Presbyterian Healthcare Services is a nonprofit integrated delivery system based in Albuquerque, N.M. Presbyterian is composed of two business units: a delivery system and a health plan. The delivery system comprises eight hospitals and a medical group of approximately 630 employed physicians practicing throughout New Mexico.

Presbyterian's health plan, a for-profit corporation, offers several different types of coverage, handles case management for its members, and works closely with the delivery system to decrease costs while increasing quality of services.

Within these two business units are several affiliates with which Presbyterian has a relationship and the power to select or appoint a majority of each entity's governing body. These affiliates make up the eight hospitals mentioned above, an ambulance service, foundation, property holdings and an insurance company. Overall, the Presbyterian enterprise has a total of five boards of directors and eight boards of trustees. The Presbyterian board of directors has fiduciary responsibility for the enterprise.

While Presbyterian's structure had changed several times, the board grew in a more linear fashion as members who represented various communities were added. This approach resulted in a board that ranged from 24 to 27 members with a potential to reach 31 members.

Its size made the board more of an observer than a strategic partner. Absolute confidentiality on delicate subjects became almost impossible. And while the management team had been restructured numerous times over the years to better align needs with expertise, the board had not. The lack of term limits meant many members had several years of service, but without further enlarging the board there was little opportunity to bring on new members who could add value, expertise and a fresh perspective.

In a nutshell: The board was not performing its basic fiduciary responsibilities, had not changed to meet the strategic needs of the organization and needed to be restructured. In the words of CEO Jim Hinton, "Presbyterian's governance system was seen as a liability, not an asset.

Starting from Scratch

The board addressed these areas and explored topics related to the meaning of governance and the background and traits of an ideal board member. One outcome was the formation of a task force that was a subset of the board and responsible for recommending initiatives necessary for a successful restructuring process. The ultimate goal of the task force was to ensure the restructured Presbyterian board of directors was and would remain a reflection of governance excellence.

Over a year, the task force guided the board through a process that:

  • required all current board members to submit their resignations to be effective at the end of the year
  • identified board members' current level of commitment to serving on the board and potential candidates for new members
  • required all current members and potential candidates to submit résumés and be interviewed to serve on the transformed board
  • enhanced the membership of other boards and board committees
  • established a governance committee responsible for governance processes at an enterprise level
  • yielded a diverse, balanced, effective 11-member board, only six of whom served on the "old" board

The interview process was Presbyterian's initial foray into the world of competency-based governance. Early in the year, the board agreed that it could not be representative and govern effectively. The interviews were designed to identify candidates who had the attributes, skills and knowledge to govern effectively. Candidates were asked about their interest in serving on the board or other Presbyterian boards, talents for furthering the goals of Presbyterian, areas of interest, past board experiences and opinion of the most important issues facing health care. Skills surrounding strategic planning, organizational design, change management, technology, financial control, marketing, human resources, governmental affairs, leadership and teamwork also were evaluated.

In many cases, the need for a diverse, balanced board superseded the selection of several very strong candidates. For example, of two bankers in the community who were interviewed, only one was selected so as to avoid a finance-heavy board. Toward the end of the process, concerns about greater ethnic diversity arose. Approximately 35 percent of Presbyterian's patient base was of Hispanic descent, which suggested that the pool of Hispanic candidates needed to be enlarged to reflect the community. This led to a month-long delay due to the recruiting and interviewing involved, but it ensured that the goal of a diverse, balanced board was achieved. After more than a year of using a purposeful selection process, the transformed board, as well as a newly established governance committee, were in place.

Spreading, Maintaining Excellence

While the board focused on developing its collective effectiveness, the governance committee focused on spreading competency-based governance to the rest of Presbyterian's boards. The first step was to refine the tools and processes used to identify and select the members of the transformed board.

Two sets of competencies were established: required and individual. Required competencies were considered a "threshold" for being a potential candidate and pertained to knowledge in the areas of governance and the health care industry, skills related to communication, and attributes reflective of integrity, dedication and continuous learning. Individual competencies were considered areas of expertise that, in total, supported Presbyterian's strategy and reflected the knowledge base required to govern a Presbyterian board effectively.

Once established, both sets of competencies were translated into processes and tools used to recruit, select and develop board members. Tools included job descriptions for board members, interview questions, nomination forms, evaluation forms and development plans. These tools and processes were aligned with the required competencies and incorporated into what Presbyterian calls its Governance Excellence Maintenance Cycle, or GEMC (see flowchart, below). The purpose of this cycle is to help every board maintain an optimal balance of members so that the board as a whole has the necessary expertise to fulfill its fiduciary responsibilities and ensure that Presbyterian's mission is achieved.

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The GEMC begins with the need to fill a current or potential vacancy on a board. The governance committee evaluates the current composition of the board and elicits input from members to determine the individual competencies for which to recruit. Potential candidates are identified through the use of both a centralized database that aligns them with the individual competencies and governance committee discussions about additional possible candidates.

An executive member of the management team contacts the potential candidates to inquire about their interest and ability to serve. Interested candidates submit a résumé and are interviewed initially by the management team and then by members of the governance committee. Interviews focus on both required and individual competencies, include a summary of Presbyterian's history and current strategy, and allow potential candidates to ask for and offer clarification. Board members whose terms are ending and are seeking reappointment are evaluated on these qualities, rather than interviewed.

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Once the ideal candidate has been identified, whether a current or potentially new board member, the governance committee recommends approval of the nomination and subsequent appointment.

The final part of the GEMC entails evaluating and developing board members. Every year, the governance committee evaluates each member's performance related to both the required and individual competencies for which he or she initially was recruited. The board chair meets with each member individually to discuss both strengths and opportunities for improvement, and works with the member to produce an individual development plan to address improvements. Opportunities that are common to a majority of board members are addressed via a board-level goal.

Once it was finalized, the GEMC was presented to all Presbyterian boards. Use of all supporting tools, in terms of format and expected level of content, was non-negotiable. Required competencies also were considered non-negotiable, but the individual competencies could be modified to reflect the community. For example, rather than expecting a board serving a smaller community to have a member who led a highly complex organization, a member who was the leader of an organization was acceptable.

To ensure the GEMC was successfully implemented, boards and their governance committees were guided through each piece of the cycle until their level of comfort with the processes and tools had progressed from dependence to interdependence.

Simplifying while Sustaining

The GEMC became part of the standard governance work for every Presbyterian board. While it was used in its original form for five years, the state of the health care industry and Presbyterian changed significantly. Presbyterian's overall governance system also had changed for the better. But it was time to ask: Given all these changes, did the GEMC need a change?

Feedback was elicited from all Presbyterian board members and what they shared confirmed both the GEMC's value and the need for improvement. While the use of competencies was helpful in maintaining a balanced, diverse board, the tools for assessing current and needed individual competencies were not as helpful. In fact, they were excruciatingly complex.

The chairs, vice chairs, executive management team and staff support for each board convened to discuss a proposal for facilitating—rather than complicating—the process to identify recruitment and development opportunities.

The first item was the need for standardized individual competencies that better reflected the current focus and future direction of Presbyterian. As indicated, the individual competencies could be revised to reflect the community served by a particular board. Given Presbyterian's more deliberate approach to being an integrated delivery system and drive "systemness" in its approach, it seemed appropriate that individual competencies be standardized for all boards, regardless of geographic location or the size of the community served. Standard individual competencies for all boards would support this system focus and aid in every board's succession plan.

The second item was the tool used to assess the 15 current and needed individual competencies. The current tool was a grid that listed all individual competencies on a horizontal axis and all board members' names on a vertical axis. Whether a board member exhibited an individual competency was indicated by a "4" for "Yes" and "0" for "No." Recruitment opportunities were identified by comparing the total number of "4's" and "0's" for each individual competency.

The solution was to decrease the number of individual competencies to seven and replace the grid with a wheel. The individual competency wheel is now used to assess the current composition of a board as well as identify desired competencies of potential candidates. To complete the tool, names of board members are aligned with the individual competencies they exhibit. No "4's," no "0's," and no math required.

Presbyterian continues to improve its competency-based approach to governance. The process for developing individual development plans is being redesigned to include both individual and peer input; a competency-based approach for selecting board committee members is being explored; and a process for annually reviewing the validity of both required and individual competencies is being put into place.

Mary Wicker (mwicker@phs.org) is director of business integration for Presbyterian Healthcare Services, Albuquerque, N.M.History's Lessons

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