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Can boards create the hospital of the future?

This article was published in the April issue of Becker’s Hospital Review.
By Kathryn C. Peisert, managing editor, The Governance Institute, A Service of NRC Health


In light of the flurry of merger and acquisition activity across many health system markets, healthcare executives and boards are acutely concerned about differentiating themselves. They want their organizations to stand out in the herd. But most nonprofit hospitals and health systems have very similar mission statements, vaguely centered around improving the health of patients. Meanwhile, differentiation based on quality of care rarely succeeds in influencing patient choice.

Moreover, results from The Governance Institute’s 2017 biennial survey of health system boards revealed several areas where board structure and behavior may be hobbling their organization’s responsiveness.

  • Many boards lack diversity — in age, professional experience and ethnicity. The average board member age is 58. Very few nurses sit on today’s boards. And board populations are overwhelmingly male and Caucasian. This homogeneity restricts the perspectives with which boards can address the issues of the future, including population health, patient experience and healthcare consumerism. The healthcare board of the future needs to be composed of forward-thinking people with diverse backgrounds and perspectives.
  • Boards spend most of their time fielding reports from management. While understanding historical trends is important, meeting time is better spent diving into strategic ideas for how to move the organization toward its future vision.
  • Systems with multiple boards struggle to clarify roles and allocate responsibilities. Swift mergers can produce large, unwieldy organizations. In these cases, it’s all the more important to define a streamlined leadership and governance structure and clearly delineate roles within it.
  • Board culture is disjointed and ill-defined. Culture is the foundation for a board’s activities in an organization. Without strong cultural self-definition, most boards will flounder.

Healthcare leaders and boards should embrace the fact that continuing to do business the same way will not help their organizations thrive. Neither will increasing competitiveness by means of differentiation. To flourish in today’s marketplace, organizations need to offer a truly exceptional healthcare experience. That calls for a dramatic shift in focus, starting at the very top.

New roles for governing boards and the C-suite

For many health systems, mergers present a sensible strategic response to increasing competition in their markets. But increased operational efficiencies and negotiating leverage with payers will not, by themselves, resolve the underlying conundrum for the future of healthcare: increasing demand from patients for a consumer-centric healthcare experience. That will take a fundamental redesign of organizational priorities.

To address this, healthcare consumerism will rise to new prominence in the C-suite and at the board level. Health systems will reorganize themselves to meet consumerism’s attendant challenges. Boards will form “consumerism committees” or, at the very least, elevate consumerism to a central pillar of governance alongside stalwarts like finance, quality and safety, physician relations, and population health.

Such organizations may also consider hiring a chief consumer officer. A small handful of large health systems have already committed to this role. They see the need to bring together strategy, marketing and consumer experience into a single centralized function, to enable the creation of a unified brand experience that will grow system revenue.

At the end of the day, it all comes down to consumer strategy. This requires a forward-thinking board and executive leadership with the willingness to take smart risks outside the normal playbook. Here are a few questions that will help you proactively address the radical repositioning of the healthcare marketplace.

  • Is your organization still hospital-centric? Some see the hospitals of the future being reduced to intensive care units and emergency rooms; will that be your hospital’s future? What more can you do as leaders to expand care to outpatient and other lower cost and more efficient and convenient settings? How can your mission statement reflect this commitment?
  • Do your competitors need to be competitors, or can they be partners? Consider ways you can partner to expand care settings, such as: increase consumer-focused care offerings, such as telehealth, apps and other mobile health platforms that offer both access and convenience; maximize IT and security resources and talent; address the social determinants of health; and work more effectively with payers to increase value-based payment contract opportunities.
  • How are you addressing consumer expectations? Disruptive competitors can do it differently precisely because they’re starting from a different focus and a clean slate — but that doesn’t mean hospital organizations can’t do it too.
  • Are you high-tech or low-tech? What are some ways to address consumerism successfully with low-tech solutions? And what do you need to do in order to become high-tech?
  • Do you consider consumerism and patient experience to be related or separate? We would argue that addressing consumerism in healthcare combines the patient experience with convenience, access, value and transparency. What does that mean to patients in your community, and how can you provide that Amazon-type consumer experience? What are some low-tech ways to start and then work your way up?