The growth of publicly available quality data got a boost in April as the much-heralded "Hospital Compare" web site went live, enabling consumers to compare hospitals' performance on 17 key measures of care for heart attack, heart failure and stroke. More than 4,200 hospitals, nearly every general acute care hospital in the U.S., are voluntarily sharing their quality data through the site, which is co-sponsored by the American Hospital Association and the Centers for Medicare and Medicaid Services (CMS). More indicators will be added over time.
Directors' Cut: Directors need to examine their hospital's performance on this site to understand how their hospital is portrayed, be prepared to respond to community questions, and support continuous improvement efforts in the hospital. To view the new website, go to http://www.hospitalcompare.hhs.gov/.
Committees in both houses of Congress held hearings in April to examine when tougher regulations are needed to police organizations with tax-exempt status to see if they're fulfilling their charitable obligations.
Internal Revenue Service Commissioner Mark Everson and others testifying before the Senate Finance Committee called for greater oversight and legislative reforms to curb alleged abuses by some tax-exempt organizations, including excessive executive compensation and misuse of tax shelters. In written testimony, Minnesota's aggressive Attorney General Mike Hatch called for reform of the current standard for determining whether executive compensation is "reasonable," and questioned some hospitals' charity care and billing and collection practices. However, Senators Rick Santorum and Chuck Schumer expressed concern that some proposed reforms could "hamper" the ability of charitable organizations to meet their charitable mission, and questioned the need for new laws. For more information on the hearings, go to http://finance.senate.gov/sitepages/hearing030505.htm.
Meanwhile, the House Ways and Means Committee also held a hearing in April to continue its examination of the tax-exempt sector. Lead-off witness David M. Walker, Comptroller General of the Government Accountability Office, connected tax-exempt oversight and good governance, saying: "Good governance and transparency are essential elements to ensure that tax-exempt entities operate with integrity and effectiveness in carrying out their missions … With recent concerns about abuses within the tax-exempt sector, renewed attention is being given to improving governance practices and expanding and increasing the transparency of the sector's operations." See all the testimony at http://waysandmeans.house.gov/hearings.asp?
formmode=detail& hearing=400.
Directors' Cut: As we discuss in the current issue of Great Boards, tax-exempt status can't be taken for granted. Boards need to be sure their organizations are prepared to demonstrate their community benefit to regulators, the courts and the general public. See the story at www.GreatBoards.org.
Governing boards are authorizing huge capital investments for information technology. How do they know the expenditures are going in the right strategic direction? Rob Glaser, vice president and CIO of Partners HealthCare, Boston says boards have "four core IT responsibilities":
Glaser offers some guidance on executing the roles, including recruiting members with IT backgrounds, inviting non-board members to serve on an IT Task Force, or forming an external IT advisory committee. See the story in the April 6 issue of Hospital & Health Network's Most Wired newsletter, at http://www.hhnmostwired.com/hhnmostwired/jsp/articledisplay.jsp?
dcrpath=HHNMOSTWIRED/PubsNewsArticleMostWired/data/
050406MW_Online_Glaser&domain=HHNMOSTWIRED.
Directors' Cut: Boards have had a hard getting a handle on IT without meddling in management. Glaser offers some useful insights on how to play a strategic role in IT decision making and oversight.
An article in Business Week describes how corporate "directors are getting together more frequently, holding longer meetings, and taking their once-ceremonial duties far more seriously." For example, at E*Trade Group Inc., directors meet four times a year for "deep dives" -- intense discussions lasting up to four hours that allow them to "interrogate managers on a single topic, such as the one last year on the company's plans for international expansion."
Compensation committees are relying more on external outside pay experts, and meeting with them without management present. Nominating committees are growing more independent, too. At Chiquita Brands International Inc., the nominating committee is interviewing six board candidates -- none chosen by the CEO. Says one committee member: "You'll never get the degree of independence [boards need] unless you get directors who are chosen by someone else."
The typical audit committee meets 8 to 12 times a year instead of just 4, and it has the power and money to hire its own lawyers, accountants, and forensic investigators. Audit chairman interact outside meetings with the auditors and get called in advance if any issues pop up, from accounting questions to consulting agreements.
See the article, in the April 25 issue at http://www.businessweek.com/magazine/content/05_17/
b3930015_mz001.htm.
Director's Cut: On some hospital boards, members from the corporate world want to transplant the new-found independence of corporate governance into the healthcare setting. Some tactics are clearly worth translating, such as the E*Trade board's "deep dives" into significant strategic issues. Independent oversight over audit over executive pay and audit are a must. But cutting the CEO out of the nominating process is usually a mistake for the not-for-profit community hospital. The hospital needs to connect with its community, and part of the CEO's job is building relationships. Hospital and health system CEOs should be involved in suggesting candidates, but the board has to direct and own the process, not just rubber stamp the CEO's recommendations.
The emergence of physician-owned, limited-service hospitals in Oklahoma led to a dramatic rise in the utilization of certain well-paid procedures, according to a study released April 26 by Georgetown University economist Jean Mitchell.
The study of more than 250,000 workers' compensation claims found the number of complex spinal fusion surgeries and other well-paid procedures performed in Oklahoma City and Tulsa increased after the emergence of such facilities, despite an overall decline in worker injuries. Mitchell also released a study of limited-service hospitals in Arizona confirming that the providers "cherry pick" healthier patients with more generous insurance.
AHA Executive Vice President Rick Pollack said that the findings raise "serious concerns about conflict of interest, implications for patient care and unnecessary increases in health care spending," and urged Congress to make permanent the ban on physician referral to new limited-service hospitals they own. The study is available on the AHA Web site at http://www.aha.org/aha/key_issues/niche/whatsnew/index.html.
The rise in consumer-driven health plans and the debate over charity care policies is generating pressure on hospitals to make their prices more easily available to consumers seeking to comparison shop.
It's a tougher task than it sounds, as finance professionals understand, but Oregon hospitals have taken step forward and launched a Web site, Oregon PricePoint, where consumers can access information about services and charges for any hospital in the state, as well as the hospital or health system's financial assistance policies. Some diagnoses are grouped together, such as "Major Hip, Knee, Ankle, Foot Surgery, Including Replacement," but others allow more direct comparisons, such as uncomplicated spinal fusions and bypass surgeries, pacemaker implants and normal deliveries.
Director's Cut: Consumers accustomed to comparing other products such as cars and computers may be disappointed to see average costs and length of stay, but not the exact price they'll pay. Still, this site is an educational step forward. Check it out at http://www.orpricepoint.org/. And think about how your hospital is preparing to make its prices transparent to empowered consumers and scrutinizing regulators.
Reminder: The Spring 2005 issue of Great Boards is available for reading or downloading at www.GreatBoards.org. The issue focuses on two timely subjects:
New ways to engage the board in strategic planning. Boards are becoming more engaged in strategic planning. We report on innovative approaches at five health systems that are trying to fully tap the strategic thinking talents of directors and other organizational leaders.
Challenges to tax exempt status. Taking your hospital's tax exempt status for granted could be a risky strategy. Barry Bader interviews the leaders of a health system that lost its property tax exemption, and he identifies 10 strategies for keeping your hospital out of a similar fix.
Coming soon in the next issue of Great Boards: Stories on the Save 100,000 Lives campaign, the right way to document meetings in board minutes, and an interview with Richard Chait, co-author of the provocative new book, Governance as Leadership.
Barry Bader has updated his presentation topics for 2005, including a new presentation on The Board of the Future and an updated presentation on the board's responsibilities for quality and patient safety. Download a copy at http://www.greatboards.org/services/
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