Category Archives: Leadership

10 signs your board has a strong pulse

Posted on by • Posted in Board, Board Accountability, Board Assessment, Board Chairman, Board Competency, Board Diversity, Board Engagement, Board Purpose, Board Transparency, Board Weakness, Leadership, Leadership Culture, Leadership Integrity, Leadership Respect, Leadership Trust, Leadership Values, Leadership Vision, Values • Leave a comment

https://www.beckershospitalreview.com/hospital-management-administration/10-signs-your-board-has-a-strong-pulse.html

Great systems are usually governed by great boards, who are made up of people who match the following 10 descriptions. 

Great board members do more than comply with corporate governance structure and rules. Too often, board members have loose ties to one another, are passive to the wants and views of the CEO or are not as informed about the specifics of healthcare as they ought to be. We view all of these traits, and more, as signs that a board has lost its charge and is no longer effectively governing.

We consider the following 10 items as descriptors of a board member who has a strong pulse and adds value to a governing body. 

1. The board member is active, engaged and passionate about being a board member. No board can afford to have disengaged members. Bylaws and attendance requirements are important, but simply complying with them does not necessarily equate to being an active, contributing and passionate trustee. Engaged board members show up to meetings, and they show up prepared. While members typically refrain from meddling in day-to-day operations, boards with high levels of trust and candor make a point to communicate with the CEO outside of scheduled board meetings. Quality of board engagement is an important contributing factor to board performance, and there is a correlation between board engagement and the ability to attract board members. Everything that follows is dependent on board engagement. 

2. The board member has a point of view on what the organization must be great at, and the board member is vehement about it. Health systems cannot be all things to all people, although the opportunities to attempt this are ample. The best organizations are not static, but disciplined. Well-governed systems know the specialties they are great in, and they continue to double down on their strengths. Their boards are cognizant of where revenues come from and ensure resources are allocated accordingly.

3. The board member realizes that her top job is to ensure the system has great leadership in place. Leaders can fall short in all sorts of ways, some more visible and easily detectable than others. The active, engaged and vehement board does not easily accept disappointment. Boards have many steps at their disposal to manage a problem before firing a CEO or senior leader, but they should never function in a way where termination is unthinkable. Boards cause great damage when they tolerate mediocre performance or compromised values among people at the top of the organization. 

4. The board member understands accountability for patient safety and quality of care rests firmly in the boardroom. It rests on board members to insist that they receive sufficient, timely information about patient safety and care quality from the CEO. It rests on board leadership to ensure members have access to expertise and resources to properly obtain, process and interpret this information. It is not a bad idea for quality expertise to be included in board members’ competency profiles and for boards to undergo training and continued education in quality and safety. This is especially relevant for board members who come from industries outside of healthcare. It rests on the board when care quality declines or when lapses in patient safety are unaddressed: It is unacceptable for a board to say it missed the memo on care outcomes or that it did not understand the information in front of it. 

5. The board member is a watchdog on societal, governance and audit issues. Informed citizens make for strong board members. It is important to not only be plugged in and aware of the issues and challenges confronting the organization today, but to be aware of broader societal issues that could affect system strategy and performance tomorrow. This is not hypothetical thinking. The past year was a master class in how broader issues affected healthcare in acute and direct ways: systemic racism, a global supply chain and a churning labor market are just three. Good boards are made up of members who stay informed and are biased toward anticipatory thinking, in which they are eager to explore the ways in which issues larger than or outside of their industry may come to affect the organization they help govern. 

6. The board member supports the leadership team, but also questions it and holds it accountable. Board members cannot be pushovers for leadership. Directors are nominated by existing board directors on the nominating committee, which often includes the CEO. As a result, trustees can empathize with the CEO of the organization on whose board they sit. Empathy does not equate to blind acceptance, but this is nonetheless a dynamic trustees should be aware of and work to keep in check. It is not unusual for board members to struggle when giving candid feedback to the CEO, for example. As a result, chief executives carry on and live in a bigger and bigger bubble. 

It’s worth noting that the reverse can occur within boardrooms as well, in which board members disagree about strategy and seek a CEO they can easily influence. At the end of the day, being a pushover is not associated with strong leadership and should be avoided by both trustees and senior executives. Instead, trustees need to embrace constructive tension in the boardroom. Questions, challenges and disagreements that reach resolution can drive valuable dialogue and stronger outcomes.

7. The board member allows others to voice their thoughts. In many boardrooms, a small number of the participants do most of the talking while the majority stays relatively quiet. A powerful or well-connected member may dominate discussions. Ideally, boards embrace the middle in interpersonal communication, with trustees contributing not too much nor too little. Either goes against the board’s very reason for being. 

8. The board member helps ensure the board as a whole reflects the racial, ethnic, gender, religious and socioeconomic diversity of the community served by the organization. This is important for a number of reasons, with health equity being principal. Trustees are stewards for the communities they serve. For hospitals and health systems to increase opportunities for everyone to be healthier — including those who face the greatest obstacles — they need visions, strategies and goals that begin at the top from individuals who have viewpoints from the community. Without these insights, the board simply can’t govern effectively. Additionally, research has consistently found that teams of people who have diversity in knowledge and perspectives — as well as in age, gender and race — can be more creative and better avoid groupthink.

9. The board member is accessible. Just as no board wants its CEO in a bubble, governing bodies must actively resist this risk. For a stretch of time, boards were less visible groups of people who would meet four to six times a year in a mahogany-paneled room to decide the future of an organization that employs tens of thousands and serves even more. This dynamic cannot hold in healthcare. Community members and employees should know — or be able to easily learn — who serves on their health system’s board. If stakeholders bring issues or concerns to a board member, the trustee should be prepared to respond and follow up. In 2021’s healthcare, board members cannot breathe rarified air.

10. The board member emulates the values of the health system. So often when people talk about the tone being set at the top, they have the CEO in mind. The board is just as responsible, if not more responsible, for this charge. What a board permits, it promotes. Board members that emulate system values are better positioned to collaborate with mutual respect, candor and trust. Board members whose values are mismatched or personal agendas are at cross-purposes with the good of the organization should be replaced. 

Executive Intelligence and Its Relationship to Management Competence

Posted on by • Posted in C-Suite, Crystallized Intelligence, Executive Intelligence, Executive Wisdom, Fluid Intelligence, Institutional Wisdom, Knowledge, Leadership, Management Competence, Managerial Balance, Talent Imperative, Talent Management, Wisdom • Leave a comment
https://www.kaufmanhall.com/insights/thoughts-ken-kaufman/executive-intelligence-relationship-management-competence?utm_source=mkto&utm_campaign=ken-weekly-blog&utm_medium=em&utm_term=231213&mkt_tok=NjU0LUNOWS0yMjQAAAGQAqrE077uk_HRRb8PIhi_ZhT0dg9v0lcs-kQ-4E7woZ-TstlSvbewzpcDMv27acV291Q4GgN6m9tlRYAcV_chmnfQbU-iLHBXbq3fVf0L-VGP

These days I have been reading From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life by Arthur C. Brooks. Brooks is the former President of the American Enterprise Institute and is currently a professor at both the Harvard Kennedy School and the Harvard Business School. 

From Strength to Strength is a book about intelligence and aging and the relationship of those aspects to personal happiness. The book is part sociology, part psychology, and part self-help. But if you read carefully, the book also offers important lessons in contemporary management.

The central theme of From Strength to Strength is how our intelligence changes over time and how individuals must change to make the best use of this changing intelligence. To make this point, Brooks cites Raymond Cattell, a British-American psychologist, who in 1971 suggested that there are two types of intelligence: “fluid intelligence” and “crystallized intelligence.”

Cattell and Brooks define fluid intelligence as the ability to “reason, think flexibly, and solve novel problems.” This is the kind of smarts and intelligence that is associated with young Nobel Prize winners and the tech titans of Silicon Valley. Crystallized intelligence is different. Brooks defines crystallized intelligence as the ability to use a stock of knowledge accumulated and learned in the past. Fluid intelligence is a characteristic of the young while crystallized intelligence is more closely associated with our aging process.

At its best, fluid intelligence is “raw smarts” or what I might term “mental athleticism.” Crystallized intelligence at its best is what we recognize as “wisdom.”

Extrapolating from Brooks’ observations and analysis, one can conclude that complex organizations, both not-for-profit and for-profit, require both kinds of executive intelligence. Fluid intelligence generates new ideas, top-shelf innovation, and executive solutions to the most difficult business problems. But crystallized intelligence provides organizations with “the wisdom and experience of people who have seen a lot.”

To further paraphrase Brooks, crystallized intelligence can teach the organization how not to make flagrant, self-defeating, and avoidable errors.

Reading Brooks and thinking about Cattell’s research led me to two observations. First, in our general corporate environment, including hospitals, we very much de-emphasize the value of crystallized intelligence. Just at the moment when many “older” executives are at the highest point of institutional wisdom, our modern corporate structure tends to react in two ways:

  • In general, we no longer give these so-called older executives jobs of responsibility and/or importance. These jobs are reserved for younger executives whose critical qualification is powerful levels of fluid intelligence.
  • Also, many corporate organizations demand what I would characterize as “early retirement.” This is especially true in many prominent American companies when long-tenured executives are required to retire in their late fifties or early sixties. If you place these retirements in the context of crystallized intelligence, then such retirements inevitably lead to a significant loss of human capital to our overall national economy. This includes the loss of long-term accumulated smarts, and most importantly, a loss of organizational wisdom.

Turning this discussion more specifically to hospital management leads to my second observation. Since Covid, the number of hospital CEO resignations has significantly increased when compared to previous years. Additionally, not only has CEO turnover increased but a number of important, influential, and highly capable CEOs—who previously might have been expected to work into their mid-sixties or, perhaps, even into their early seventies—have also decided to leave hospital leadership.

If we come back then to the central observations of Brooks and Cattell, we can see that hospital leadership and management, which is already challenged by so many external and difficult factors, is now losing critically required crystallized intelligence and wisdom.

Having said all this, it is still patently obvious that your organization requires the fluid intelligence of the next generation and the generation after that. That kind of intelligence is necessary and essential to solve today’s and tomorrow’s hardest healthcare problems. And, of course, to innovate and then to innovate some more.

But at the same time, your hospital or health system must also preserve a prominent place for older executives who possess the crystallized intelligence that assures your hospital will prioritize caring, thoughtfulness, and an essential level of managerial balance—all things that come along with executive wisdom.

From Strength to Strength signals a new way of looking at your executive team. This includes understanding that executives of differing tenures bring very different types of intelligence to the organization. And, it requires finding the proper balance between fluid and crystallized intelligence to give your hospital the very best opportunity to re-find its way to a much-needed new vision of hospital success.

Health System Chief Strategy Officer Roundtable Assessment: ‘The Near-Term is Tough, the Long-Term is Uncertain and the Deck is Stacked against Hospitals’

Posted on by • Posted in Affordability, Chief Strategy Officer, Competition, Competition on Price, Health Policy, Health System, Healthcare Reform, Hospital Industry, Leadership, Leadership Transformation, Leadership Vision, Private Equity, Regulation, Regulatory Pressures, Reputation, Transition to Value-Based Healthcare, Value Based Care Model, Value Proposition, Value-Based Healthcare • Leave a comment
https://paulkeckley.com/the-keckley-report/2023/12/4/health-system-chief-strategy-officer-roundtable-assessment-the-near-term-is-tough-the-long-term-is-uncertain-and-the-deck-is-stacked-against-hospitals/

On November 2-3 in Austin, I moderated the 4th Annual CSO Roundtable* in which Chief Strategy/Growth Officers from 12 mid-size and large multi-hospital systems participated. The discussion centered on the future: the issues and challenges they facing their organizations TODAY and their plans for their NEAR TERM (3-5 years) and LONG-TERM (8-10 years) future. Augmenting the discussion, participants rated the likelihood and level of disruptive impact for 50 future state scenarios using the Future State Diagnostic Survey. *

Five themes emerged from this discussion:

1-Major change in the structure and financing of U.S. health system is unlikely.

  • CSOs do not believe Medicare for All will replace the current system. They anticipate the existing public-private delivery system will continue with expanded government influence likely.
  • Public funding for the system remains problematic: private capital will play a larger role.
  • CSOs think it is unlikely the public health system will be fully integrated into the traditional delivery system (aka health + social services). Most hospital systems are expanding their outreach to public health programs in local markets as an element of their community benefits strategy.
  • CSOs recognize that states will play a bigger role in regulating the system vis a vis executive orders and referenda on popular issues. Price controls for hospitals and prescription drugs, restraints on hospital consolidation are strong possibilities.
  • Consensus: conditions for hospitals will not improve in the immediate and near-term. Strategies for growth must include all options.

2-Health costs, affordability and equitable access are major issues facing the health industry overall and hospitals particularly.

  • CSOs see equitable access as a compliance issue applicable to their workforce procurement and performance efforts and to their service delivery strategy i.e., locations, patient experiences, care planning.
  • CSOs see reputation risk in both areas if not appropriately addressed in their organizations.
  • CSOs do not share a consensus view of how affordability should be defined or measured.
  • There is consensus among CSOs that hospitals have suffered reputation damage as a result of inadequate price transparency and activist disinformation campaigns. Executive compensation, non-operating income, discrepancies in charity care and community benefits calculations and patient “sticker shock” are popular targets of criticism.
  • CSO think increased operating costs due to medical inflation, supply chain costs including prescription drugs, and labor have offset their efforts in cost reduction and utilization gains.
  • CSO’s are focusing more of their resources and time in support of acute clinical programs where streamlining clinical processes and utilization increases are achievable near-term.
  • Consensus: the current financing of the system, particularly hospitals, is a zero-sum game. A fundamental re-set is necessary.

3-The regulatory environment for all hospitals will be more challenging, especially for not-for-profit health systems.

  • Most CSOs think the federal regulatory environment is hostile toward hospitals. They expect 340B funding to be cut, a site neutral payment policy in some form implemented, price controls for hospital services in certain states, increased federal and state constraints on horizontal consolidation vis a vis the FTC and State Attorneys General, and unreasonable reimbursement from Medicare and other government program payers.
  • CSOs believe the challenges for large not-for-profit hospital systems are unique: most CSOs think not-for-profit hospitals will face tighter restrictions on their qualification for tax-exempt status and tighter accountability of their community benefits attestation. Most expect Congress and state officials to increase investigations about for-profit activities, partnerships with private equity, executive compensation and other issues brought to public attention.
  • CSOs think rural hospital closures will increase without significant federal action.
  • Consensus: the environment for all hospitals is problematic, especially large, not-for-profit multi-hospitals systems and independent rural facilities.

4-By contrast, the environment for large, national health insurers, major (publicly traded) private equity sponsors and national retailers is significantly more positive.

  • CSOs recognize that current monetary policy by the Fed coupled with tightening regulatory restraints for hospitals is advantageous for national disruptors. Scale and access to capital are strategic advantages enjoyed disproportionately by large for-profit operators in healthcare, especially health insurers and retail health.
  • CSOs believe publicly traded private equity sponsors will play a bigger role in healthcare delivery since they enjoy comparably fewer regulatory constraints/limitations, relative secrecy in their day-to-day operations and significant cash on hand from LPs.
  • CSOs think national health insurer vertical consolidation strategies will increase noting that all operate integrated medical groups, pharmacy benefits management companies, closed networks of non-traditional service providers (i.e. supplemental services like dentistry, home care, et al) and robust data management capabilities.
  • CSOs think national retailers will expand their primary care capabilities beyond traditional “office-based services” to capture market share and widen demand for health-related products and services
  • Consensus: national insurers, PE and national retailers will leverage their scale and the friendly regulatory environment they enjoy to advantage their shareholders and compete directly against hospital and medical groups.

5-The system-wide shift from volume to value will accelerate as employers and insurers drive lower reimbursement and increased risk sharing with hospitals and medical groups.

  • CSOs think the pursuit of value by payers is here to stay. However, they acknowledge the concept of value is unclear but they expect HHS to advance standards for defining and measuring value more consistently across provider and payer sectors.
  • CSOs think risk-sharing with payers is likely to increase as employers and commercial insurers align payment models with CMS’ alternative payment models: the use of bundled payments, accountable care organizations and capitation is expected to increase.
  • CSOs expect network performance and data management to be essential capabilities necessary to an organization’s navigation of the volume to value transition. CSOs want to rationalize their current acute capabilities by expanding their addressable market vis a vis referral management, diversification, centralization of core services, primary and preventive health expansion and aggressive cost management.
  • Consensus: successful participation in payer-sponsored value-based care initiatives will play a bigger role in health system strategy.

My take:

The role of Chief Strategy Officer in a multi-hospital system setting is multi-functional and unique to each organization. Some have responsibilities for M&A activity; some don’t. Some manage marketing, public relations and advocacy activity; others don’t. All depend heavily on market data for market surveillance and opportunity assessments. And all have frequent interaction with the CEO and Board, and all depend on data management capabilities to advance their recommendations about risk, growth and the future. That’s the job.

CSOs know that hospitals are at a crossroad, particularly not-for-profit system operators accountable to the communities they serve. In the 4Q Keckley Poll, 55% agreed that “the tax exemption given not-for-profit hospitals is justified by the community benefits they provide”  but 45% thought otherwise. They concede their competitive landscape is more complicated as core demand shifts to non-hospital settings and alternative treatments and self-care become obviate traditional claims-based forecasting. They see the bigger players getting bigger: last week’s announcements of the Cigna-Humana deal and expansion of the Ascension-LifePoint relationship cases in point. And they recognize that their reputations are under assault: the rift between Modern Healthcare and the AHA over the Merritt Research ’s charity care study (see Hospital section below) is the latest stimulant for not-for-profit detractors.

In 1937, prominent literary figures Laura Riding and Robert Graves penned a famous statement in an Epilogue Essay that’s especially applicable to hospitals today: “the future is not what it used to be.”

For CSO’s, figuring that out is both worrisome and energizing.