Physician Participation in Board of Directors: Transcending the Bottom Line

Two quotes:

Healthcare corporate governance in action

One is from Citizen Kane: "Well, it's no trick to make a lot of money... if what you want to do is make a lot of money."

The other is from a long-past Population Health Blog mentor: "Docs can be good at taking care of patients, or at golf.  The problem is that they can't do both."

The PHB had both in mind while it wrote this just released paper appearing in the American Journal of Medical Quality. Somewhere in the nexus of a) patient care, b) having a sustainable enterprise and c) consumerism, all of the health providers, payers, buyers, vendors, systems and business associates need to know that the bottom line is not about making money and being able to afford a country club membership. 

A low handicap is all well and good, but more is needed.

The message of the paper?

During the era of ascendant managed care in the 1990s, researchers examined the association between physician participation in the governance of health entities and their performance.  The result was several peer-reviewed studies that demonstrated that when there was physician participation on a board of directors, measures of profitability, quality assurance and social performance were higher compared to institutions without a doc in the boardroom.

As PHB readers are well aware, managed care was eventually defanged.  Interest in physician governance waned and the rest is history.

Except things are heating up.  There are millions of newly insured, and healthcare is poised to consume 20% of GDP.  As we look for ways to achieve the Triple Aim, the PHB decided to to dust things off and reexamine the merits of physician governance. 

Here's what it found:

1. Industry Expertise: physicians' broad awareness of health care is just as important financial expertise in the banking sector or educational expertise in university governance.

2. Outcomes: As healthcare organizations participate in public reporting, physicians' familiarity with outcomes data can help their fellow board members provide better oversight of what the numbers really mean and how to improve them.

3. CEO Success: Health care organizations' chief executives don't have to be physicians, but physicians can help them grapple with increasingly complicated marketplace.

4. Diversity: Physicians have been acculturated over their professional lives to skeptically evaluate things for themselves.  While this can be challenging in some settings, the good news is that this independence of thought can be counted on to reduce the risk of corporate "group-think."

5. Credibility: Physicians are still widely admired for their integrity.  This can help set the "tone at the top" as well as diminish the risk that a health care organization is putting profits before patients.

6. Professional Development: physicians' commitment to lifelong learning can act as a role model for lay board members who may be unwilling to commit to the time or the expense of continuing education.

7. Competitive Insights: Physicians are more likely to be aware of the strengths, weakness, turf and politics in their own as well the competitors' organizations.

Given the evidence, it seems that any health care organization without a doc on their board is missing out on an important value proposition that not only adds to, but transcends the bottom line. 

Just sayin'.

One last thought: when any physician ponders participation in governance, he or she will have to deal with three unique barriers: 1) loss of practice income, 2) a time commitment away from the bedside that could erode their clinical skills and 3) the loss of prestige that comes from having a less than 100% commitment to their profession.

More on that in a future post.

The Myriad Ways of Strategy and Population Health for Governance Boards and Health Care Leaders

What's it take to be a "luminary?"

As healthcare organization leaders grapple with health reform's uncertainties, a common refrain is importance of "strategy".

It's no longer enough to maximize revenue, increase patient throughput, lower costs, manage debt, embrace financial risk, optimize FTEs, assure compliance or strengthen the balance sheet.

While those present management and fiduciary functions are still critical, governance boards and c-suite executives in both purchaser and provider organizations also have to make bets about the future.

For example, if healthcare inflation accelerates, how will your current customers react to their future costs-sharing? How and when will today's voters reconcile the burdens from growing public debt and government-sponsorship of the insurance programs you contract with? As "the internet of things" spreads, what is tomorrow's value proposition of your healthcare "things?"  Is reading this blog today going to lead to you being smarter in tomorrow's contentious meeting?

In other words, when leaders grapple with strategy, they're really futurists. They're making bets today on how to adapt current strengths and weaknesses to myriad downstream threats and opportunities.

Uncertainty has become a new watchword. Even if an organization doesn't change and sticks with old fashioned fee-for-service, they're still making a big wager on the future of individual billing versus risk-contracting for populations.

Which is why the Population Health Blog is interested in how leaders outside of healthcare deal with uncertainty. 

Being routinely unable to resist the materialistic allure of the WSJ. Magazine fashion ads, the PHB  happily stumbled into this Soapbox column on the single topic of strategy. Six "luminaries" were asked about it.

The recording industry executive emphasized visualizing the endgame. The professional sailor trusts her gut instincts. The computer gamer is all about capitalizing on lucky breaks. The presidential historian liked ongoing experimentation. The restaurateur is constantly shaping company culture. The matchmaker likes being open to change, even if it means being vulnerable.

Lesson? The PHB has read or heard all of this and more from leaders and in boardrooms. Examples include this (the end-game), this (intuition), this (luck), this (experimentation), this (culture) and this (change management).

"Strategy" remains a highly variable work in progress.  There is no best practice.

And then there's the huge health care opportunities and risks from contracting for the care of populations. Check out this interesting post by George Washington University's Miliken Institute of Public Health that describes a survey of 37 health care luminaries on the topic of population health. As the author points out, consensus on responsibility (and, as a side note, the assets and liabilities that accompany it) is lacking.  In addition, quoting the "Triple Aim" is turning out to be less than its admirers would like.

So it turns out that this is also very much a work in progress.

The PHB's takes?

 There are two:

1) Multiply the many approaches to strategy with the multiple takes on caring for populations and the possibilities are endless. Based on the variations, no one has cracked the code applying strategy to populations and risk-contracting.

For purchaser/provider board members and C-suite leaders, the good news is that your strategic bets on the future are - for now - as good as anyone's. The bad news is that the present day fiduciary work is not lessened and you're going to have to devote more effort (and time) on developing a still unsettled strategy approach to the uncertainties surrounding health reform.

2) Regrettably, despite describing itself as a "luminary" many times to the PHB Spouse, it was not included in the WSJ. column and the Miliken Blog.  This sadly suggests that her skepticism - for now - is warranted.

Image from Wikipedia

"Generative" Health Care Leadership, Governance and Boards of Directors

Time to get "generative!"

Thanks to bout of troublesome weather, the Population Health Blog has been stranded somewhere in the U.S. air-travel network. Undaunted by bitter loss of an upgrade and the prospect of a late arrival, it bravely used the down time to dig into the highly interesting book Governance as Leadership: Reframing the Work of Nonprofit Boards by Richard P. Chait, William Ryan, and Barbara Taylor.

While written for "nonprofit board members," the PHB believes the insights are applicable to just about any board of directors or other leadership group of an organization that is grappling with uncertainty. And given the uncertainty in health care, Governance is "must" reading for the leadership as well as the board of any hospital, physician-group, health system or provider organization.

Pointing to years of academic research, consulting experience and common sense, the book describes three "modes" of governance:

1. Type I Fiduciary, which relies on process and uses standing committees to ask (for example) if assets are being effectively deployed.  Think "data."

2. Type II Strategic, which relies on content and uses ad hoc committees to ask (for example) how strengths align with future opportunities.  Think "information."

3. Type III Generative, which relies on "cues," "framing" and "narratives" to ask less about the solution and more about the problem.  Think "insight."  
  
Boards are naturally inclined toward Type I and II governance. According to the authors, that's a mistake that can foster zero-sum thinking and the triumph of personal influence over group meaning.

Instead, when all three types are used at the right time for the right issues, they become synergistic and can create a tangible competitive advantage for the organization.  The best time to turn to Type III governance is when there is an issue that is ambiguous, salient, high stakes, contentious and irreversible.  The authors compellingly describe how present "cues and clues," can be used to "reframe" facts into new patterns.  As a result, the past can be re-narrated to imagine a new future.

Governance uses the example of the compelling insight that broken windows isn't the result of, but can lead to high crime rates.  That, in turn, led to the creation of "community policing."  The PHB would offer the health industry insight that the "problem" wasn't getting physicians to better care for persons with diabetes, but getting persons with diabetes to be better engaged in self-care.

You get the idea.

 The authors readily admit that Type III Governance is a "wilderness" that is an "outside-the" or "black" box that is non-linear, vague and subjective.

It seeks "sense" or meaning and creates multiple choices, not a single fix.  It generates insight and creativity, not mission setting, strategy development or problem solving.  It gets you to the drawing board.  It frames the problem.  It generates the hypothesis. 

And when reality is recreated, it can ultimately achieve a far richer level of down-stream buy-in.

How can Type III Governance be leveraged?

First of all, governing boards and their management teams must collaborate in this.  Boards have a particular role to play because they have the three "P's" of power, a plurality of multiple perspectives and a position of a more distant ("10,000 foot") vantage point.  Boards can work with their management teams by either acting as 1) sounding boards that foster generative thinking by asking, probing and identifying the cues, framing the data and renarrating the past or by 2) initiating generative thinking by focusing on ambiguous or problematic issues among themselves and their colleagues.

Be prepared to tackle sensitive subjects and dealing with multiple perspectives that is less about fixed unanimity and more about the sense of a "collective mind". Resist succumbing to notions or fostering groupthink.

Use retrospective questioning (to discover unknown strengths, flaws and patterns in the past) and dominant narratives (that create a meaningful bridge from the past to a portray a desired future) to gain greater understanding.

Embrace the generative mode early on the "elephants in the room." A otherwise unaddressed "big issue" will evolve over time and default processes and solutions will recast the situation as a planning or strategic challenge.

Use mindful deliberation without formality or rank that focuses less on creating the solution than on defining the problem.

To increase the chance of success, boards need regular exposure to inside-facing culture of the organization as well its outward-facing environment. That means having unfiltered access to the cues/clues inside (the "factory floor") and outside (with customers or other stakeholders). While there is a risk of board members or senior leaders running amok over established lines of authority, the risk to any organization is ultimately greater if they're confined to the boardroom or the C-suite. 

Generative thinking will feel more like "play" or a "retreat" than a meeting.  That's good.

Use tools like

Counterfactuals: What is it about the budget or the assigned FTEs that explains our goals?
Hypotheticals: If the company ceased to exist, where would its customers go?
Intuition: Is there a hunch about the next five years?
Catalytic questioning: Is there a headline we'd like to see?

Governance makes for interesting as well as fun reading. The authors avoid complex jargon and sprinkle their text with some insightful examples. While readers may struggle with the details of installing "generative" thinking into their leadership "workflows," the idea of using this template to harness the creative juices of a leadership group or a board is exciting stuff.

The Enterprise Risk from Dubious or Unethically Conducted Research to Population Health Management Companies & Ten Options That a Board of Directors Should Consider to Mitigate that Risk

MEMO

 

To:        Chair of the Board, Any Population Health Management Service Provider Company

 

From:    The Disease Management Care Blog

 

Priority: High

 

Date:     Feb. 20, 2013

 

Re:       Implications  of "Research" for your company's "Enterprise Risk Management"

 

 

Thanks to the 2004 Congressional Budget Office analysis and similar reports questioning the value of "disease management," our industry responded with more than just a name change to "population health management." It also committed itself to conducting credible research and being subjected to the scrutiny of public domain, transparent and high quality peer review. Examples like this and this are, in no small measure, responsible for our industry's growing credibility. Not bad, considering critics like this predicted a lack of quality and cost-savings evidence would result in the industry's becoming "just one more policy failure."

Unfortunately, however, what your senior management team is not telling you is that public domain, published or peer-reviewed research is highly vulnerable to data manipulation, conflicts of interest, skewed results, suppression of negative results and spin.  The blowback from bad research can be considerable and the misconduct can result in embarrassing and highly public retractions.  The pharmaceutical industry has become the poster child for this sort of bad behavior, resulting not only in considerable fines but long term reputational damage.  It will take years to repair.

To date, the Disease Management Care Blog is unaware of any research bad behavior in the population health management vendor community.  However, given the premium placed by purchasers on demonstrable proof of a product's superiority, a highly competitive environment and the hunger of marketing departments for scientifically validated value propositions, the DMCB suspects it's just a matter of time.

As you know, a Board's commitment to Enterprise Risk Management (ERM) should not be underestimated. If your company is conducting research that is a) destined for the public domain and b) being used as any part of any marketing strategy, the temptation to "fudge" results is no less than "cooking" financial results.  Undoubtedly, your Audit Committee, in its duty to ultimately oversee ERM, rigorously oversees regular audits of internal financial controls and reports. 

Given the reputational risk to your company, the same discipline should be applied to your research shop.  This should not only include research publications, but outcomes reported in public meetings, "webinars" or in "white papers" that are distributed outside the company or posted with public access on your or any business associates' website.

The DMCB is not aware of a standard best practice when it comes to a Board's monitoring the veracity of its management's research. Furthermore, every company is different and leeway is acceptable.  This calls for both vigilance and flexibility.

Options to consider in mitigating the risk of dubious research include:

1) assuring two persons with separate reporting relationships have access to the original data,

2) requiring that at least two persons are independently involved in the data analysis,

3) becoming familiar with the regulatory requirements that surround any research involving human subjects

4) asking that any important findings be reviewed or validated by an internal or external third party with 1) an appropriate level of expertise and 2) no conflicts of interest;

5) reviewing whether any employee compensation incentives are unwittingly promoting unethical research behavior,

6) charging that the company "risk officer" is charged with responsibility for research,

7) assuring that "research integrity" is regularly reviewed by your Board of Directors

8) fostering healthy Board skepticism when there are outcome results that are too good to be true,

9) requiring that senior management and, in particular, the CEO are committed to and are championing the highest standards of research conduct.

10) having a proactive public relations "disaster plan" in place should any company research be called into question in the media