What Does it Take to Build a Strong Nonprofit Health Care Board?
This seven-page Alliance report is a reprint of an article of the same title published in the Spring 2007 issue of the health care journal Inquiry. This roundtable discussion is another of an ongoing series called Dialogue, collaboration between the Alliance and Inquiry on important nonprofit health care issues.
Independent Sector Guide on Good Nonprofit Governance and Ethical Practice
Overall, the Alliance is pleased with and supportive of this Guide, issued in October 2007. It is consistent with most of the Alliance’s own guidelines on nonprofit health care governance, adopted by the Alliance Board in May 2005. The only Alliance suggestions previously submitted that were not incorporated in some manner were the following:
- The Board plans for the succession of the Board chair, other Board positions, the position of Chief Executive Officer (CEO), and other key executive positions
- The number of other public or private company boards on which a director may serve is determined by policy or case-by-case review
- While all major decisions should be determined by the Board as a whole, larger nonprofit organizations have standing committees, with charters and composed of independent directors, responsible for audit, compensation, and governance and nominations. These committees have the sole authority to select, direct, retain and terminate independent consultants
- For purposes of preserving the Board’s independence as well as ensuring clear and candid communication among directors and with the CEO, at least several times a year, on a prescheduled basis, directors meet in executive session without the presence of management
- Board and individual director evaluations should be preformed annually, recognizing that the depth of the evaluations may vary from year to year (The Independent Sector Guide calls for such evaluations at least every three years)
This 8-page report issued by the Alliance for Advancing Nonprofit Health Care in May 2005 provides guidance on governance practices in critical areas such as overall role and responsibilities, independence, numbers and qualifications of directors, committees, director development and performance evaluation, and succession planning. The Alliance developed the guidance based on its members’ experiences, the recommendations of others in both the for-profit and nonprofit sectors, and the assistance of Boardroom Consultants—a leading consulting firm specializing in corporate governance.
IRS Recommendations on Good Governance Practices
This 4-page document released by the IRS in early 2007 provides some brief guidance on mission statement, code of ethics, due diligence, duty of loyalty, transparency, fund-raising policy, financial audits, compensation practices and document retention policy. It states that while adopting a particular practice is not a requirement for exemption, an organization that adopts some or all of them is more likely to meet its exempt purposes and earn public support.
Beyond Charity Care: Mission Matters for Tax-Exempt Health Care
This report, authored by David Seay in 2007 for the Catholic Health Association, provides valuable discussions of community benefit, governance and accountability, volunteerism, philanthropy, staying the course, etc. which can be used in internal and external communications with a variety of audiences.
Clarifying Expectations: A First Step in Developing Truly Effective Relationships Between CEOs and Trustees
This easy-to-read book by David Bjork of the Clark Consulting Healthcare Group for the Center for Healthcare Governance, includes useful checklists regarding the CEO’s and the Board’s roles and the relationship between the two.
Building an Exceptional Board: Effective Practices for Health Care Governance
This 2007 report, developed by a blue ribbon panel of the Center for Healthcare Governance, is available for purchase on its website, www.americangovernance.com.
OIG/AHLA Resource on Health Care Board Responsibilities for Quality and Patient Safety
This 29-page resource, jointly released by the Office of the Inspector General and the American Health Lawyers Association on June 26, 2007, includes recommended questions for health care board members to consider in understanding and carrying out their fiduciary responsibilities for the organization's quality and patient safety performance. For nonprofit health care organizations, this resource addresses a director's duty to pursue its nonprofit purpose.
This 211-page book by Howard Berman, published by the Health Education and Research Trust (HRET)
in October 2003, describes the underlying principles and foundation of nonprofit health care governance, nonprofit board structure, and nonprofit board operations. To purchase this book from HRET, search at www.hospitalconnect.com.
This 7-page article, by July Connelly in the November/December 2003 issue of Corporate Board Member magazine, describes various environmental forces which are demanding that nonprofit boards exercise the same types and levels of fiduciary responsibilities of care and loyalty that are being imposed on their corporate counterparts. To obtain this article, search within the November/December 2003 issue in the Archives section of www.boardmember.com.
This 9-page article, by Michael Peregrine and James Schwartz in the January 22, 2004 issue of Health Care Reporter, identifies several key trends in corporate law impacting nonprofit healthcare organizations: increased scrutiny by state attorneys general of general business practices; increased use by state attorneys general of charitable trust law and theory to obtain remedies not available under corporate nonprofit law; increased efforts by various types of government officials to hold directors more accountable for their organizations’ behaviors; and growing recognition among many groups that the principles embodied in the Sarbanes-Oxley legislative reforms are also applicable to nonprofit organizations. The authors discuss specific developments in 2003 illustrating these trends, including but not limited to: controversies involving inter-state transfers of assets from sales of facilities by Banner Health; challenges of waste of assets and breach of fiduciary responsibility by the board of HealthPartners in Minnesota; and denial of nonprofit CareFirst Blue Cross Blue Shield’s proposed conversion and sale to for-profit Wellpoint, with subsequent state legislation establishing greater governmental control over the organization and its board.
This article is available for purchase through subscription to this newsletter at www.bna.com.
This 4-page lead article, by Fred Scaglione in the November 2003 issue of the New York Nonprofit Press,
Reports on New York State Attorney General Eliot Spitzer’s proposed legislation (and reactions of the nonprofit community thereto) that has been described as the nonprofit equivalent of the federal Sarbanes-Oxley legislation. To obtain the article, search for the November 2003 issue within the Archives section of www.nynp.biz.
This 3-page article by Roger Kenny, published in the July/August 2002 issue of The Corporate Board magazine, discusses the role and benefits of independent outside directors in both young and more mature organizations, particularly as mentors and resources to the CEO. To obtain a free copy of this article, call Boardroom Consultants at 212-328-0440 or visit its website, www.boardroomconsultants.com
This two-page document is a summary of the results of a 2003 survey by the Governance Institute of governance practices in nonprofit hospitals and healthcare systems. Noteworthy performance deficiencies were in time being spent on organizational strategy and policy, board self-assessment and board development. To obtain this summary, search at www.governanceinstitute.com.
The Governance Institute also provides a newsletter, white papers, annual research reports and an “Elements of Governance” series.
This 54-page briefing, by Ronald Levine and Jennifer Short in January 2004, is intended to provide clarification and guidance to health lawyers as they seek to assist their clients in complying with new corporate-governance standards, which the authors believe are being also applied to non-profits as “best practices”. To purchase this briefing, search under Publications at the website of the American Health Lawyers Association, www.healthlawyers.org.
Also available for purchase on this website are “Best Governance Practices for Non-Profit Health Care Organizations” and “Governance Reforms for Nonprofit Organizations: Sarbanes-Oxley and Beyond.”
This 100-page workbook, by former Inspector General Richard Kusserow et alia in 2003, clarifies why both for-profit and nonprofit organizations must pay attention to this new corporate responsibility law and describes some specific steps, with 16 “templates”, that organizations can adapt for their own use. To purchase this workbook, search at www.aishealth.com.
This 98-page Hospital Research and Education Trust book, by James E. Orlikoff and Mary K. Totten in 1999, discusses governance, board structure and operation, and board member roles and responsibilities. To purchase this book, search at www.ahaonlinestore.com.
Through its Center for Healthcare Governance, the American Hospital Association and consultant partners also provide education programs, consulting assistance, Trustee magazine and other publications.
This 28-page paper by BoardSource defines governance not as dry, obligatory compliance but as a creative and collaborative process that supports the CEO, engages board members, and furthers the causes they serve. The paper is available for purchase at www.boardsource.org.
BoardSource also provides educational programs, customized consulting and other publications, including a series on specific board committees (e.g., executive, development, finance, governance).
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