers will be offered financial incentives for Are we prepared for the impacts of Health Care Reform? demonstrating meaningful use of electronic health records Are we establishing measurement criteria in a strategic (EHR). planning process? Starting in 2015, providers are expected to have adopted Have we established planned outcomes and performance and be actively utilizing an EHR in compliance with the metrics? “ meaningful use ” definition or they will be subject to Do we have a plan for the organization will stay financially viable financial penalties under Medicare. at all times? The ultimate goal of meaningful use of an electronic health Do we plan to discuss strategic plan progress at each Board meeting? record is to enable significant and measurable Do we spend 50% of the Board meeting on strategy? improvements in population health through a transformed Will we restructure the Board if necessary? health care delivery system. 19 20 CEOs believe IT operating and capital budgets 86% Hospitals have implemented Computerized 31% Physician Order Entry (CPOE) on at least one unit. will more than double by 2016 (Future Scan 2011). Those hospitals typically have 20% higher staffing levels in IT than their peers without CPOE. CEOs believe that hospitals will dedicate a 79% (Maestro analysis of HIMSS Analytics data, June 2011). sizeable portion of their EHR budgets to train Survey respondents say that 70% physicians on effective use of EHRs (Future Scan 2011). IT is still regarded in their institutions principally as a support function Hospitals expect that they will incur penalties 55% rather than a strategic one. (The for not complying with MU by 2015 Economist Survey of U.S. Healthcare (AHA Trend Watch April 2010). CIOs, October 2010). 21 22 Building a Culture of Accountability Competencies of board members Translate strategy into specific objectives Competence of the board as a whole Coordinate actions across levels and work units and follow up on progress. Agility in decision ‐ making Provide accurate and timely Succession planning information to employees. for leadership Ensure that your actions are consistent with organization objectives, values, and priorities. Clarify expectations and head off potential problems. 23 24
Board development Are you asking the right questions? ◦ Understand healthcare industry ◦ Have sufficient information ◦ Understand role of governance and management Board culture ◦ Candid discussions ◦ Ask tough questions ◦ Hold management accountable 25 26 Does the board regularly have extended strategy Do we have the right board committees? discussions? Is our strategic planning and process agile? Is the IT budget clearly integrated into the Is our strategic plan able to be flexible and responsive To organization’s strategy? changes in the environment? Does the organization have the appropriate strategy and Does the board understand the environment, the models to integrate physicians into our healthcare system? implications for the organization and the resulting Does the organization have a formal plan to develop our chronic stress for CEO and senior leaders physicians as leaders? Does the board itself accountable for its knowledge Has the organization developed a culture of accountability? and support of the CEO and hold the CEO Has the board developed criteria for potential partners? accountable for the execution of the organization’s For mergers? For Affiliations? strategy? 27 28
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