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Defining The Roles And Responsibilities Of A Hospital's Board Of Directors

The Roles and Responsibilities of a Board of Directors for a Hospital

Healthcare reform and increased regulatory matters are making healthcare more complex and challenging for board directors than ever before. Hospitals have varying types of leadership structures, depending on their size and whether they are private, for-profit entities or nonprofit hospitals. In general, hospital care is changing from volume-based care to value-based care, which means that boards of directors need to make major changes in their objectives and strategic goals. In spite of all of the changes, boards must continue to focus their top priorities on financial sustainability for the hospital and quality of care for their patients.

Boards design their leadership structures to fill all of the needs of the organization efficiently. Each role has a specific job description with expectations for duties, responsibilities and boundaries. The collaboration between the people in those roles is what makes it all work for the good of the patients, shareholders, stakeholders and employees. Here is a general overview of how hospital infrastructures work.

Roles and Responsibilities of the Chairman of the Board

The board chair is a member of the board of trustees. The person filling this role presides over board and executive committee meetings. The board chair has many duties. One of the primary duties is to guide the board’s work by steering the board’s priorities, annual objectives and strategic plans.

Serving as the hospital’s public spokesperson, the board chair is the voice of the board to hospital staff, stakeholder groups and the community at large. As a leader, the board chair serves the best interests of the organization and the board, placing their own interests aside.

Typically, the board chair develops a special relationship with the hospital CEO. The board chair offers the CEO advice about governance matters and garners support for the CEO from the rest of the board. Regular communication between the board chair and the CEO facilitates the setting of clear goals and objectives, which the CEO then communicates to upper management.

The board chair has many responsibilities to the other board members, including recruitment, orientation, and board mentoring and development. The board chair is an ex-officio member of all committees. In this role, the board chair designates committees and appoints committee chairs. Board chairs who work effectively with committees keep up-to-date on their activities and are available as a sounding board.

Roles and Responsibilities of the Board of Trustees

The board directors of hospitals are sometimes referred to as trustees because the owners and community entrust them with overseeing the hospital’s best interests. The board of trustees is the governing body of the hospital. They are responsible for developing and reviewing the hospital’s overall mission and strategy. The board guides the long-term goals and policies for the hospital by making strategic plans and decisions.

The board of trustees doesn’t get involved in managing the hospital’s activities; rather, they oversee them. As part of their oversight duties, the board of trustees sets the job description for the CEO and is responsible for hiring, firing and monitoring the CEO.  The board typically sets clear goals and expectations for the CEO, in keeping with strategic planning. Trustees assist and support the CEO with input about management policies, procedures and decisions. Upper management, along with human resources, is responsible for hiring hospital staff. Board trustees oversee the employee credentialing process, making sure healthcare professionals have the proper training, licensing and accreditation. The board is also responsible for making sure that processes are in place to discover any history of disciplinary action by prospective employees and to ensure that they have the proper level of malpractice insurance.

Hospital trustees are charged with duty of care, which means that they must oversee the hospital’s financial health and sustainability. They must also make sure that the hospital makes the best use of the resources it has.

Hospitals provide a vital community service, so it’s important for board trustees to oversee the highest quality of care. Board trustees need to stay abreast of the latest in industry news and best practices. Trustees represent the hospital within the community, so it’s important for them to understand the needs of their community and to respond with outreach efforts and education.

Hospital boards must engage in self-regulation by performing regular self-evaluations on themselves, their peers and the whole board. Trustees typically find it necessary to continually educate themselves on healthcare trends by subscribing to magazines like Trustee.

Roles and Responsibilities of the Company Secretary 

As in many other industries, the role of the company secretary is evolving into one of primary importance. In fact, some governance experts favor a title change from Secretary to Chief Governance Officer. Many hospitals are lagging behind the times, marginalizing the secretary and deeming them as little more than a note-taker and file clerk. With major changes in governance taking place, company secretaries are the prime people to champion governance expertise for their boards.

Company secretaries work closely with the board chair and the CEO when recruiting, electing or appointing new board members. They also assist the board chair with recruiting and selecting committee chairs and committee members. The secretary often serves as the committee chair for the governance committee.

Secretaries also take on much of the responsibility for orienting board members and arranging mentors and continuing education for them. As needed, the company secretary also helps the board perform self-evaluations. The secretary also takes a primary role in working with the board chair to address dysfunctional or non-participatory board trustees.

As a matter of practicality, the company secretary maintains official hospital records, including the articles of incorporation, bylaws, voting records, and the board’s policies, procedures and protocols. The secretary works with the board chair to set and distribute agendas and board packets prior to board meetings.

In addition to these important duties, the secretary assists the board chair in fulfilling his or her responsibilities.

Roles and Responsibilities of the General Counsel

Hospitals have not historically appointed anyone to fill the role of General Counsel. When hospitals needed legal advice or representation in the past, they typically hired outside firms after the board identified a prospective or pending legal matter. In today’s healthcare industries, two issues motivate hospital boards to hire legal staff.

First, the healthcare arena is becoming increasingly litigious, which has led to the need for healthcare reform. Second, the fall of the financial industry is promoting governance changes. Hospitals are feeling the impact of increasingly stringent regulatory constraints.

As a result, many hospitals now employ robust legal teams, headed up by the General Counsel. The General Counsel may act alone, but usually oversees a team of attorneys. Hospitals no longer generally have one or two general law attorneys. The needs of today’s hospitals necessitate having attorneys on staff who specialize in specific areas of law. The General Counsel acts as a liaison between the board and staff attorneys. The General Counsel usually attends board meetings and helps the board understand any legal implications of the strategic planning process.

It’s common for hospitals to retain lawyers with titles such as Deputy General Counsel, Chief Legal Officer, Chief Compliance Officer and Chief Risk Officer. The General Counsel oversees the activities of the entire legal team. These varied roles are important because hospitals’ attorneys interact with many different stakeholders, including universities, healthcare providers, researchers and the public. Because of the many legal needs of hospitals, legal teams need to be flexible, multidisciplinary and innovative.

Healthcare reform is a major topic within the hospital industry. Hospitals desire to have input as legislative changes are looming. Having qualified and competent attorneys allows hospitals to have a greater impact on legislative issues, which can have an overall positive impact on the board’s ability to govern hospitals effectively.

Finally, boards are finding it more efficient and affordable to hire in-house legal teams than to hire lawyers on an ad hoc basis after a crisis. This approach supports board trustees’ duty of care in making the best use of resources.

Roles and Responsibilities of the Treasurer

The primary role of the board treasurer is one of a financial advisor. Regulatory changes have intensified within the last two to three years, which has made the role of hospital treasurer challenging.

The treasurer is responsible for producing a complete and accurate financial report for board approval. This report may be due monthly, quarterly or annually. The board trustees make decisions about the hospital’s financial health based on these reports.

The treasurer is responsible for overseeing the accounting and financial records of the staff counterpart, which is the CFO. The treasurer helps the board understand and interpret the CFO’s reports and gives them meaning by presenting them with scope and context. Acting as a liaison between the board and the CFO, the treasurer provides the board trustees’ perspective back to the CFO.

The CFO’s duties are distinctly different from those of the treasurer. The CFO plays more of a hands-on role in managing cash flow, paying debts, managing bank accounts and approving credit card purchases. The treasurer provides oversight to the CFO regarding these duties.

The treasurer is also responsible for completing financial forms, such as the IRS Form 990, on time and taking a lead role during audits.

Because of the changing regulatory environment, hospital treasurers need to be adaptable, quick-thinking and to have top-notch communication skills.

Roles and Responsibilities of the CEO or Dean of Medicine

The CEO of a hospital is sometimes called the Dean of Medicine. This is the highest-ranking executive position in the hospital’s infrastructure. The CEO manages the day-to-day activities of the hospital and works with the board chair to develop and implement the hospital’s strategies. The CEO is the highest leader that oversees all of the hospital’s operations and programs. The board of trustees usually receives regular summaries of the hospital’s work, along with proposals for changes, from the CEO.

Along with the board chair, the CEO is often a public person who acts as the hospital’s spokesperson.

Roles and Responsibilities of the President

Not all hospitals have a president. Whether they have one is a matter of how the board of trustees designed the management structure. Some hospital boards choose to combine the CEO and President positions. Other boards of trustees combine the President position with the Chief Operations Officer (COO) role. Some hospital structures place the President as second in line to the CEO, somewhat like a Vice President position.

Any and all of those structures can work nicely. The key issue is for the hospital board to write clear job descriptions with their expectations for duties and responsibilities specifically stated.

The role of President, when there is one, is to effectively manage the relationship between the owners and the decision-makers in order to increase shareholder value.

Roles and Responsibilities of Upper Management

Upper management at hospitals performs much of the legwork, as directed by the CEO. Managers set the goals and budgets for their departments. They also oversee work schedules and coordinate operational matters with their staff.

Managers are responsible for overseeing billing and collections activities, such as patient fees and insurance. Sometimes they are also responsible for fundraising activities.

Managers are the front-line people responsible for ensuring compliance with laws and regulations. Their primary duties are to strategize how to improve the hospital’s efficiency and keep quality of care at the highest level possible.

Quality managers stay current on healthcare laws, regulations and technology and strive to use their knowledge to improve care to patients.

Because of having first-hand knowledge of operations, upper managers represent the hospital to investors and governing boards. They also assess the needs of the community and develop programs for outreach and education to meet the needs of area patients.

Upper managers need strong communication skills, as their jobs require them to connect with other departments in the hospital and to communicate with doctors, nurses and other staff regarding their needs.

The Final Wrap-up on Hospital Board Roles and Responsibilities

In many ways, the roles and responsibilities of hospital boards and managers are no different than other types of boards. What sets them apart is that they need to satisfy shareholders and perform their fiduciary duties while providing the best possible quality of care for their patients.

Healthcare reform is continually challenging hospital boards to remain diligent and dutiful in their responsibilities.

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