Health care board performance evaluation has evolved significantly over the past 25 years. Once conducted to comply with a Joint Commission standard requiring boards to evaluate their own performances, board self-assessment is widely recognized as an important way to demonstrate commitment to continuous improvement. In fact, the idea that "you can't improve what you don't measure" has become so ingrained that the Joint Commission no longer calls out the need for evaluation in an explicit standard, but says that regular assessment should be a routine activity in which organizations, their leaders and their boards engage to improve performance.
Many boards agree. A 2009 study of governance in community health systems led by researcher Lawrence Prybil found that while 89 percent of boards engaged in formal performance assessment, the percentage was higher among high-performing boards. This confirms the conclusions of previous studies that suggest that board evaluation is among the top activities boards can undertake to improve both their ability to work as a team and their overall performance.
The practice of reviewing board performance has evolved to include individual board member assessment, incorporating peer feedback, evaluation of board leaders, and assessment of the quality of board and committee meetings. However, full board evaluation remains the cornerstone of the process and results often are used along with the findings from these other evaluation processes to provide a more comprehensive picture of performance and to foster insights into governance strengths and challenges.
Most governance experts agree that effective full-board evaluation processes share such common features as:
- Conducting the assessment at least once every two years;
- Using tools like surveys or interviews to gain feedback about board performance from trustees and senior leaders in the organization;
- Using the feedback to foster candid discussion among the full board about its performance;
- Conducting this discussion outside of regularly scheduled board meetings, often away from the hospital during a board retreat;
- Developing an action plan that identifies and addresses opportunities for governance performance improvement;
- Regularly monitoring and reporting on progress toward implementing the action plan;
- Assessing the action plan and modifying it as needed during the next board evaluation process.
Many boards also want to compare themselves with similar boards or with their own performance over time as a point of reference. All of these features, including a comparison database, are part of the Governance Assessment Process—for boards of freestanding hospitals, health care system boards and boards of hospitals in systems—facilitated by the American Hospital Association's Center for Healthcare Governance.
Room for Improvement
A review of GAP data from freestanding hospital and system boards from 2007 through 2009 show that while most boards place their performance in the high range across several dimensions, they also identify a variety of opportunities for improvement. Areas in which boards rate their performance in the low or medium ranges provide insights into challenges they may need to address in this climate of change and reform.
The governing boards of 33 freestanding hospitals participated in GAP from 2007 to 2009. The GAP survey for freestanding hospitals includes 11 sections:
- Foundational characteristics, which focus on the board's commitment to its own effectiveness, the hospital and its stakeholders
- Basic roles and responsibilities, such as understanding of the board's fiduciary duties, conflicts of interest and confidentiality
- Oversight of mission, vision, goals and strategies
- Responsibility for executive performance and compensation
- Measuring, monitoring and assessing hospital quality and safety
- Setting objectives for, monitoring and evaluating hospital financial performance
- Board structure
- Board composition
- Board meetings
- Board culture
- Governance infrastructure
While average performance within each section did not vary substantially over time, most sections included one or more questions where boards rated their performance in the medium range. These questions and the direction of average performance on each over a three-year period are listed in the sidebar below.
Key Practices
The GAP survey provides a response range of 1 (low performance or not reflective of board practice) to 5 (high performance or compliance with a particular board practice).
Several board practices are described below. Where data regarding the same practice are available from GAP surveys of boards in systems, these results also are referenced.
- In the past two years, this board has had a briefing, in-service educational program or discussion regarding its legal fiduciary duties of loyalty, care and obedience. Results for this board practice saw positive movement among freestanding hospital board respondents from 2007 to 2009. During these years, 402 trustees rated their board's performance on this practice and the number of responses agreeing with the statement increased by 17 percent. On average, overall scores also moved from the medium to the high range. Responses to this board practice over time suggest that more boards now may be receiving education about their key fiduciary responsibilities. While boards traditionally have interpreted their fiduciary role to focus primarily on stewardship of the organization's assets and financial resources, keeping abreast of fiduciary responsibilities likely will become even more important as board stewardship of quality and patient safety is viewed as a responsibility that is becoming as important or even more so than its financial oversight responsibilities.
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The board has a CEO succession or transition plan in place and updates it periodically. This board practice is among those receiving the lowest performance scores on the freestanding hospital board GAP survey, with average responses hovering close to the low-performance range. This level of performance is not surprising, given that a national survey of health care CEOs conducted by Witt/Kieffer in 2006 indicated almost two-thirds of respondents said their organizations did not do any deliberate CEO succession planning. However, although GAP data for this practice showed a slight movement upward from 2007 to 2009, continuing performance at lower levels is now cause for heightened concern. Studies conducted by The Synergy Organization have documented the disruption and increased costs an organization likely will incur if its CEO leaves and a successor is not put into place in a smooth or timely manner.
However, survey results reported in the July/August issue of Trustee by Bruce Sherman, Integral Advisors LLC, suggest that boards that do not attend to CEO succession planning are putting their organizations at even greater risk. In-depth interviews conducted by Integral Advisors and Board Advisor LLC with investment analysts, pension advisors, investment banks, private equity investors, ratings agencies and several equity-related organizations suggest they increasingly downgrade organizations that fail to give succession planning their full attention at both board and management levels. Investors look for active board involvement in succession planning, and prefer companies in which the board reviews succession planning annually and has both emergency and nonemergency succession plans in place. "Our research suggests an urgent need to reverse past practice regarding succession planning in health care organizations, particularly in light of the organizational changes that health care reform portends," noted Sherman.
- Annually, the board reviews the organization's medical staff development plan. Responses from 387 trustees indicated less agreement in 2009 than in 2007 that their boards conducted this practice. Governing boards that have not kept their focus on this oversight responsibility may find it challenging to ensure their hospitals develop close alignment with the primary and specialist physicians with which they need to partner to participate effectively in accountable care organizations, patient-centered medical homes and other forms of service delivery emerging under health care reform.
- This board has formulated position charters that specify its most important expectations of directors. Performance for this practice, as assessed by 391 trustees, showed a 12 percent increase from 2007 to 2009, moving toward the higher end of the medium range. It is difficult for board members who have not received a written description of the expectations associated with board service to be held accountable for those expectations. Lack of position descriptions also may help explain the results regarding individual trustee performance assessment described in the sidebar.
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Prior to the conclusions of their terms, directors undertake a formal self-assessment of how and how well they are performing their roles, and employ the results to engage in personal action planning to improve their performance and contributions. Results of the GAP data analysis show that ratings indicating board compliance with this practice declined from 2007 to 2009. Some 378 trustees of freestanding hospitals provided responses, and overall scores decreased 11 percent. Average ratings were in the medium range all three years and moved to the lower end of the medium range by 2009. GAP data from 2007 to 2009 from 20 system boards with 264 trustees responding also showed that on average these boards scored their performance on this practice as low or medium 65 percent of the time.
A board only can be as strong as its weakest member. Trustees cannot systematically improve their own performance and contribute to the performance of the board as a whole if the board does not assess the performance of its individual members. This type of evaluation typically provides feedback on individual strengths and weaknesses, which then leads to development of a personal plan for performance improvement. Data from individual performance assessments also can help boards decide whether to reappoint trustees for additional terms. - Annually, the board specifies the key objectives it must accomplish and formulates an associated work plan. Responses from 401 trustees of freestanding hospitals regarding this board practice indicated that medium-range performance changed very little from 2007 to 2009. On average, 40 percent of the 20 system boards that responded to GAP during this period also characterized their performance on this practice as falling in the low or medium performance range. Boards that set objectives and develop work plans to accomplish them are more likely to effectively and intentionally support achievement of their organization's mission and goals than those that do not. Alignment of all organizational leaders and a clear understanding of relative roles and responsibilities likely will become more critical as multiple organizations seek to collaborate more closely to deliver care across the continuum in an environment of reform.
- On average, more than 75 percent of board meeting time is spent in active discussion, deliberation and debate rather than listening (to briefings, presentations and reports). Results from 403 trustees of freestanding hospitals indicated that performance on this board practice remained in the medium range in 2007 and 2008, falling close to the low range in 2009. On average, 84 percent of the 20 participating system boards that responded to GAP surveys between 2007 and 2009 assessed their performance on this practice in the low or medium ranges. This level of performance across all respondents is cause for concern, especially because Prybil's 2009 research also suggests boards in high-performing organizations are more likely to actively engage in discussion, debate and decision-making than those in lower-performing organizations.
- In board meetings, participation among directors is roughly equal. Responses from 412 trustees of freestanding hospitals consistently rated their board's performance on this practice in the medium range from 2007 to 2009. Eighty-five percent of 20 participating system boards on average also rated their performance on this practice in the low or medium range from 2007 to 2009. This level of performance could be explained by a variety of factors, including some trustees being less prepared for meetings than others or board chairmen who fail to seek feedback and participation from all board members. However, it is clear that many boards are failing to benefit from the full range of knowledge and skills their members bring to the board table.
Ready or Not?
GAP data suggest that while participating hospital and system boards are likely to face several challenges in the emerging environment of health reform, only boards that understand where opportunities for improvement exist can then take action to address them.
Jared Swiecicki (jswiecicki@aha.org) is a program specialist at the Center for Healthcare Governance, Chicago.
