The value of a productive working relationship between the board of directors and hospital senior leadership can’t be overstated. One of the cornerstones of that relationship is a board that leads rather than represents a community special interest or faction. Recent research suggests that boards that lead have well-run organizations and higher profit margins. These boards are aligned in their pursuit of the organization’s mission rather than struggling with divergent views and loyalties.

Until recently, Moundview Memorial Hospital & Clinics, Friendship, Wis., struggled with governance stability. In 1959, Adams County formed an association to build the hospital. With a $5 fee, any citizen may join the association, and today our association has approximately 175 members who, at our annual meeting, can vote to make changes to the hospital’s bylaws, have a say on major mergers and appoint board members. This structure was initially effective and provided stable governance because the board understood its own role as well as the roles of the CEO and management. However, it eventually became problematic.

Before I joined Moundview as CEO in 2009, the hospital had several CEOs in a short period of time. This instability hindered the board’s ability to govern effectively because, out of necessity, it became an operational board. The board and management did not have a trusting relationship, which led to both parties assuming responsibility for operational decisions. For example, in fiscal year 2007, the board felt the need to step in when management considered terminating a strategically important employee. In this case, the employee remained in the organization and is currently a member of the organization’s leadership.

The board made three strategic moves to step away from making operational decisions. First, it hired an experienced interim hospital administrator who educated board members on their own and management’s responsibilities. Second, the board in 2008 signed a management agreement with Ministry Health Care, a hospital system that had experience with rural boards and rural executives. Finally, I was hired in 2009 to manage the organization. Since then, senior leaders have worked to strengthen staff continuity, foster the use of management best practices and educate the board on effective governance. Today, the board is strictly focused on governance-related issues.

On the rare occasion when a board member inquires about operational matters during board meetings, we have found that the most effective way to handle the situation is to let the trustee talk. Management is careful not to further the discussion during the meeting. After the board meeting, I’ll follow up on the issue with a phone call to that board member. Management can also tactfully explain to the trustee that his or her role is governance and management’s role is operations. Communication between the board and the CEO/management has to be open and honest in order for it to be fruitful.

One way I foster open communication is through my involvement with the community. Being an active, visible part of the community is crucial to the hospital’s success because the community appoints members to the board. With the association structure, I answer to the board, and the board and I answer to the community. Thus, the more involved I am with the community, the stronger our relationship and the better our communication. This, in turn, increases the community’s trust in the board and me, which adds another level of stability to our governance.

A recent example of how effective communications benefited Moundview is when the board and I asked the association to allow the board to make governance changes to the association’s bylaws when needed, not just during the annual meeting. We explained to the association that if they agreed to the change, it would strengthen the board and ultimately benefit the hospital. The association wanted proof that this type of governance structure would be beneficial, so we provided research on optimally functioning boards. Ultimately, association members realized that giving the board more power was in the hospital’s and community’s best interest.

There are still many obstacles Moundview must overcome, but now that the board and management are aligned in their roles and there is open communication, we are prepared to meet any challenge. Ω

Jeremy Normington, PH.D. (jnormington@moundview.org), is CEO of Moundview Memorial Hospital & Clinics in Friendship, Wis.