How to establish and develop a tertiary hospital or medical center
Reynaldo O. Joson, MD, MHA, MHPEd, MS Surg
Definition of terms:
Establish – means building the structure and furnishing it with facilities
Develop – means formulating, implementing and constantly improving the system
Hospital or medical center – one that has both inpatient (confinement) and outpatient (ambulatory) facilities
Tertiary hospital or medical center – means hospital or medical center based on DOH standards – see DOH standards (generally, one that has sophisticated medical services not only in terms of diagnostic facilities but also treatment capabilities)
Development of a tertiary hospital/medical center
The development of a tertiary hospital/medical center revolves around a board of directors or board of trustees.
Board of Directors or Board of Trustees
Why are boards needed and what are their functions?
First, the law requires them. When a corporate entity is established, laws mandate that a board be established to assume responsibility of its affairs.
Second, boards represent the organization’s owners – be they stakeholders in the case of nonprofits or shareholders in for-profits. Boards are owners’ agents and provide the means of ensuring that organizations act on the owners’ behalf.
Third, boards make sure that those “at interest” (e.g., management and medical staff) function in ways that further organizational mission and goals.
Only boards are empowered and able to perform these three functions. They are ultimately accountable for their organizations – everything they do and everything that goes on inside of them.
While they assume ultimate accountability, boards have no ability to perform the actual work of their organizations. They must see to it that such work is done by delegating tasks and authority to management and (in the case of the hospitals) to the medical staff. Management and the medical staff are, in turn, directly accountable to the board for their decisions and actions.
To be effective, the boards of health systems and hospitals must have a clear, precise, and shared image of the type of work they should be doing to really govern their organizations.
What are the responsibilities of the boards?
- Boards are responsible for envisioning and formulating organizational ends.
Boards must formulate vision, mission, goals, and strategies.
All other board responsibilities flow from, and depend on, the fulfillment of this responsibility.
- Boards must assume responsibility for ensuring high levels of executive management performance.
recruiting and selecting the CEO;
specifying CEO performance expectations;
appraising CEO’s performance;
determining CEO’s compensation and benefits;
terminating CEO’s employment relationship with organization.
CEO is generally both a colleague and a subordinate.
CEO is a member of the board who also reports to it.
CEO is full-time.
- Boards must assume ultimate responsibility for ensuring the quality of patient care.
credentialing ( appoint, reappoint, and determine privileges
of medical staff);
ensure that the necessary quality, utilization, and risk
management systems are in place and operating
assess the process and outcomes of care.
Two questions to answer:
- Does our institution provide high-quality care?
- How do we know that high-quality care is being provided?
- Boards are responsible for ensuring their organization’s financial health.
Establishing key financial objectives that lead to
accomplishing organization’s goals and mission;
Ensuring that necessary financial planning activities are
undertaken so resources are allocated effectively
across competing uses (focus: operating and capital
Ensuring high levels of financial performance (focus: results
as reflected in financial documents such as balance
sheet, revenue and expense statement, and cash flow statement);
Ensuring that appropriate controls are in place (focus: audit);
Ensuring that excess funds are invested prudently.
- A board must assume responsibility for itself – its own effective and efficient performance.
Responsible in ensuring that
Its configuration is appropriate (focus: board size and
composition, member terms, board budget and
staffing, officers, committees, in addition to
recruitment, selection, and orientation of new
Necessary board evaluation and development process are in
Its meeting are conducted in an effective and efficient
Its legally mandated fiduciary obligations (duties of care,
loyalty, and obedience) are met.
Boards cannot do a good job fulfilling the other four responsibilities if they do not fulfill this one well.
What are the roles of the boards?
- Policy formulation
- Decision making
Boards formulate policy with respect to each of their five responsibilities. Such policies provide organizations with direction and are the means by which authority and tasks are delegated to management and the medical staff. Policies also provide framework for executing the decision-making role.
The formulation of policy is the primary mechanism through which boards influence their organizations. As such, they provide the most tangible evidence that boards are fulfilling their responsibilities.
Policies are statement of intent that guide and constraint further decision making and action and limit subsequent choices.
There are three different levels of policy – statements of board responsibility, board policy, and operating policy.
Statements of board responsibility describe the nature and scope of board obligations for formulating organizational ends, ensuring high levels of executive management performance, ensuring quality of patient care, ensuring financial health, and ensuring the board’s own effective and efficient performance. One such statement should be formulated for each board responsibility.
|Responsibilities||Statements of board responsibilities|
|Ends||The board will be responsible for envisioning and formulating organizational ends. In consultation with stakeholders, it will formulate vision, mission, goals, and strategies and will make a review at least once every 5 years.|
|Executive management performance||The board will be responsible for ensuring high levels of executive management performance through a Chief Operating Officer. It will be responsible for recruiting and selecting the CEO; specifying CEO performance expectations; and appraising CEO’s performance.|
|Quality of care||The board will be responsible for ensuring quality of patient care. It will formulate quality policies to fulfill this commitment.|
|Financial performance||The board will be responsible for ensuring the organization’s financial health. It will formulate policies to achieve this objective.|
|Self||The board will be responsible for its own performance in terms of effective and efficient achievement of organizational ends. There will be a management self-audit every year.|
Board policies flow directly from statements of responsibility. They provide direction and convey board expectations of management and medical staff as they go about accomplishing the organization’s work.
Operating policies are more detailed policies for the management and medical staff to observe and to follow.
Dividing line between board and operating policies determined by the board. Few broad policies, more delegation to the management and medical staff. More detailed, more restrictive and prohibitive.
Decisions must be made by boards in each of their areas of responsibility and regarding recommendations forwarded to them by management and the medical staff.
Decision making is often considered to be the central and most important role of governance, since much of what boards do eventually comes down to making choices.
Policies provides the contex for, and guides, decision-making.
Board may retain, delegate or share authority for decision making.
Boards then engage in oversight by monitoring decisions and actions to ensure they conform with policy and produce intended results.
3 functions of oversight:
Monitoring, assessment, and feedback
Need for governance information system:
Selective and of high leverage
Clear, concise and user-friendly
Valid, accurate, and timely
A paradigm of board work
|Ultimate responsibilities||Core Roles|
|Policy formulation||Decision making||Oversight|
Really Governing: How Health System and Hospital Boards Can Make More of a Difference. Dennis D. Pointer and Charles M. Ewell. Delmar Publishers, Inc. Albany, NY, 1994
The specifics of how to establish and how to develop a tertiary hospital / medical center will be presented in subsequent documents, chapters, and pages.