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As hospitals buy physician practices, board compensation oversight must shift into high gear.

Society and industries are always evolving; revolutionary change occurs sporadically when powerful forces align to disrupt the old order. The health care delivery system today is in the midst of an historic transformation to redesign how care is delivered. The quite immodest aim is to take 20 to 30 percent of costs out of the system while maintaining or improving clinical outcomes and patients’ health.

Mentoring, a process that pairs board members who are new to their roles with more seasoned board and executive resources for growth and development, traditionally has been used by health care boards to orient new trustees for board service.

With CEO support and opportunities for education, trustees can become better hospital leaders

Steps CEOs and boards should take to understand and improve engagement.

Although scorecards that measure health system performance against established metrics have become an increasingly common and useful tool in the trustee’s governance toolbox, finding concrete, comprehensive ways to measure how well the organization is achieving its strategic goals — and, in turn, determining incentive compensation based on goal achievement — can be a daunting, ephemeral task. Here’s how one health care system has successfully connected all the dots.

Our understanding of effective governance in hospitals and health systems is growing. Several recent studies find that meeting certain benchmarks for board structure, composition, culture and evaluation practices has become a basic governance responsibility. These studies also call for heightened board engagement in governance oversight responsibilities.

Great Boards talked further with author Casey Nolan, managing director of Navigant’s Healthcare Provider Strategy Practice, Washington, D.C., about how boards typically function and the challenges they are likely to face at each stage of development. Nolan also discussed what board members need to know to govern effectively and add value as their systems evolve.

This monograph addresses the multiple accountabilities of nonprofit health system boards for the cost, quality, and safety of the services their facilities provide, the manner in which these accountabilities are being fulfilled, and issues we believe warrant attention by system leadership in order to retain and build public confidence, respect, and trust.

The relationship between boards and chief executive officers can be fraught with challenges, and trustees often are unsure of how to handle certain delicate situations. But using a framework of etiquette can provide guidance.

In the publication, authors Joshi and Horak state that hospital trustees support hospitals’ fundamental missions to improve the health of the community. In a climate of growing concerns about the quality of health care and the amount we pay for it, trustees are called upon to oversee the transformation of the culture of the organization.

Now that the Affordable Care Act has been upheld, it appears that the American health care delivery system is about to embark on unprecedented change. This transition encompasses a staggering number of issues: integration and physician alignment; significant reduction in Medicare reimbursement; heightened emphasis on quality and safety; the need to evaluate and pursue partnership options, such as mergers and affiliations with health care providers along the continuum of care; defining and delivering accountable care; and ultimately the complete transformation of an acute care based system to systems of care that promote and encourage population health.

Four basic rules can help boards make better executive compensation decisions. While boards and their compensation committees do a good job of overseeing executive compensation, there are several common flaws in what is otherwise a strong process.

Board support is essential in helping doctors take on and succeed in leadership roles. The emerging health care environment requires far more physician leadership than has been needed in the past. But there is a natural barrier to physicians who answer the call to lead, and it is best described as “physician whiplash.”

The AHA’s 2011 Governance Survey shows that good governance practices continue to take hold among hospitals and health systems. Driven by powerful economic pressures and stringent legal requirements to be visionary, strategic, diligent and independent, boards are applying various “good governance” practices, including competency-based succession planning, board orientation and education, routine executive sessions, CEO retention planning, and board self-evaluation.

As boards navigate between today’s fragmented, volume-focused health care system and a system that is more integrated and value-driven, there are plenty of issues that keep trustees up at night (see Figure 1). Are the transformational changes now confronting health care organizations affecting the way boards govern?

Given the nature and challenges of small, elected boards, choosing to look inward and improve governance is no easy decision.