Selecting a chief executive is the most important single decision a board makes. The right choice pays multiple dividends; the wrong choice causes permanent damage.
In the summer issue of Great Boards, we interview leading search consultants and trustees who've engaged in successful searches to find out the best practices they recommend - and the pitfalls they'd avoid. One key piece of advice: Be ready to show the board's commitment to the new CEO's success by putting a succession plan for the Board Chair in place. For more, see the new issue of Great Boards at http://www.greatboards.org/newsletter/.
Information overload got you down? Heritage Valley Health System in western Pennsylvania became a paperless board by channeling everything from bylaws to meeting materials through a secure Internet portal. See how they did it at http://www.greatboards.org/newsletter/.
THE DIRECTOR'S CUT: RESOURCES AND NEWS OF INTEREST TO BOARDS
SCRUTINY OF EXECUTIVE COMPENSATION GROWS. The Internal Revenue Service has launched a study into executive compensation practices at not-for-profit organizations. The IRS is surveying how hundreds of voluntary organizations pay their highest compensated executives, to see if they comply with the service's requirements.
The study is only Act I. At Senate Finance Committee hearings in June, an IRS commissioner said the audit initiative is an "aggressive" program and just the first stage of a more extensive review.
With political pressure growing for the government to "do something" about rising health costs, attacking executive pay looks like a juicy target. Board attention to this area, to be sure your pay practices meet IRS' rebuttable presumption standards, is important.
Two new resources to assist boards have just been released. Attorneys at McDermott, Will & Emery have written a useful article describing the issues that the IRS is likely to review and suggesting steps that exempt organizations. Written by Bernadette Broccolo, Ralph DeJong and Elizabeth Mills, the article appears at http://www.mwe.com/info/news/ots0604f.htm.
The August issue of CEO Hotline from Clark Consulting gets very practical, spelling out the laws and regulations affecting board oversight of executive compensation programs, and offering 11 practices to strengthen governance oversight. The article stresses the importance of an independent compensation consultant who reports directly to the board's compensation committee, not to management. For more, go to the Health Leaders' website at http://www.healthleaders.com/news/whitepaper.php?
contentid=57064, or directly to Clark Consulting at http://www.clarkconsulting.com/knowledgecenter/
newsletters/ceohotline/index.shtml.
Also check out the article by Dan Fairley of Clark Consulting in the August 2002 issue of Great Boards - it's at http://www.greatboards.org/newsletter/2002/august/
GB_August_Good_Business.PDF.
Lawsuits have been filed challenging billing and collection practices at not-for-profit hospitals, claiming that the poor and uninsured patients they are supposed to help are actually being overcharged and hounded by collectors. In Illinois, authorities stripped the tax-exempt status of Provena Health over accusations it wasn't providing enough charity care and was operating too many for-profit operations under its umbrella. As noted earlier, IRS is examining executive pay. More Congressional scrutiny is on the way.
The present would be an opportune time for a board to authorize an independent - and for now confidential - audit of its tax-exempt activities, and how they would stack up to still-murky but emerging standards for community benefit.
Better now than later. The Wall Street Journal described the difficult road that Provena Health is taking to regain its exemption, including paying property taxes and boosting its charity care. See the article at http://online.wsj.com/article/0,,SB10884534284844
9424,00.html?mod=Health (subscription required).
More than 2,000 hospitals have adopted the billing and collection guidelines issued by the AHA Board of Trustees last December by signing the AHA's "Confirmation of Commitment." Says AHA, "Though hospitals demonstrate their commitment to fairness, compassion and respect on a daily basis -- despite the challenges posed by a fragmented health care system that leaves millions unable to pay for the care they receive -- it's more important than ever to confirm your commitment to these principles. As public scrutiny and media attention intensify, we must demonstrate that our compassion stretches from the bedside to the billing office." The principles appear at http://www.aha.org/aha/key_issues/bcp/content/
guidelinesfinalweb.pdf.
This fall, Great Boards plans a story on the challenges to tax exemption. If your organization has been addressing this issue, let us know via an email to Barry Bader at bbader@GreatBoards.org.
Michael W. Peregrine of McDermott Will & Emery was a principal draftsman of the educational pamphlet, along with Lewis Morris, the Chief Counsel of the OIG; Michael Hemsley of Catholic Health East; Jane Conard of Intermountain Healthcare; and Douglas Hastings of Epstein, Becker & Green.
Access the guide from the American Health Lawyers Association's website or download it in PDF format.
STUDY LINKS NURSING HOURS, MEDICAL ERRORS. Nurses who worked shifts lasting at least 12.5 hours were three times more likely to commit an error, such as giving a patient the wrong medicine or the wrong dose, than nurses who worked less than 8.5 hours, about a regular shift, according to a new study from the University of Pennsylvania School of Nursing.
Nurses reported that they committed errors on 103, or five percent, of the 2,057 longer shifts and made "near errors" on 97 of those longer shifts. Near errors are mistakes nurses intercepted before they reached patients, such as bringing the wrong medication to a patient's bedside, but catching the error before administering the drug. Meanwhile, nurses made errors on just 12, or 1.6 percent, of the 771 regular shifts, and near errors on only 20 of those shifts.
Working unplanned overtime at the end of a shift also increased the likelihood of making a mistake, regardless of how long the shift.
According to a story in the Boston Globe, Ann Rogers, the lead author of the study published in the journal Health Affairs, said many of the 393 nurses surveyed wrote commentary in their logbooks. "They often said, 'I am trying to do too much. I triple checked myself three times because I knew I was tired,' or 'it was 4 a.m. and I wasn't concentrating,'" Rogers said. "That's a bad time for any human being to be awake."
The study adds fuel to an emerging quality issue. Many observers are concerned that financial pressures and a shortage of nurses are increasing workloads beyond safe bounds. In California, pressure from the nurses' union and consumer groups led to the enactment of the nation's first mandatory staffing ratios. Last November, the Institute of Medicine, a nonprofit nonpartisan advisory group, said that nurses' long work hours pose one of the most serious threats to patient safety, as fatigue slows reaction time, saps energy, and diminishes attention to detail. IOM recommended that state regulators pass laws barring nurses from working more than 12 hours a day and 60 hours a week--even if nurses want to work extra hours to earn more money.
Everyone wants qualified, rested nurses. Who's willing to pay for them? Some hospitals are concluding they simply have to find a way, whether the standards are reasonable or not.
How much attention has your board or the board's quality committee paid to the links among nursing, quality outcomes, and patient satisfaction? Too often, boards focus on physician issues and hospital-wide quality indicators but very little on the quality of nursing care. One of our clients has devoted several productive meetings of its Board Quality Committee to learning about the hospital's efforts to strengthen the nursing staff and build a culture supporting quality care, patient safety and high levels of customer service. Both physicians and community members of the committee found the sessions useful, and the committee plans continued oversight.
To see the study, go to Health Affairs at http://content.healthaffairs.org/cgi/content/abstract/23/4/202.
Or see the Boston Globe's summary at http://www.boston.com/business/articles/2004/07/07/
study_links_long_hours_nurse_errors?mode=PF.
STUDY: LEADERSHIP CAN OVERCOME BARRIERS TO ELECTRONIC ORDERS. Chances are your board has been discussing implementation of a computerized physician order entry (CPOE) system to help prevent medication errors—the most common cause of preventable injuries in hospitals. It may be in your long-term, capital plan for Information Technology (IT).
Despite strong urging from the government and purchaser groups such as Leapfrog, adoption of CPOE nationwide has been slow. According to a new study in Health Affairs, physician and organizational resistance, high costs, and product and vendor immaturity appear to be the major obstacles to implementing this technology.
With support from The Commonwealth Fund, Harvard Medical School researchers Eric G. Poon, M.D., and David Blumenthal, M.D., interviewed top managers at U.S. hospitals to identify the barriers to implementation and adoption of CPOE and to recommend strategies for overcoming them. The authors suggest that providing strong hospital leadership, rallying physician support, and realigning priorities to focus on patient safety may address some of the barriers. Outside the hospital, the authors also raise issues for policymakers, vendors, and payers.
See a summary from The Commonwealth Fund at http://www.cmwf.org/media/releases/poon_cpoe
_release07072004.asp. Or get the full article at http://content.healthaffairs.org/cgi/reprint/23/4/184.
HOW DOES JCAHO RATE YOUR HOSPITAL? Find out at the Joint Commission's newly enhanced Quality Check® website. JCAHO says Quality Check® will provide clear, objective data to individuals that will permit them to compare local hospitals, home care agencies, nursing homes, laboratories, and ambulatory care organizations with others on state and national data bases. For the first time, JCAHO will provide hospital-specific information about clinical performance in the care of patients with four major conditions: heart attack, heart failure, pneumonia, and pregnancy and related conditions. Individuals will also be able to determine how healthcare organizations compare with others in meeting National Patient Safety Goals.
Read the background at http://www.jcaho.org/news+room/news+release+archives/
qualitycheck_0715.htm, and check out your hospital's rating at http://www.jcaho.org/quality+check/index.htm.
WIRED HOSPITALS' EFFORTS PROFILED. US News and World Report has a well written story on Wired Hospitals that can help educate boards that want to be visionary, strategic thinkers about information technology. Read a copy at http://www.usnews.com/usnews/issue/040802/health/
2wired.htm.
HEALTHCARE COSTS KEEP RISING. Running longer than the "The Fantastiks" off-Broadway, it's the annual recital of how healthcare costs are rising. And as always, it provides useful background information for board orientation and education.
In 2003, the rate of growth in health care spending growth actually slowed for the second consecutive year, according to a study by the Center for Studying Health System Change. But total health care spending per privately insured person still rose 7.4% in 2003, slowing from 9.5% in 2002 and 10% in 2001. Spending on hospital inpatient services rose 6.5%, slowing from 8.4% in 2002, while spending on hospital outpatient care rose 11%, down from 12.9% in 2002.
The authors said the decline in spending for hospital services reflected a slowing in hospital utilization growth from higher than usual growth in 2001 and 2002.
To see the report, go to http://content.healthaffairs.org/cgi/content/abstract/
hlthaff.w4.354.
PAST ISSUES OF GREAT BOARDS. Every issue of the Great Boards newsletter is available at www.GreatBoards.org. Just click on Newsletter and Past Issues, or use the Google search box to find a topic you want.
If you missed it, the Spring issue of Great Boards describes what boards need to know about the Joint Commission's shift to unannounced surveys and the best practices for engaging a board in the strategic planning process.
CHANGING YOUR E-MAIL ADDRESS. To change your e-mail address on our subscriber list, follow the simple instructions at the end of this message. To keep the Great Boards newsletter free, we ask subscribers to update their own records right on line.
TELL A FRIEND. If you find the Great Boards newsletter and our other governance resources helpful, tell a friend or colleague. Just forward this message to them and they can sign-up free on our website: http://www.greatboards.org/newsletter/subscribe.asp.
FEEDBACK. Have a question or topic you'd like us to address? Interested in retreat or consulting services for your board? Visit www.GreatBoards.org and send a message from the Contact page or send an e-mail to bbader@GreatBoards.org .
Barry S. Bader, Bader & Associates
12225 Seline Way, Potomac MD 20854, 301-340-0903
www.GreatBoards.org *** bbader@GreatBoards.org