What Are the Best Practices for Healthcare Board Governance?

The word governance stems from the Latin word gubernare, which means to steer or rule. Governance in healthcare boards is evolving, as technology has made it possible for hospitals and other healthcare organizations to access increasing amounts of data. However, the basics of good governance remain, and new best practices are evolving as the healthcare organizations probe how to apply existing best practices to the processes of collecting and disseminating data.

While technology is creating rapid change within the healthcare industry, the evolution of board software is helping healthcare boards to document and store records that support best practices, such as board policies and other documents that demonstrate how they govern data.

Best Practices for Healthcare Board Governance

For public and private healthcare organizations, the basics of best practices for healthcare governance are fully committing to fiduciary duties and accountability.

The Internal Revenue Service (IRS) code requires nonprofit healthcare organizations to exist for charitable purposes. Nonprofit organizations are largely governed by state law. Charitable trust laws in some states consider that a healthcare organization’s assets are held in trust for the benefit of the community. In connection with the benefit of attaining tax-exempt status, nonprofit healthcare organizations must serve the interests of the community interest and not those of individuals. The office of the attorney general holds nonprofit healthcare organizations accountable.

Best practices in healthcare governance for for-profit organizations also require accountability. For-profit healthcare organizations exist for the benefit of shareholders. In today’s society, shareholders hold high expectations for healthcare boards. They expect healthcare boards to maintain a proactive and interactive board culture. While it’s an honor to serve on a healthcare board, board members must pursue their duties and responsibilities doggedly to earn and maintain their shareholders’ and the public’s trust.

Healthcare governance requires having a comprehensive understanding of fiduciary duties and fulfilling them faithfully. The basic duties of healthcare board directors are oversight and strategic planning. To fulfill these responsibilities, board directors must adhere to the duty of care, the duty of loyalty and the duty of obedience.

Duty of Care

The duty of care requires board directors to provide strong oversight over management without succumbing to micromanagement practices. It requires board directors to make informed decisions by seeking out information. The premise of due inquiry means that board directors should question the validity and completeness of the information they receive. The business judgment rule assures board directors that they won’t be held personally reliable for making informed decisions that they make in good faith that have no self-interest and that are made in the best interests of the corporation.

Duty of Loyalty

The duty of loyalty protects public and private healthcare organizations from board members and other groups or individuals who may be trying to personally or professionally gain from the organization in some way. The duty of loyalty specifically addresses the importance of appropriately dealing with conflicts of interests. This doesn’t necessarily mean that board directors can’t have a known conflict of interest. It just means that they need to give the board notice if they have a conflict and state the nature of their interest.

Board directors who have a conflict of interest can fulfill their duty of loyalty as long as they refrain from deliberating and voting on matters where they have a conflict of interest. By adhering to these best practices in all situations, boards ensure that all transactions are transparent and fair.

Duty of Obedience

Over the last several years, federal and state governments have been more closely scrutinizing healthcare boards to ensure that they’re compliant with the laws, rules and regulations that fall under the duty of obedience. The duty of obedience also falls under best practices for healthcare governance to honor the terms of their bylaws, mission, policies and procedures, and to act within the scope of their authority at all times.

Best Practices for Healthcare Data Governance

There’s no question that we live and work in an analytically driven industry. Data is one of the longest-lasting assets that any organization has. As Health Catalyst so aptly notes, “…data outlives facilities, devices, and people…”

The term data governance has evolved as information technology begins to take center stage in every industry. Data governance is a term that describes the concept of managing and influencing how organizations use data. The prevalence and diversity of risk strongly motivate healthcare organizations to acquire more data to manage risks and better understand outcomes. Data governance is still in its infancy stages, which causes confusion about the level and types of data that healthcare organizations should be collecting and using.

In this early stage, it’s difficult to ascertain just how much data healthcare organizations need. With this in mind, healthcare governance experts indicate that organizations should grow slowly and carefully in the area of data governance by taking a lean and balanced approach toward data governance. The culture of data governance should govern to the least extent possible while achieving the greatest common good possible.

Overseeing and ensuring data quality needs to be a leadership priority that focuses on being valid, complete and timely.

Best practices for data access suggest that there needs to be increased access to internal and external data, including offering access to data to patients. As data flows, there should be processes in place to protect and restrict data as appropriate.

In the area of data literacy, best practices indicate that boards should focus on quality and cost. Those who need data need to be able to understand what it means and how to use it in relation to their roles. Bear in mind that boards and managers can use data for good and bad decision-making. They also need to be clear about how to use it when data is incomplete or scarce.

Currently, most healthcare organizations don’t have all the data they need, so this is the time to collect useable data for the future, which could take up to another five years. Boards will be the agents from the top who balance corporate priorities with requests from clinical and business units at the bottom. As data governance takes a stronger place in board work, boards will need to establish a group to manage the quality, content, access, literacy and priorities for data, such as a Data Governance Committee.

Healthcare organizations must be knowledgeable about the various relationships between the hospital and its stakeholders in order to be accountable to them. This is an important issue for boards to consider when making decisions. Governance decisions come into play most often when limited resources create competing demands.