Group Governance in Healthcare Industry

Group governance in the healthcare industry relates to decisions that define expectations, grant power, and verify performance. It consists of a specific part of management and leadership processes. In the case of hospital and healthcare industry, governance relates to consistent management, cohesive policies, processes and decision rights for a given area of responsibility.

The purposes of group governance in the healthcare industry is to take into account the concerns about quality and service, the distress experienced by many providers, the need for collaborative approaches to strategy development and strategy fulfillment for developing the very leadership infrastructure essential for success. This work combines organizational assessment, retreat facilitation, ongoing counsel to top management, the support of major change initiatives and coaching of senior executives. The consultation process, group practice leadership, and the development of organizational cohesion are also the purposes of group governance. The purpose of group governance is to provide trusted solutions that would protect and enhance health and financial wellbeing. It would help to develop the strategy to broaden beyond the concept of health protection to give customers more peace of mind on health and financial matters. The products and services could extend beyond just traditional health services to include travel insurance, life insurance, retirement planning and lifestyle management. The goal should be to provide the whole of life approach to health and wellbeing, through providing the right approach to the right people, in the right way, at the right time in their life.

Group governance provides the umbrella for all governance approaches. It combines the principles of corporate/financial accountability with clinical/management accountability. It helps to unite the various strands of governance within a common framework, addresses the issues of overlap and provides a system which will include finance, efficiency and economy, effectiveness, efficacy and compliance with healthcare standards. The move towards integrated governance is also reflected in the governance domain of the standards for better health. The purpose is to have greater accountability in regard to patient outcomes, effectiveness of treatment, satisfaction of patients and to have an ethical use of resources by the health services organizations.

Some of the key characteristics of group governance are to have a corporate philosophy and policies that support the governance structure and functions within the organization and have a clear, consistent understanding by the board and CEO of the board’s role, responsibilities, authority and organizational relationships. Group governance will help develop the support and leadership of the CEO who is committed to building a strong governance structure and practices and to have a sustained organizational commitment to a solid board development program. It will help to form a sound structure and staff resources to assist the board and its committees and on-going access to important information coupled with well-constructed board and committee agendas that focus the member’s time and energy on key governance priorities. Core governance processes should be well-designed and reviewed regularly to identify opportunities for improvement. Substantial engagement of clinicians who are chosen by virtue of their commitment and expertise as members of governing boards and board committees. A board culture that is characterized by proactive engagement of its members, a consistent pattern of constructive dialogue and debate, and enlivened decision-making processes.

One important common characteristic of group governance is to maintain the corporate philosophy and policies that support the governance structure and functions within the organization. Whether it is a free-standing hospital or a large health care system with facilities in several states, governing boards are unlikely to be effective without strong support by the corporate sponsor or parent body. This support is demonstrated by clear expectations, appropriate resources and thoughtful oversight. There should be an on-going process for assessing the board’s changing needs of expertise. There should be an active recruitment effort to attract trustees who can meet those needs with an on-going board evaluation process with the twin goals of objective appraisal and continuous improvement. The group governance would function effectively with good staff and logistical support.

Second common characteristic of group governance is to have a clear, consistent understanding by the board and CEO of the board’s role, responsibilities, authority and organizational relationships. The role of the board is to provide leadership and set the organization’s strategic direction and vision, set policies and organizational performance measures. Its role is to appoint and delegate authority to and monitor the chief executive and ensure that the organization has the resources to run efficiently and monitor and evaluate performance. To be effective, boards must have highly capable and committed persons in these leadership roles. The pace of positive change can be accelerated greatly through the active engagement and support of the CEO. Board leaders should review their board’s composition to ensure that clinician voices are heard. Studies in the healthcare field and other sectors have indicated that organizations whose boards are involved, interactive and proactive are more likely to perform better than similar organizations with less engaged boards.

There are many factors beyond the quality of group governance that affect the performance of hospitals and other health care organizations. For example, the caliber of clinical staff and executive leadership, the resources to acquire the best technology and the effectiveness of information systems. However, governmental agencies, bond rating agencies, donors and other stakeholders are recognizing that the quality of group governance is important, and they are pressing for higher standards and better board performance.

There has been changes in the structure and duties of boards of directors in for-profit hospitals over the past 50 years. Over the past 50 years the institutional, governance, and strategic functions of boards have changed. The higher levels of board size and diversity, traditionally associated with optimal institutional and governance performance of boards have affected the board’s ability to initiate strategic changes during periods of environmental turbulence. The board diversity in particular has been a significant constraint on strategic change.

A change in the structure and duties of the board of directors have happened to actively promote quality improvement and a new approach is set in management in healthcare services. Their duties have expanded over time to an expanded managerial role. There have been increasing demands in leadership roles with group decision making and stimulating a team approach. Over the years, transformational leadership in health care organizations has developed to change systems and processes underlying quality. 50 years back, there were several barriers in the role of board of directors to providing leadership in hospitals and thus the quality and its authority over medical staff and administration. Barriers included trustee ignorance, trustee insecurity, board inattention, poor board-physician communication, fragmented information on quality, traditional medical staff structure, lack of professional management of quality, and lack of investment. This has improved over the years by developing strategies for hospital board leadership which have included preparing to lead, self-education, visible participation in quality activities, activism, role clarification, increased informal dialogue with physicians, medical staff reform, creation of a quality management department, instituting high-quality standards, and external quality audit. Boards are facing a historic opportunity to transform hospital quality backed by a strong legal mandate.

Single hospital boards have been the selected method of governance since the first hospitals were built in this country in the 1600s. However, in recent years, governance of the healthcare system has undergone a radical transformation. Single hospital boards have almost disappeared. Instead, hospitals have been clustered together by governments into multiple-hospital consortia, or into regions, often with other non-hospital healthcare organizations that had previously enjoyed autonomous governance (e.g., boards of public health). This has resulted in the differences in the structures, operations, functions in the healthcare boards. A major healthcare transformation in the United States has also been the conversion of nonprofit hospitals to for-profit entities.

Economic forces have been shaping healthcare at a rapid pace and have affected all stakeholders, including providers, insurers, consumers, and federal and state governments. As major players in the industry, hospitals and health systems have experienced the impact of key changes. The strategic implications and the adjustments to direction have positioned the healthcare organizations for continued competitive success. Over the years, there have been magnitude and direction of changes in board structure, composition, and selection and CEO-board relations. The board activity, evaluation, and compensation are examined for the population of hospitals and for different categories of hospitals which was not the same as before. The findings suggest that hospital boards are now engaging in selective rather than wholesale change to meet the simultaneous demands of a competitive market and traditional institutional orientations to community. Results also suggest parallel increases in collaboration between boards and CEOs and in board scrutiny of CEOs. The critical challenge to the boards over the years has been to align the interests of the physicians with the organizations. As a result of multiple developments in healthcare and healthcare policy, hospital administrators, policy makers and researchers are increasingly challenged to reflect on the meaning of good hospital governance and how they can implement it in the hospital organizations.

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