When Rick Norling stepped down as president and CEO of Premier Inc. in 2009, he was one of the most distinguished executives in the field. Under his guidance, Premier — an alliance of more than 2,700 hospitals and health systems — received the 2006 Malcolm Baldrige National Quality Award.
Since then, Norling embraced health care board work, currently serving on boards for three for-profit and two nonprofit organizations. He also plays an advisory role to numerous other organizations, and continues a long-standing relationship with the Institute for Healthcare Improvement as a senior fellow.
Norling recently sat down with Witt/Kieffer Chairman of Board Services Jim Gauss to discuss key issues facing health care boards today:
Gauss: Given your passion for quality and safety, how have you approached your contributions to the nonprofit boards on which you serve?
Norling: An interesting role has been to understand the legal and community framework within which nonprofits must operate, both mission-related as well as legal and regulatory issues. It's emotional in terms of the situations people get into, and how an organization like Father Joe's Villages [a San Diego area organization dedicated to caring for the homeless] can really make a difference. I've been able to bring some leadership and call out some opportunities in regard to quality, and so I feel good about what's gone on there.
At the board level, when you have a background as an executive, community board members often tend to defer to you. But a board needs balance. Hoag Health Center [on whose board Norling has served] has done a good job of getting people with special areas of expertise. I was brought in from the category of quality and safety. Other board members are brought in because they know and understand the payer's side of the business, and others are brought in because they understand technology. There is a stable of very smart, very motivated people who are volunteering to bring their area of knowledge as well as broader perspectives into play. And there's also a remarkable group of members who help us focus on community needs and community engagement. Both elements — corporate skills and community leadership and engagement skills — are tremendously important and need to be maintained and balanced.
Gauss: What advice would you give to someone who is considering joining a health system, medical center or hospital board?
Norling: Be very respectful of the role that community members can and should play. It takes all kinds. And I guess what I've seen at Hoag is remarkably dedicated people who really put in their time and expertise. Everybody has something to offer, and one needs to be open and respectful of that. And frankly, a good board is a combination of people who can both listen and opine. Ultimately, for all the corporate sophistication and special knowledge that may exist, it's still about people and communities.
Gauss: A lot of nonprofit organizations are still grappling with breaking down some of the barriers in terms of selecting members outside their communities. How should they go about it?
Norling: If you look at the health care field now, we are seeing a number of community boards being eliminated in favor of corporate boards. So I think there is a fear and risk of the corporatization of health care, be it the way the insurance companies or drug companies or all sorts of other interesting companies are involved in the health delivery system. Community-based nonprofits need sophistication at the board level to complement and supplement the CEO sophistication. But this sophistication needs to be done within a broad context and awareness of the community's needs.
Gauss: So, the purpose of the health system and its mission to the community served should not be lost in this discussion.
Norling: The mission statement must be crystal clear about how to create that community benefit. Frankly, with what's going on in health care, I think mission statements in general need to be looked at as to their continuing relevance. Yes, there need to be mission statements, or core purposes, depending on what guru you listen to, but exactly what that mission is and needs to be is pretty important and needs to be thought through, and perhaps modified. And from that everything else flows.
But it's still about doing the best job you can for communities. If that means becoming part of something bigger, then that should be a reasoned consideration and done appropriately, assuring that the community's going to get incremental benefit from that process. There is a broader thought process that needs to be engaged, and the answer isn't just bringing in incremental, often free, expertise. The answer is looking for the right balance and the context of an evolving mission.
Gauss: Let's change gears and look more broadly at boards in the future. How are they changing?
Norling: The boardroom of the future is going to vary with what the health system is going to look like, what ultimate goals it is trying to pursue, and how the hospitals fit within that, since right now a lot of the boards we're talking about are “hospital” boards. With elements of Obamacare, the idea of ACOs, the idea of bundled payment, the focus on transparency regarding performance in quality, safety and cost, all of these trends are pushing for more integrated care in the direction of a phrase that's becoming popular — namely, population health. And there are extreme implications for hospitals and hospital boards as we make that move.
The focus on population health is such a fundamental transformation since a lot of the success is in preventing hospitalizations, and making investments in monitoring, in care, in education of patients and families, and use of social networking and a variety of other capabilities. It will be focusing on people and communities, and then on particular segments of the population that have unique and special needs.
As this happens, health systems fundamentally have to reorganize and reprioritize their resources, and you almost talk about a health system cannibalizing its core business. And all the revenue-cycle emphasis of the hospital is going to be changing because in the context of population health the hospital is the cost center. As a matter of fact, it's a high-tech manufacturing plant that is very costly and needs to learn to do what it does exceptionally well.
If that's the case, what you've got is a fundamental transformation from a producer-focused system — the doctors, the hospitals, the high-tech center and the revenues associated with that — into what has been the profit center, the revenue center, the focal point, becomes a cost center that needs to be very effectively managed. The pressures on operations management and quality are going to be much greater. The context of the revenue coming on a per capita basis, whether it's capitation as a payment mechanism or various incentives and rewards on a per capita basis, fundamentally is going to change where health systems are going. What's the role in a hospital board in that context? I'd argue that it's transitional, so we need to be aware of that.
Gauss: From a system board governance standpoint, what exactly will this transformation mean?
Norling: I think there will be a move such as we've talked about to get more experience, very specific experience, unique experience on the board. As governance structures look more like a corporate board, this idea of community benefit can't be forgotten, and this idea of being able to meaningfully engage communities and redesign care to meet the needs not just of patients who already have problems, but also of citizens in the communities.
Gauss: So it wouldn't surprise you to see people with strong financial, merger, investment, and legal experience, but also people like you, or physicians, or people who have some level of population health or insurance expertise on these boards?
Norling: I think that is tending to occur, but the key is how the balance occurs. Right now, when you talk about a hospital board looking at how to focus on its future, there is interesting learning in both directions, in terms of the necessary transformation and why. But at some point, as we move to a system of population health, form should always follow function, so the form of organization and governance needs to follow and support and be skilled enough to govern what's effectively a revised function of a health system pursuing population health, versus a hospital pursuing excellence in hospital care and community benefit. The organizational form and design are going to change; therefore, the governance has to change.
Gauss: Any final comments or reflections?
Norling: The accountability of boards is coming back into this sector. The accountability is rising in the sense of charting the course, engaging properly in the turmoil. I consider it positive turmoil that's taking place.
Jim Gauss is chairman of board services, Witt/Kieffer, Irvine, Calif.