One common theme in discussions with my colleagues at OPEN MINDS about management strategy is that many boards of directors of health and human service organizations are not up for the task of governance in our changing environment. The focus on value and increasing financial risk in contracts is testing the limits of board governance, particularly for non-profit/tax-exempt organizations.
The role of board members is traditionally focused on financial controls and financial sustainability—defined as a “positive bottom line.” For non-profit/tax-exempt organizations, this also means seeking financial donations to support the organization’s mission. But many of these financial management systems and practices were developed in an era of cost-based or volume-based reimbursement and aren’t up for the task when reimbursement is based on performance and when those reimbursements include future financial liabilities.
What should a board do to prepare for this transition in financing models? I was interested in the approach adopted by Johns Hopkins Medicine that was profiled in NEJM Catalyst in Taking Health Care Governance to the Next Level. The Johns Hopkins approach focuses on half of the equation—the “performance” side of the measures. The authors point out that:
In most organizations outside health care, the Board of Trustees (or Directors) assumes ultimate accountability for performance. This is rarely the case in health care, where boards have traditionally fixated on financial performance and delegated quality of patient care to the medical staff, often with limited board oversight.
Provider organization executive teams (at least the financially progressive ones) know they need to align their strategies for organizational performance with their ability to manage financial risk. But, despite a lot of work done on getting “boards on board” with strategy (see Get the Board of Directors on Board for Change, Getting A Board On Board, and A Chaotic Environment Demands Fluid Strategic Planning), there isn’t a lot of work done on just how to align boards with performance initiatives and alternate payment methodologies. So, it was with interest that I read the article’s strategies for governing quality. Some of this sounds familiar, but with special attention paid to providing boards with both performance transparency and a method for driving better performance.
Cultivate organization-wide agreement on strategy—The first step is aligning the board with the organization’s VBR strategy. The board should be familiar with the major environmental forces affecting the market and are aware of the resources and risks needed to meet the organization’s mission, while remaining competitive. All leaders in the organization, from executives to board members, needs to both understand and have a stake in the game.
Map the delivery system from board to bedside—To get the most out of the board, and your performance, map out all your service delivery areas that will be subject to performance monitoring and assign clear responsibility for who is overseeing quality for each program, department, or service area.
Align quality work with common framework—Develop a common strategy that will promote and manage the push for better performance, and make sure all leadership—from executives to board members—are aware of exactly what this means for strategy. Examples included were internal risks to consumer safety, externally reported measures, consumer experience, value, and health care equity.
Develop transparent performance metrics—Mapping quality metrics is common in both VBR and metrics-based management. Be clear about the performance measures, how they are being monitored, and the continuous quality improvement efforts the executive team is pursuing. The key is to constantly monitor performance data, utilize that data to prepare key performance measures, and share that performance dashboard regularly with the board.
Create shared accountability—Everyone within the organization should play a role in performance improvement. There should be clear and constant communication with the board about performance, its impact on relationships with consumers, and its effect on payer contracting. When performance targets are misses, they should be audited and the results presented to the board’s quality committee.
For more on performance management, check out these resources from the OPEN MINDS Industry Library:
- Public Performance Transparency As A Driver Of Performance Improvement
- Why Performance Management (& Metrics) Is A Leadership Issue
- Metrics Are A Leadership Issue
- Becoming A ‘Blue Chip’ Provider Organization
- Using Consumer Experience Data As Management Tool
- There’s More To A Data Culture Than Just Data
- Spending On Data Only Makes Sense When It Leads To Competitive Advantage
- The Five-Step Process To Demonstrate Your “Performance” To Health Plans
- The Transition To Value: Addressing The Triple Challenge Of Performance Measurement, Talent & Capital
- Are You Really Ready For Value-Based Payment? Planning Your Move To Pay-For-Value
For more, join me on September 9 at The 2019 OPEN MINDS Executive Leadership Retreat, and the session “Aligning Non-Profit Health & Human Service Boards For Sustainability With The New Market Landscape: An OPEN MINDS Seminar On Governance Issues In The Time Of Changing Reimbursement Models & Charitable Care Rules.”