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Building and maintaining focused, accountable and visionary trustee leadership is one of the principal challenges for hospitals in today's turbulent health care environment. Hospital boards face difficult choices in a time of burdensome governmental regulation: inadequate reimbursement, increasing competition and shifting community needs. Complexity, financial strain and demands for a greater level of governance accountability require motivated, knowledgeable trustees who understand how to think and lead strategically in today's demanding environment.
The Strategic Plan: More than Words on Paper
A highly effective strategic plan is not simply a set of strategies, plans, budgets and responsibilities. Instead, it's an ever-evolving process of the examination of the market, forces for change, and other current information that helps the board to understand changing dynamics, and continually reshaping or fine-tuning the hospital's strategic direction. In essence, strategic planning is an organized, systematic approach for understanding and dealing with the hospital's future possibilities and uncertainties. It takes an "outside in" view of the organization, and what is required to achieve the defined objectives expressed in the mission and vision statements.
In order to be successful, a high-performance strategic plan relies on the viewpoints of a broad range of constituents and stakeholders. To accomplish that, the hospital's planners must reach out to people and organizations throughout the community, and engage them in meaningful discussions about their views of the hospital, community health needs, barriers to care, issues of access and more. The strategic plan also should help the hospital's leaders determine a meaningful, realistic, challenging and compelling vision of the future. The key for the board is to ensure that the hospital's vision truly means something. Finally, a high-performance strategic planning process ensures a clear understanding of the resources required for strategic success, and the accountabilities of everyone in the organization for performing their part in ensuring strategic success.
Three Important Truths to Understand About Strategic Planning
- Board members don't need to know everything there is to know in order to make intelligent decisions and wise choices about the future. There is an overwhelming amount of information available at any given time that may be relevant to the planning process. Trustees need to have assurance that senior leadership is asking the right questions and utilizing the appropriate tools to ensure an evidence-based, outcomes-focused process.
- Because of the rapid pace of change in health care, what organizations know today is very different from what they're likely to know tomorrow. That means that strategic planning processes, structures and systems need to be nimble and flexible, and that the plan must be able to be adapted to new information and new realities of the future that have not yet been envisioned.
- Trustees will never know everything they'd like to know to be totally confident in every decision they make. What they need to have is the assurance that the board's "knowledge bank" has sufficient "capital" to ensure that the decisions they make, and the directions they outline for the future of the hospital can withstand scrutiny.
The Board's Role: Deep Thinking and Leadership, Not Micromanagement
Governance leaders play a unique and very important role in the hospital's strategic planning process and in its ongoing strategic success. The role of the board is to be a leader, a motivator and a catalyst for strategic success. The board does not need to be involved in the details of strategic plan development and implementation.
It's the strategic thinking role that is absolutely unique to the board in the strategic planning process. Simply stated, the board should govern and lead the strategic plan, not create or manage it. But that simple statement too often gets lost in misunderstanding, miscommunication, misapplication and missed opportunities.
A Focus on High-Level Thinking: The board is the driver and keeper of the organization's mission, values, vision, goals and strategies, but it should not dictate the plans for delivering on those expectations. When it does, it ceases to play a governing role, and instead plays a management role, blurring the lines between these two critical elements.
At the same time, the board bears ultimate responsibility for the design of the strategic planning process and for the organization's success or failure. To fulfill this responsibility the board must assume a strong and focused leadership role; it cannot afford to reactively wait to see what developments will unfold in the marketplace. The board must be able to engage in new thinking and help executive management develop new directions to successfully compete in an increasingly challenging marketplace. Board leadership must be fast, fluid and flexible, and power an expectation of innovative ideas, new thinking and new directions to successfully compete in today's turbulent environment.
Board Leadership: Finding a way to play the most positive role possible in the strategic change process, and drive strategic discipline and strategic thinking throughout the organization without micromanaging can be a difficult balance.
Hospital boards must first establish direction through the mission, values and vision. Second, the board must ensure that the entire hospital family sees their role and value in achieving the hospital's strategic initiatives. Every single person plays a role, and each person should hold him or herself accountable for understanding that role and playing his or her part in organizational success. That culture of commitment is created and inspired by the board. Third, and very importantly, the board plays a unique role in motivating and inspiring hospital leadership to excel as strategic change leaders, individuals who can coalesce their colleagues in a strategic movement unified by purpose, committed to excellence and rewarded for performance.
A Strategic Assessment Should Lead to Probing Questions from the Board
The board should lead the process of exploring deep, critical questions during the strategic planning process. The questions typically result from a close examination of the data and information included in a strategic assessment, and are sparked by review of information from all information gathered, including a community needs assessment, an analysis of demographic trends, emerging competitors, projected internal and external threats, and more.
Some examples of the types of questions that typically emerge at the board level when a strategic assessment is properly used include:
- What are the most important forces driving the hospital's future success?
- How can the hospital improve its image and enhance consumer preferences?
- How can the hospital best capture market share from its competitors? Will the hospital's competitors be different in the future? How?
- What hospital services have the most potential for growth, both existing services and services that could be created?
- What are the primary factors driving patient outmigration, and what can be done to retain more business for the hospital?
- What is the hospital's role and responsibility in addressing the primary service area's most serious health risks?
- How do the service area population mix and economic character affect future hospital development potential?
- What should be the hospital's financial growth strategy, both short and long term?
- How should the hospital balance expense reductions with the need to invest in future service development needs and opportunities?
- How can the hospital continue to fund capital needs and growth strategies in the face of declining margins?
- How can the hospital ensure an adequate supply of RNs, technicians and other employees required to meet emerging needs?
Vital Signs: Requirements for Evidence-Based Governance Decision Making
One of the primary challenges for hospital boards is to know whether the strategies and objectives adopted and implemented are achieving the desired outcomes. Being able to engage in a continuous analysis and dialogue about strategic progress and performance requires a set of key performance indicators that tell the board where current strategic gaps exist, and when potential strategic gaps may be on the horizon.
With the input of the CEO and management team, the board should track performance and progress using a set of metrics, a periodic review process, and an incentive system to reward management for meeting organizational objectives. Well-designed vital signs have several specific attributes: they are few in number; strategically significant; quantifiable and trendable; time-specific; and consistently reported and used to determine and close strategic gaps. An accountable, strategy-focused board will review strategic performance and progress at least quarterly, and most will review progress indicators on a monthly basis.
Developing and Using Vital Signs: Developing and using a set of hospital-specific vital signs is a straightforward process, and generally includes the following six steps:
- Determine what should be measured to track performance and progress in each area.
- Determine the data that indicates the degree of success in achieving each objective.
- Regularly report performance in a way that shows actual performance compared to projections, and/or comparison with external benchmarks, such as the performance or best practices of other similar organizations.
- If management reports a significant gap between projected performance and actual performance, it also should be charged with recommending specific actions to be taken to close the performance gap.
- On a continuing basis, the board should re-examine progress and performance resulting from the changes made to close the gaps.
- In many instances, vital signs become outdated based on new information or organizational changes. Rather than continue to rely on outdated or outmoded strategic progress indicators, the board should periodically update both its indicators and its performance expectations.
Typical Areas of Measurement: There are a variety of areas in which strategic measures may be developed to gauge the hospital's success in achieving its strategic objectives. The most common and easiest to develop are financial indicators. However, equally important are indicators in areas such as quality and patient safety, organizational efficiency, workplace culture, productivity and mission, among others.
Each hospital's strategic measures will be different. The key to success is to ensure that the measures chosen are relevant to understanding the hospital's progress in attaining its individual strategies. Performance indicators should be examined and discussed in the same way a balance sheet or income statement is discussed. No one indicator by itself can tell a complete story. In fact, a single indicator may be misleading if not examined in relationship to others. Taken together, key performance indictors reveal much about what's happening in an organization. This is where board insight and perspective becomes so pivotal to strategic success.
Avoiding Failure
One reason strategic plans may fail is because the board does not make strategic planning a high enough priority, and does not hold executive management appropriately accountable for plan outcomes. Achievement of the hospital's mission and vision is the number one job of the board. And the best way to ensure that the mission and vision are achieved is to have a strong, vibrant and outcomes-focused strategic plan. Furthermore, the best way to ensure that the plan is meaningful and measurable is to have in place a reward system for the CEO and other senior leaders that is tied to the achievement of specific objectives.
Another reason plans may fail is because the board of trustees is unwilling or unable to devote the time and resources necessary to develop and carry out the plan successfully. Thirdly, plans may fail for one simple but false reason - the belief that health care is changing too rapidly, and the environment is so uncertain, that long-range planning is simply an exercise in futility.
Nothing could be further from the truth. The rapid-change and uncertain environment creates an even greater need for strategic thinking and strategic planning. However, that planning cannot take place in a traditional "straight line" manner. Instead, it must rely on an ability to think and plan in "black, white and gray." Boards and executive teams need to be able to think through scenarios for the future, define the potential changes that may take place in a variety of circumstances, and define strategic responses in advance.
Charting a course for the hospital's future is one of the most important responsibilities of the board. However, there's a big difference between mapping a course, or being a navigator, and driving the bus. To successfully lead their organizations toward the future, boards of trustees must clearly understand and successfully carry out their unique and vital role in the strategic development and implementation process.
Special thanks to The Walker Company for use of: The Board's Role in Strategic Planning and Governance Planning Pitfalls: 8 Dangers to Avoid. More resources available online at: www.walkercompany.com.
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As board members work to examine their strategic planning process and find new ways to engage the board in more meaningful involvement, it's important to recognize potential governance planning pitfalls that are important to avoid, including:
- Assuming that the past is a reliable predictor of the future;
- The inability to craft a compelling, dynamic and meaningful vision embraced by all;
- Attempting to manage plan details instead of engaging in critical strategic dialogue;
- Taking narrow, board-centric approaches that do not involve a broad range of participants;
- The failure to see strategic planning as a continual process of real time responsiveness to change, rather than an end point;
- The failure to define precise targets, measure progress and continually work to close strategic gaps;
- The inability to drive the strategic planning process, outcomes and responsibilities deeply into the organization; and
- The inability to continuously turn new information into strategic knowledge, and transform it into strategic action.
Below are some ideas for actions to take moving forward as an accountable, responsible and responsive strategy-focused board:
- Review your current strategic plan, and evaluate its purpose and value.
- Lead the initiation of a deep, wide-ranging and comprehensive examination of organizational fitness for future success.
- Identify the most critical challenges and forces shaping the hospital's future, and develop a compelling and responsive vision.
- Examine the governance substance and style, and adopt new leadership processes and practices to ensure a future strategic planning success.
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Mark your calendar and plan to join Kansas Hospital Association staff at our Critical Issues Summit for Hospital Boards on Aug. 18 and 19 at the Wichita Airport Hilton. Topics include strategic planning, health reform, physician issues and future issues facing hospitals.
During the keynote session at the Critical Issues Summit, Steve Berkowitz, MD, will examine the interaction between data transparency, evidence-based practices and pay for performance. Together, these three market forces are moving the national quality agenda forward faster than ever before. The big winner in this process is the patient.
An optional pre-session on Thursday will discuss legal issues challenging hospital boards. Friday morning will include an Eggs and Issues Breakfast with Rep. Mike Pompeo (KS-04).
The brochure and online registration are available on the KHA Web site. Questions may be directed to the KHA Education Department at (785) 233-7436.
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The Kansas Hospital Association's Trustee Recognition and Accountability program recognizes trustees at the Critical Issues Summit for the standards of excellence they uphold, governance best practices they adhere to and the education in which they have invested. The Trustee Accountability and Recognition program recognizes hospitals and trustees specifically that:
- Understand and embrace the need for governance accountability;
- Govern according to a standard of excellence;
- Are willing to formally recognize their adherence to governance best practices;
- Embrace community accountability; and
- Structure their community benefit and outreach programs to meet identified community needs.
Please complete a recognition form and fax it to Cindy Samuelson at (785) 233-6955.
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The American Hospital Association's Center for Health Care Governance is pleased to unveil a new series of "in-the-boardroom" education modules to help trustees stay abreast of the latest trends and requirements.
This series, Health Care in Transition: Topics for Trustees, brings the educational expertise of the Center and the policy expertise of AHA to create dynamic "in-the-boardroom education" on policy and regulatory issues of critical importance. These Webinars are free of charge and available to everyone.
The first three Webinars are focused on:
- Readmissions;
- Value-Based Purchasing; and
- Bundled Payments.
Each 20- to 30-minute program consists of an audio recording with synched slides on one topic, discussion questions for use by the board after viewing the program and supplemental resources. The Webinars can be accessed for immediate play or downloaded to your computer. Additional topics will follow.
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The Kansas Medicaid program has increasingly become a "front burner" topic for Kansas lawmakers. In fact, Governor Sam Brownback has identified Medicaid reform as one of the top three priorities for his administration. He has assigned Lt. Governor Jeff Colyer, MD, the task of leading the Medicaid reform efforts and identifying initiatives to reign in the increasing cost of the program and improve medical outcomes. The administration has publicly announced their desire to reduce the State's Medicaid expenditures by $200 million to $450 million. As a reference point, the administration has indicated that, without any other cost-savings measures being implemented, it would take a 20 percent reduction in Medicaid provider payments to reach the targeted savings.
The Lt. Governor, along with several cabinet officials, recently held multiple Medicaid reform stakeholder discussions to obtain suggestions and feedback regarding the redesign of the Kansas Medicaid program. These discussions, led by Deloitte Consulting, were held in Topeka, Wichita and Dodge City. In all, more than 1,000 individuals participated in the roundtable discussions.
During his presentations, the Lt. Governor reviewed the administration's Medicaid reform vision statement that reads "to serve Kansans in need with a transformed, fiscally sustainable Medicaid program that provides high-quality, holistic care and promotes personal responsibility." In conjunction with the vision statement, the Lt. Governor identified several Medicaid transformation principles that would be used throughout this process. These principles included aspects such as: 1) holistic care focused on outcomes; 2) creating a strong, dignified safety net for our most vulnerable Kansans; 3) economically rational; 4) assisting people from Medicaid to the workplace; and 5) rewarding personal responsibility for health outcomes.
The suggestions offered by the participants were many and varied widely. The administration will now shift its focus to sifting through the public recommendations and begin narrowing down the list of possible reform initiatives. In the meantime, the administration has established a link on the KDHE Web site to collect any additional Medicaid reform ideas.
It is vital that hospitals remain actively engaged in the Medicaid reform discussions. We will continue to do that through our KHA Medicaid Efficiencies Task Force to help in finalizing a list of Medicaid reform suggestions for the administration. KHA staff will continue to stay at the table, meeting with administration and legislative leaders to advocate for Kansas hospitals. We also need your involvement to make sure policymakers understand the impact of Medicaid cuts on your facility.
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The United States Department of Health and Human Services released State Snapshots for the 2010 National Healthcare Quality Report. The Healthcare Cost and Utilization Project, of which the Kansas Hospital Association is a partner, is one source of data for the reports and provides national estimates of Agency for Healthcare Research and Quality indicators. The State Snapshots summarize health care quality by state along several dimensions of health care - overall, by type of care (preventive, acute and chronic), by setting of care (hospital, ambulatory, nursing home and home health), by clinical area (cancer, diabetes, heart disease, maternal and child health, and respiratory conditions), by clinical preventive services, and by special focus areas including disparities (race/ethnicity and community income) and payer. The Web site pulls together state-level information from the NHQR and displays it graphically. These graphical representations are designed to help public health professionals, administrators and policymakers understand health care quality in the state, including strengths, weaknesses and opportunities for improvements.
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To assist Kansas hospitals on their journey toward meaningful use, the Kansas Hospital Association and the Kansas Hospital Education and Research Foundation have compiled and developed resources. These resources are available at www.hithelp.info. This new Web page includes information and updates on activities at the state and federal level, as well as a link to the Kansas EHR Toolkit.
The three-part toolkit is designed to assist hospitals with electronic health records implementation and adoption of health information technology. The three components of the toolkit are EHRCompass™, EHRConnect™ and EHRAssist™. Users can navigate through milestones of selection, adoption and implementation of an EHR using EHRCompass™ and connect with peers through EHRConnect™. EHRAssist™ provides access to pre-negotiated HIT consulting and technical resources made available through Associated Purchasing Services. The toolkit is available to all KHA members.
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Health care is the most complex, demanding, fast-paced and rapidly changing industry in America. The Kansas Hospital Association is pleased to offer several trustee educational resources in a variety of formats. Trustee education needs to be specific to your board needs, when you need it. KHA offers in person programming, Web-based programming, downloadable programs for board meetings and a computer-based program that an individual trustee can complete as needed.
The Kansas Hospital Association, in conjunction with The Walker Company Healthcare Consulting, LLC, offers dozens of affordable and topical governance education programs that may be easily downloaded and used as needed. Just click on "Trustee Foundations."
The Hospital Governance series is a set of online courses offered through careLearning that provide the basic information a governing board trustee needs to fulfill his or her duties to the organization successfully. For more information about the series, including a full description, go to www.carelearning.com and click on the Course Catalog.
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If you don't currently have a trustee manual, or are in need of updating your manual, we encourage you to check out the Kansas Hospital Association's Board of Trustees Governance Manual. The documents below are in Microsoft Word templates in which content can be easily added or deleted to meet your organization's unique needs.
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The Kansas Hospital Association would like to request your nominations for three awards that will be presented during the 2011 KHA Annual Convention. The Charles S. Billings Award is the top honor given by KHA. The annual award recognizes a hospital leader for his/her lifetime of service and continuing contribution to the health care of Kansas. The Billings Award was established in 1971 to honor Charles S. Billings' dedication and years of service to Kansans. We encourage you to consider completing a nomination form. Materials must be postmarked to KHA no later than Aug. 1.
The Distinguished Health Care Advocate Award recognizes those individuals, organizations or groups who provide an exemplary contribution to the health and well-being of the people of Kansas through their leadership in the political or policy arena. The Distinguished Health Care Advocate Award provides KHA members the opportunity to recognize those who work on our behalf from outside our ranks. We encourage you to consider completing a nomination form. Materials must be postmarked to KHA no later than Aug. 1.
The Donald A. Wilson Visionary Award, established to honor Donald A. Wilson who served as president of KHA from 1982 to 2004. This award recognizes hospital-related individuals who have made an outstanding, innovative contribution to health care delivery, health care financing or initiatives that improve the health and clinical outcomes of their community. The Donald A. Wilson Visionary Award provides KHA members the opportunity to recognize individuals who have been a change agent in the hospital industry. We encourage you to consider completing a nomination form. Materials must be postmarked to KHA no later than Aug. 1.
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It has been a busy few months of preparation, collaboration and education around community health needs assessment. The Kansas Hospital Association is busing working on a number of tools to assist our members with the requirements of the Patient Protection and Affordable Care Act for tax-exempt hospitals.
Community Health Needs Assessments:
- Complete at least one every three years; the first one must be completed by the end of the tax year beginning after March 23, 2012.
- Include input from persons who represent the broad interest of the community; specifically, persons having public health knowledge or expertise.
- Make the assessment widely available to the public.
- Adopt a written implementation strategy to address identified community needs.
- Failure to comply will result in an excise tax penalty of $50,000 per year.
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