A case for non-profit board compensation

Four Ways to Maximize Board Performance

For decades, community hospitals have taken great pride in their local ownership and control, and rightfully so. The care delivery process is personal and intimate, and can be that much more meaningful when delivered by a community, to a community.

The volunteer governance structure that places community members on the boards of local hospitals is also important. But a decade of healthcare reform, consolidation, and potential clinician shortages has limited opportunities which used to be available to community hospitals. Local control and community governance are often among the casualties.

The reason is actually not very complicated. With reform comes a demand for health systems to simultaneously drive out costs and improve quality. So, providers have had to find and then standardize best practices throughout their organization. This requires a discipline on the part of trustees and executives that we have not previously seen in non-profit healthcare.

To be successful, a community hospital board must know much more than its local community. Rather, it needs to fully understand the transition to value-based reimbursement, rationalization of services, financing mechanisms, quality metrics, customer satisfaction processes, physician employment mechanisms, and more – all in a rapidly evolving landscape. Rarely does one community have all the resources to fully staff a hospital or health system board. Moreover, even if there are people in the community who can serve, it’s often helpful to have outside members who can also see the bigger picture, beyond the community-specific lens.

For these and many other reasons, serving on a non-profit board is simply becoming more than can be expected of local community servants, and boards are increasingly forced to find specific talent to help them better meet the needs of the populations they serve. As a result, non-profit boards across the country are increasingly paying members for their board service. According to research, approximately 15 percent of non-profit hospitals and health systems reported compensating all or some of their board members in 2013, up from 10 percent in 2009.

For the pay that is being given, there are return expectations, of course. Following are performance criteria that should be expected of all board members, and for which boards should be willing to pay:

1) Attendance: All board members are required to attend all board and committee meetings. Though it may seem obvious, some board members live outside the community. But preparation for board meetings and physical attendance is crucial to success.
2) Education: Governing board members should receive annual training at a professional conference, in addition to their board meeting assignments. Such education is critical to understanding and adapting to the myriad forces pressing for change in the industry.
3) Evaluation: To develop plans, every board should go through an annual self-evaluation process, benchmarking results to industry standards and identifying specific under-performing areas. Evaluations for individual board members are also a meaningful option for many organizations.
4) Strategic Planning: The mission, vision and values of any organization are the responsibility of the board to approve. They, along with the strategic plan, need to be an active output of an involved board. Each board member should fully understand and support the direction and vision.

In an industry that requires professional results from non-profit organizations, it is only reasonable to suggest that we have professional board members involved in the process.

Rulon Stacey, Ph.D., FACHE, currently serves as managing director at Navigant, chair of the Board of Overseers of the Malcolm Baldrige National Quality Award, and chair of the International Hospital Federation CEO Circle. A former health system CEO and chairman of the American College of Healthcare Executives (ACHE), Stacey received ACHE’s highest honor, the Gold Medal Award, in 2017.


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