governance 201: how the board’s role has changed€¦ · health care system, the work of our...

The Governance Institute’s Leadership Conference – The Broadmoor

Colorado Springs, ColoradoSeptember 11–14, 2016

Guy M. MastersPrincipal

Premier, Inc.

Governance Leadership ConferenceThe Broadmoor, Colorado Springs, CO | September 11, 2016

Prepared for

Governance 201: How the Board’s Role Has Changed

1The Broadmoor, September 11, 2016

At-a-Glance: Time Well Invested

I. Baseline Fundamentals

II.

III.

IV. Make It Happen: Your Role

Governance – Two Levels Up

Drivers of Industry (and Gover-nance) Change




What percent of maximum potential contribution is your board making to the organization? _________

Where would you like to rate in 3 – 5 years? _________

How optimistic are you that this degree of change is possible? _________

Baseline Questions


…what their most important responsibilities are?

Fulfill their fiduciary responsibility with respect to the exercise of authority over the public trust that is understood between the organization’s mission, and those whom the organization serves.

Ensure that the organization achieves its mission, vision, and strategic direction.

Do All Members of the Board Know…




Fiduciary Duties

Care Loyalty Obedience

Core Responsibilities

Quality Oversight

Financial Oversight

Strategic Direction

Board Development

Management Oversight

Community Benefit/

Advocacy

Fiduciary Duties of Directors (Tax-Exempt Organizations)




The duty of care requires board members to have knowledge of all reasonably available and pertinent information before taking action. Directors must act in good faith, with the care of an ordinarily prudent person in similar circumstances, and in a manner he or she reasonably believes to be in the best interest of the organization.

Standard

Attend Board and committee meetings

Advance preparation for meetings

Become informed to make appropriate decisions and judgment

Review financial reports and policies

Ensure compliance with regulatory requirements

Activities to Fulfill




Fiduciary Duties

Governance Practice Measures Y/N Activity Timing

1. Be prepared to address agenda items at board and committee meetings

S• Define/discuss what this means,

especially during on-boardingAnnual

2. Have knowledge about the organization’s compliance performance

S• Schedule updates from

compliance officer/legal/etc.

3. Evaluate proposed new initiatives on factors such as mission, financial feasibility, market potential, impact on quality and patient safety, etc.

S• Create check-list template to

evaluate initiatives using criteria

4. Receive important background materials at least one week in advance of meetings

Y/N

5. Participate in ongoing education regarding key strategic issues facing the organization

S• Create annual schedule of on-site

and offsite education activities

6. Ensure appropriate physician involvement in governance

S • Monitor how/when this occurs;

discuss effectiveness, sufficiencyAnnual

7. Require that new board members receive education on their fiduciary duties

Y/N• Validate that on-boarding process

includes this element


S=Subjective


The duty of loyalty requires

board members to discharge

their duties unselfishly, in a

manner designed to benefit only

the corporate enterprise and not

board members personally. It

incorporates the duty to disclose

situations that may present a

potential for conflict with the

corporation’s mission as well as

protection of confidential

information.


Standard


Disclose any conflicts-of-interest

Adhere to the organization’s conflict-of-interest policy

Avoid the use of corporate opportunities for personal gain or other benefit

Do not disclose confidential information

Activities to Fulfill




What: 58 Questions

Reviews areas of responsibility, processes, essential monitoring activities, policy, mission, vision, strategic direction, financial performance, accountability, succession planning, quality, etc.

Why: Value/Uses:

Assess performance against best practices, peer organizations

Assess individual performance and contribution

On-boarding

Education and training

When: Annually

Tip: Survey questions (and answers) should not be a surprise to anyone!


II.

Drivers of Industry (and Governance) Change

How we got here

Trends and implications




Common Characteristic?


Healthcare spending: Aging population driving deficit and debt

48.3 50.355.3

63.7

72.8

80.685.2

0

10

20

30

40

50

60

70

80

90

2011 2012 2015 2020 2025 2030 2035

Projected Medicare enrollment (in millions)

ProjectedMedicareenrollment (inmillions)

Source: 2012 Annual Report of the Boards of Trustees for the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds




Institute for Healthcare Improvement: The Triple AimTM

The Triple AimTM set forth by the Institute for Healthcare Improvement:

Optimal care delivery within and across the continuum

Focused on improving the health of the population and cost of care

Right care, Right place, Right time

Source: http://www.ihi.org/IHI/Programs/StrategicInitiatives/TripleAim.htm

Triple AimTM

PopulationHealth

PatientExperience

Per CapitaCosts

Which is highest priority?

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Industry Changes Driving Governance ChangesA Whole New Lexicon and Wave of Acronyms!

BP CPC+ PCMH OCM

PBM

PHM PQRs

VBP

ACOs CIN Super-CIN

CJR BPCI EDWPHM

MSSP – Tracks 1, 2, 3 aEHR

MACRA – MIPS, APMs

employed physicians

shared risk

partnering

reform

downgrades

merger

consumerism

retail medicine




What’s Keeping CEOs up at Night?

Things keeping health system CEOs up at nightWritten by Molly Gamble and Ayla Ellison | August 18, 2016

#1 Concern: The speed of

movement from volume to value

and potential impacts


Transition to Value-based Payment: Managing Two Worlds

Pay for value

Accountable care

Coordinated care across the continuum

Global payment

Right care, right setting, right time

Triple Aim metrics

Fostering wellness

Payer partners

Fully wired systems

InnovatorsEarly

AdoptersEarly

MajorityLate

MajorityLaggards

1 2 3 4 5 6 7 8 9 10

Pay for volume

Fragmented care

Fee-for-Service

Treating sickness

Adversarial payors

Little HIT

Lack of outcome based metrics

Duplication and waste

NOW FUTURE

TIME




What Risk Really Looks Like


Progression from volume to value - moving performance risk to providers

Current

• Reimbursement cuts

• Readmission penalties

• HAC penalties• Value-based

reimbursement• Spend per

beneficiary • Star rankings• Site neutral

payments• Pay for

performance contracts

• Tiered networks / payments

Voluntary Risk

• Medicare ACO (MSSP 1, 2, 3, Next Gen)

• Voluntary bundles – CMS BPCI & Oncology Care Model (OCM) programs

• CMS CPC+, • PCMH / care

management premiums

• Commercial ACOs

Mandatory Risk

• MACRA and alternative payment models

• Mandatory bundles -Comprehensive Care for Joint Replacement (CJR) & Episode Payment Models (EPMs)

• DSRIP

Future

• Global or total cost of care payment

Changing Reimbursement Models




The Future of Physician Reimbursement:Medicare Access & CHIP Reauthorization Act (MACRA) of 2015

On 3/26/15, the House passed H.R. 2 by 392-37 vote.

On 4/14/15, the Senate passed the House bill by a vote of 92-8, and

the President signed the bill.

Replaces the 1997 SGR formula, which capped Medicare physician per beneficiary spending growth at GDP growth rate.

Overwhelming bipartisan support.

Provides new tools to implement payment reforms.

Applies to MD, DO, PA, NP, Clinical nurse specialist, CRNAs.

2021 includes therapists, social workers, psychologists, audiologists, dieticians.

Two options for physicians/providers:

Merit Based Incentive Payment system (MIPS)

Alternative Payment Models (APMs)


MACRA OPTIONS

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

MIP

S T

RA

CK

AP

M

TR

AC

K

Measurement period

Measurement periodAdvanced APM participating providers exempt from MIPS; receive annual 5% bonus (2019-2024)

2019+/-4%

2020+/- 5%

2021+/- 7%

2022 & beyond+/- 9%

MIPS exceptional performance adjustment; ≤ 10% Medicare payment (2019-2024)

0.25% update

Merit-Based Incentive Payment System (MIPS) Adjustments

Now is the time to evaluate a practical path forward and build a roadmap of the capabilities necessary to operate in an expanded value based payment environment

0.75% update




Post-MACRA alternatives for independent individual physicians

Retire before 2019 or de-participate from the Medicare program

Join a larger physician group practice with capabilities to provide MACRA support

Become employed by an organization with capabilities to provide MACRA support

Remain independent and join a Clinically Integrated Network (that can provide MACRA support)


Bundled Payment for Care Improvement Initiative (BPCI) Models

Voluntary program for multiple entity types

Applicant period is closed

Entities first went live in October 2013

Oncology Care Model (OCM)

Voluntary program for physician practices

Applicant period is closed

Anticipated start date is July 2016

Comprehensive Care for Joint Replacement Model (CJR)

Mandatory in 67 selected geographic areas

Started April 1, 2016

Where Is “Bundled Payment” Going?

On the Horizon: Additional procedures and service lines added to bundled program More geographies to be added to mandatory areas More commercial payers embracing bundled reimbursement




Who Is Competing for Volume?


Consumer Trust

Percentage of consumers who would trust this kind of entity to manage their health:

Source: www.hhmag.com, February 2015, The Birth of the Healthcare Consumer Survey, 2014

40%

39%

33%

37%

Walmart, Target, and other large retailers

Healthcare provider

Amazon, Google, and other digitally enabled companies

Insurance company




What Do Consumers Really Want?

Convenience =“Immediate access to an effective, affordable,

total solution to a health problem.”

Click-in Call-in Walk-in


Insurance Companies are Advancing up the “Food Chain”

Commonly Treated Conditions: Cough, cold, minor rashes, allergies, diarrhea, ear pain, fever, flu, headache, pinkeye (Anthem Blue Cross).

SEE A DOCTOR ON YOUR COMPUTER OR MOBILE DEVICE AND GET ANSWERS NOW.

15 Physicians: 11/4

Kaiser Permanente: 20 million eVisits in 2014




Digital Disruption – Potential Impact?

Largest internet retailer owns no stores

World’s largest immediate transportation company owns no taxi’s

Most popular media owner creates no content

World’s largest movie provider owns no theaters

Largest software vendors don’t write apps


Governance Implications

“In this era of unprecedented change in the health care system, the work of our Boards to bring about and support this monumental transformation is critical. Leading strategically, supporting disruptive innovation, and driving boldness in our efforts to improve the health of individuals and communities are what make governance effective in transformed health systems.

Just like every aspect of our organizations’ operations, what has worked well for us in the past likely will not be sufficient for tomorrow’s success. The same is true for governance.”

– James H. Hinton, President & CEO of Presbyterian Healthcare Services in Albuquerque, NM

Source: H&HN Magazine, November 2014.Source: Marian Jennings, used with permission




III. Governance – Two Levels Up


Getting From Here to There May Be Hard!

It Will Take: Improved Processes Best Practices Expertise Appropriate technology Leadership

Does Our Board Need to Transform?




Governance in “the Good Old Days”

Interested, committed citizens

Large boards and numerous committees

“Wall” between board and management

“Quality” was purview of doctors,not the board

Fundraising of paramount importance

No term limitsLittle emphasis on board development or self-evaluation

“An hour or two a month.”

Source: Marian Jennings, used with permission


Today: Governance is a serious responsibility requiring greater:

Accountability

Transparency

Independence

Engagement

Education

Effectiveness

Governance Today





What Does (Will) Your Board Look Like?

Industry and market knowledge

Clinical expertise

Financial knowledge

Management experience

Legal

Management consulting

Community and political contacts

Mergers and acquisitions

Population health management

Predictive modeling

Risk management

Quality and performance improvement processes

Cost reduction

Data analytics

Consolidations and alliances

Culture alignment and change management

Hi-tech

Cyber security

Social media


Does Governance Change Matter?

“There are hospitals out there that have

been independent for 80 years and they’re

saying ‘We’re going to be independent for

the next 100 years.’ That’s going to be a

tall order. As other hospitals consolidate

and grow around you, whatever niche you

had will vaporize.”

- Lisa Goldstein, Moody’s Investors Service




TGI’s 2015 Biennial Survey of Hospitals and Healthcare Systems:

“Boards are slowlyshifting their structures and activities to enable them to move forward into this 21st-century healthcare delivery system…”

Excellent Snapshot of Governance Today

Source: K. Peisert, 21st Century Care Delivery: Governing in the New Healthcare Industry, 2015 Biennial Survey of Hospitals and Healthcare Systems, The Governance Institute.


Independent Hospital vs. System Governance: 2015Mostly Similar with Some Differences

Differences

Independent hospital boards are:

1. Slightly smaller than system boards.





Independent Hospital vs. System Governance: 2015Mostly Similar with Some Differences

Differences

Independent hospital boards are:

2. Less likely to have term limits than system boards or subsidiary hospital boards.

3. Likely to meet more frequently than system boards or subsidiary hospital boards.



Half of health systems in the 2015 sample operate with “multi-tier” governance models

Health System Governance: 2015





Independent hospitals and health systems have begunchanging board structures/practices around PHM or VBP, but…

Health System Governance: 2015

Changes since 2013:

Population Health Management (PHM)

Value-BasedPurchasing (VBP)

Indep. Hosps. Systems

Indep. Hosps. Systems

We have changed our board structure to prepare for this area. 47% 64% 38% 58%

We have added board members with expertise related to this area. 5% 12% 5% 12%

We have added board members with predictive modeling/risk management expertise related to this area.

2% 8% 1% 4%

We have added physicians to the board to help us with goals related to this area. 9% 16% 12% 14%


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• Better (not more) information from management

• Preparation materials include executive-level summaries, dashboard reports, and clear requests for action

• 80% of the board’s time is spent on strategic (not operational) issues

• Consent agendas used

• Meeting attendance requirements set

Emerging Governance Best Practices

Make your board and committee meetings more effective and more efficient:




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Emerging Governance Best Practices

Make sure your governance model supports your transformation into an integrated model of care:1. Team care through interdisciplinary clinical collaborations

2. Standardization of clinical service line strategies

3. Minimization of ineffective clinical process variation

4. Financial risk strategies with payers

5. Capital asset efficiency

6. Economically productive geographic expansion

7. Optimization of patient/customer access

8. Electronic “wiring” of the system, including direct connections to patients

9. Realignment of internal operating incentives through new compensation models

10. Attention to the development of informatics capacities

11. Developing longer-term approaches to workforce planning

12. Creating a productive work environment Full source available to members of The Governance Institute at

www.governanceinstitute.com


41

Identifying Opportunities to EnhanceYour Organization’s System Governance

• Generative discussion at the system board:– What competencies will we need on our board, moving forward?

Where are our biggest gaps and how will we fill these?

– Does our board adequately reflect the diversity of our communities? Are clinicians sufficiently represented?

– Do we need to change our board agendas to allow for more generative discussion? More strategic discussion?

– If we have 2nd tier boards in place today:

• Why? What specific value to they provide?

• How can we be clearer about what roles we need them to play, if any? How can we ensure that we are not duplicating efforts?

• How will our clinically integrated networks (CINs) fit into our governance structure?





IV.

Make It Happen – Your Role

Share experiences

One size does not fit all

Your role in change (creating the ideal)

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Checklist “To-Dos”

Institute more robust board orientation & development

Sunset board committees unless compelling reason

to keep

Practice “tight-loose-tight”

around bifocal strategic metrics

Use TGI resources to move to best

practices

Use an annual board work plan tied to your strategy and

transformation efforts

Rigorously review members at ends of their terms to move to a competency-

based board quickly

Reevaluate competencies needed and

recruit/develop with those in mind

Encourage generative discussion

Use “rigorous” board

self-assessment to continuously

improve functioning





Advocating Legally: Privilege or Curse?

Articles, Bylaws, & Policies: Deciding What Goes Where

Best Practices: Non-Profit Corporate Governance

Board Committees

Board Education, Goal Setting & Work Plans

Board Job Descriptions & Committee Charters

Board Mentoring

Board Roles and Responsibilities

Board Self-Assessment, A Core Responsibility

Building a Comprehensive Board Orientation Program

CEO Performance Evaluation

Community Benefit

Conflict of Interest

Effective Board Meetings

Fundamental Fiduciary Duties of the Non-profit Healthcare Director

Governance Development Planning

Governance Policies: Road Maps for Best Practices

Governance Support: A Behind the Scenes Guide to Ensure Your Board is Prepared

Hospital Accounting & Finance

Individual Board Member Assessment

Integrated Strategic Direction Setting and Planning

Physician Credentialing: An Orientation Manual for Board Members

Physicians on the Board

Planning for Future Board Leadership

Strategic Direction Setting & Strategic Planning

Succession Planning

The Board's Role in Quality

The Distinction Between Management & Governance

The Role of the Board Chairperson

Transitioning to Effective System Governance

“Elements of Governance” Publications (30 Lifesavers)

45

“In a Nutshell”Traits of Highly Effective Boards

Are accelerating their governance transformation

Seek to be proactive, not reactive

Provide a pipeline of future directors and leaders with “the right stuff” and the right orientation

Demonstrate passion for a shared mission and vision and a commitment to high ethical standards

Exhibit a healthy culture of trust and respect, candor, and accountability




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“In a Nutshell” (continued)

Adopt a streamlined size and structure

Invest more time in board development

Have crisp meetings with a dynamic balance of fiduciary oversight, generative discussions, and strategic thinking

Have and use the right information: clear, concise, strategic, and contextual/comparative

Nurture “an accountable partnership” with CEO

Evaluate board, committee, and individual performance and continuously seek improvement



“Things do not get better by being left alone…”

– Winston Churchill




Best Practices Review


Guy M. Masters, MPAPrincipal

Premier, [email protected]

(818) 416-2166

governance 201: how the board’s role has changed€¦ · health care system, the work of our...

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