





Mission, Vision, Values
Bylaws, Articles of Incorporation
Fiduciary Responsibilities
Medical Staff Structure and Responsibilities
5% of the Exam
10 Questions





“Board of Trustees”
“Board of Directors
“Governing Board”
“Operating Board”
Etc.

Obligations of the Board:
 Duty of Care
 Duty of Loyalty
 Duty of Disclosure
 Law of Obedience
 Confidentiality
 Business Judgment Rule
(All were established by case law over time)

Functions of the Board:









Appoint/terminate the CEO
Succession planning for the CEO
Establish Mission, Vision, Values of the HCO
Approve long-range plans and annual budget
Ensure quality of medical care
Monitor performance against plans
Approve Medical Staff bylaws
Engage and align operational and physician leaders
Assess and develop itself

Structure of the Board:
 Chair
 Vice Chair
 Members
 Physicians
 CEO
 Term Limits

Strategies for Staffing a Board:
 “Functional”
 “Diversification”
 “Representative”
 “Passion”
 Matrix of any above combinations

Board Committees (6 Most Common):
 Executive
 Strategic Planning
 Finance
 Quality
 Audit
 Governance (aka Nominating or Bylaws)

Executive Committee
 Primary job is CEO Evaluation
 Should be used sparingly
 Could have the power to act autonomously

Strategic Planning Committee
 Program and building planning
 3-5 year Strategic Plan

Finance Committee
 Budget review and approval
 Investment philosophies

Quality Committee
 Enforce benchmarks
 May oversee physician selection

Audit Committee
 Engages outside auditors to certify financial
statements
 MUST BE SEPARATE FROM FINANCE COMMITTEE!

Governance Committee
 Board member recruitment, education, evaluation

Selection of Members:
 Appointed by Chair with concurrence of Executive
or Governance Committee
 CEO can recruit if board relationship is good
 Medical staff elect physician representatives

CEO’s role:
 Inform board of everything on time
 Help recruit new members
 Ensure members stay involved
 Assure board does not “manage”
 Actuate board retreats

Board Warning Signs:








No job descriptions
Specialized knowledge sought by the HCO
Special interests
Pride and emotional connection
Poor orientation
Board is giving management information
Crisis meetings
Meetings are becoming more frequent

Board Risks:
 NFP-affiliated board members
 Paying members
 “Disqualified Persons” as outlined by the IRS
www.IRS.gov/charitiesandnonprofits
 Employing revenue-based compensation
 Board members participating in inside deals
 Sarbanes-Oxley (Public Company Accounting
Reform and Investor Protection) Act

Mandated:








External auditors certify financial reports
Management must file internal control report
CEO/CFO certification of all financial statements
Audit Committee is independent of Finance Committee
Auditor partnership should rotate every 3-5 years
Audit fees must be disclosed (criminal implications)
Auditors cannot serve as consultants to the HCO
Performance bonuses forfeited if financial statements are
restated
 Audit Committee must have financial experts
 Code of ethics for Senior Leaders

Board holds ultimate authority for the HCO
 Medical Staff Structure
▪
▪
▪
▪
CMO, Chief-of-Staff
Chief of Surgery
Chief of Medicine
Chairs, Medical Directors
 Senior Leadership Structure
▪
▪
▪
▪
▪
Usually led by CEO and/or President
COO
CNO
CFO
CIO

Challenges:
 Physician-Executive alignment
 Service Line models
 Prioritizing resources
 Delineating authority
 NFP vs. FP organization
 Physician employment

The Duty of Loyalty requires that:
 A. Board members disclose all of their assets
before becoming a member
 B. Board members belong to as few HCOs as
possible
 C. Board members refrain from conflicts of
interest
 D. Board members serve out their entire term

The Chairman of the Board is elected by:
 A. The Senior Management Team
 B. The Executive Committee of the Board
 C. The Medical Staff in concert with the Executive
Committee of the Board
 D. The entire board

The CEO of an HCO reports to:
 A. The board chair
 B. The Executive Committee of the board
 C. The entire board
 D. The Governance Committee of the board

A member of an HCO Board also serves as
the Medical Director of a competing HCO.
Which of these is applicable to the situation?
 A. Duty of Loyalty
 B. Duty of Care
 C. Business Judgment Rule
 D. Confidentiality

A danger in having a Board that is too large is:
 A. The Board can never have a quorum
 B. The board will not be able to elect a chair
 C. There will be too many committees
 D. The Executive Committee will make all of the
important decisions

In a dispute between two staff physicians, the
primary role of the CEO is to:
 A. Ask a representative of the Board to mediate
 B. Avoid involvement in physician disputes
 C. Meet with both parties as soon as the problem
is identified
 D. Request the appropriate chief(s) of service to
investigate and report back

The CEO’s relationship with the Board should be
one in which the CEO:
 A. minimizes Board involvement in any operational
issues
 B. Draws upon skills of Board members in facilitating
appropriate discussion and decision making
 C. Identifies those topics with which the board should
involve itself
 D. Serve as the functionary for implementing
decisions made by the Board

The most important responsibility of the CIO
in an HCO is:
 A. Evaluating computer hardware, software, and
communications
 B. Supporting the executive team with effective
strategic planning and management information
 C. Develop request proposals for computer
software
 D. Supervising systems analysts and programmers
to ensure they are meeting the HCO’s needs

The first role of the governing body (Board) is
to:
 A. Manage inputs of the HCO to achieve the
outputs (goals)
 B. Recruit members who understand health
services
 C. Set objectives and develop policy to guide the
HCO in achieving its mission
 D. Develop the operating plan and monitor
departmental performance

Internal members of the HCO’s governing
body:
 A. Serve ad hoc and rarely vote
 B. Are kept to a minimum due to concerns over
confidentiality
 C. Often include the CEO, Medical Director, and
CFO
 D. Often include the Executive Staff in planning
and information management

The role of the Board for a NFP HCO includes
all of the following except:
 A. Delineating clinical privileges
 B. Ensuring quality care is delivered
 C. Overseeing day-to-day operations
 D. Setting broad institutional policy

The main role of the board is to:
 A. Select the CEO
 B. Oversee operations
 C. Set institutional policy
 D. Running the HCO in the absence of the CEO

Which of the following is a key responsibility
of a governing board?
 A. Recruit and select the CEO
 B. Operationalize the Strategic Plan
 C. Assist the CEO with evaluating the senior
management team
 D. Develop a physician recruitment plan

The Board can terminate the privileges of any
member of the medical/professional staff:
 A. Only after a peer review has been performed
and the peer group recommends termination
 B. At any time, if it follows its own adopted
procedures
 C. Only if termination is recommended by the
medical executive committee
 D. Only if approved by the CMO (or equivalent)

What is the right size for a Board?








7
10
15
25
50
85
100
Do you put donors on the Board because of their
financial contributions?
 Yes
 No