A study we completed in 2009 examined governance in 123 nonprofit community health systems located in 40 states. This study compared board structures, practices and cultures in these systems with contemporary benchmarks of good governance. The study included a survey of CEOs (with complete responses from 123 of the 201 systems in the study population) and on-site visits to 10 of the highest performing systems.
The site visits included one-on-one interviews with at least four board members: the current board chair, the immediate past chair, a senior physician board member and one member who had joined the system board within the past year. A total of 41 board members were interviewed. All were informed that the operating performance of their systems ranked in the top tier of the study population and, after a structured interview, each was asked a few open-ended questions. One was: "From your perspective, what are the key factors that have contributed to this high level of operating performance?" The trustees' responses to this question are presented here; the overall results of the entire study are reported elsewhere as noted at the end of the article.
Key Factors in Attaining Strong Performance
There are, of course, many factors that influence the operating performance of complex health care organizations. These include internal factors such as management and clinical staff capabilities and external factors such as payer mix. In individual interviews, board members at 10 high-performing health systems were asked to reflect and identify the "short list" of factors they felt have been most important in contributing to their system's strong operating performance. The trustees were articulate and spoke with conviction in expressing their views. Six principal factors or themes emerged from the interviews.
Strong, values-based CEO leadership. Interviewees at nine of the 10 systems commented on the vital importance of effective CEO leadership in achieving and maintaining a high level of system operating performance. Attributes mentioned frequently included CEO commitment to their system's organizational mission and values, stellar communications and relationships with the board and clinical staff, expertise in financial management and cost controls, a passion for continuous improvement and strategic vision.
At seven of the 10 systems, the importance of the system's overall management team was emphasized by many—in some systems, nearly all—trustees. There was broad-based recognition that effective teams with expertise in the full range of management functions are essential to successful system operations in the current health care environment. The ability to attract talent and build strong, effective management teams was widely recognized by these trustees as an essential characteristic of successful CEOs.
Board members at several systems acknowledged that former CEOs exhibited characteristics and relationships that impeded progress and exerted an adverse impact on organizational performance. These trustees expressed the opinion that their boards had been slow in replacing a poorly functioning CEO. A majority of interviewees underscored the importance of their CEO as the primary organizational leader in driving the system's operating performance to high levels and doing so in a fashion consistent with the organization's core values.
Well-understood mission, vision and values. Trustees at eight of the 10 community health systems emphasized—sometimes using different terms—the importance of having a meaningful systemwide mission statement, a compelling vision for the system's future and a clearly stated set of core values that are understood and supported by key stakeholder groups, both internal and external. There was general consensus that expressions of organizational mission, vision and values can be powerful in unifying stakeholders and galvanizing energy toward established goals and standards if they are consistently reinforced by organizational leaders throughout the system. Several board members recalled earlier periods in their system's history when such statements were "spoken" but not "lived." They spoke eloquently about how this has changed and the positive impact this has had on the organization's culture and success. They also recognized that building the understanding and support of key constituencies within the system and in the communities it serves is a challenge that requires continuous attention by governance and management leadership.
Strong clinical leadership and capabilities. At least one senior physician trustee was interviewed at all 10 systems. At eight systems, they and other trustees conveyed the vital importance of committed, competent clinicians as a critical determinant of operational performance. There is broad accord that without strong physician leadership, no hospital or health system can achieve enduring success. Several also spoke about the importance of nursing leadership in achieving clinical excellence and controlling costs.
Both physician and lay trustees in four locations stressed the importance of building strong, mutually beneficial partnerships between the system or its hospitals and physicians. At one community health system, all of the interviewees emphasized the development of a series of joint ventures with physician groups as a principal contributor to steady improvement in the system's operating performance in recent years. Another system is the product of a recent asset merger between a large, well-established multispecialty group practice and a major regional hospital. This merger was accomplished after a long planning process during which the leadership of both organizations concluded that the changing health care environment demands more fully integrated health care delivery models and new forms of collaboration. This integrated system is performing well, and the board members and CEO believe it can and should be replicated in other communities.
Committed and engaged board of directors. The existence of a highly committed, well-informed and proactive governing board that works collaboratively with the CEO and physician leadership was identified by trustees at eight systems as being highly important in attaining and maintaining organizational success. A substantial number of these interviewees had vivid memories of a previous period when their system's board was passive and had limited awareness of environmental, operational and strategic issues which eventually led to problems that threatened the system's future. These trustees often spoke with pride about the transformation of their board into a more effective body and expressed their commitment to seeing continued progress in the coming years.
Many board members stressed the importance of well-organized and staffed board committees, the leadership role of the board chair and a mutually supportive relationship between the board chair and the CEO. In this context, it is noteworthy that, in the structured portion of the interview process, all 41 trustees were asked, in their opinion, "Is there general agreement [within your organization] on the distinctions between the board chair's role and the CEO's role?" All of the interviewees responded affirmatively to this question, suggesting once again that role clarity is an important contributor to effective working relationships.
In discussing the contributions that effective boards can make to organizational success, trustees at most of these systems addressed, in various ways, the importance of a trust-based relationship between a board of directors and its CEO. In eight of these 10 high-performing systems, CEO changes had been made in recent years. A lack of confidence and/or trust in the former CEOs was a key factor in six of these changes. Trustees in these systems discussed the high level of trust and respect they and their board colleagues have for their current CEO. They also appreciate their CEO's commitment and contributions to building a strong, well-informed and engaged board.
Defined organizational objectives, targets and metrics. In one way or another, interviewees in six of the 10 community health systems stressed the importance of having well-defined organizational "targets" together with evidence-based metrics that enable board, executive and clinical leadership to monitor actual performance in relation to established standards in key aspects of system operations, including but not limited to community benefit, financial performance, and patient care quality and safety. They believe the development and ongoing improvement of "scorecards" that present this information in a clear, compact fashion has been very helpful for their boards.
From the viewpoint of many trustees, the development of clearer targets, higher standards and better metrics presented to system leadership on a regular basis has been a major contributor to achieving and maintaining high levels of performance—and in prompting swifter corrective action when established standards are not being met. In the area of patient care quality and safety, there is general recognition that precision in setting proper standards and measuring performance is challenging. However, a large proportion of these trustees express the view that their systems have made and continue to make progress in quality measurement and reporting.
Healthy organizational culture. Until recent years, the concept of organizational culture had not emerged as a salient force in enhancing progress toward strong performance outcomes. Although complex and difficult to measure, this concept is gaining significant traction in the health arena and is finding its place in the organizational lexicon. Momentum has been building to understand the culture of health care organizations and adopt new approaches to performance improvement that incorporate cultural change.
Organizational culture and its importance to organizational success was mentioned by trustees at six of the 10 high-performing systems. A unifying theme, expressed in different ways, was that the prevailing culture within their systems has come to include broad-based commitment to excellence in patient care and operating performance. Most emphasized that this commitment did not always exist but has been built through collaboration among clinical, governance and management leadership in more recent years, either in response to serious organizational difficulties or as a core strategy for improving operating performance, esprit de corps and competitive edge. In various ways, the interviewees expressed awareness of the complexity and the importance of shaping their system's organizational culture to embrace its core values and commitment to high performance.
Summary and Conclusions
The interviews with board members at 10 high-performing community health systems revealed many other factors that, in the opinions of some, have contributed to their system's strong operating performance; for example, prudent investments in facilities and services, new technology and strategic mistakes by competitors. On the whole, however, the trustees perceived the six factors outlined above as being most influential in their organizations' successful performance in recent years. The table on Page 21 provides a summary of the trustees' views.
Numerous factors contribute in varying degrees to organizational performance. Board leaders and CEOs should assess their organization and, as objectively as possible, identify those which are truly pivotal in determining its operating performance. Allocating proper attention and resources to them and monitoring the results on an on-going basis are among the main responsibilities of governing boards in today's challenging health care environment.
Lawrence Prybil, PH.D. (email@example.com), is a member of the National Board of Advisors, Center for Healthcare Governance, and professor of health services management in the College of Public Health, University of Kentucky. Samuel Levey, PH.D. (firstname.lastname@example.org), is Distinguished Professor of Health Management and Policy in the College of Public Health at The University of Iowa. The entire report, "Governance in High-Performing Community Health Systems," on which this article is based is available online and can be downloaded without cost at www.americangovernance.com.
Sidebar - About This Study