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Overseeing Without Overstepping: The Board’s Role in Hospital Operations

By , SVP of Business Development June 11, 2019 Financial Performance, Operational Improvement, Hospital Boards

To what degree should boards be involved in the finances and operations of their hospitals? This is an important question, because effective hospital boards are clear on their roles and responsibilities. That role is hospital governance while management is the responsibility of the hospital leadership team. That means board members must focus on strategy and leave operations to hospital leadership. Yet, it’s not only appropriate but also imperative that board members understand the finances and operations of their hospital.

That means board members must discern the financial situation; education about the hospital’s finances are a critical part of new-board-member orientation. Many hospitals also make it a requirement for all board members to have an understanding of finance.

Drawing from this knowledge base, a board’s actual duties relating to finance and operations include:

  • Assisting with strategic business planning
  • Approving the hospital’s annual budget
  • Establishing long-term financial targets
  • Ensuring cost-effective use of resources and capital

Involve stakeholders across the organization including the board in strategic business planning, which identifies the steps for financial and operational success and lays out strategies for service line growth, operational efficiency, clinical quality and other initiatives. The operational implementation of strategy is beyond the board’s roles and responsibilities and is left to hospital execs. Managers whose job it is to implement tactics would ideally send regular updates to the board, keeping board members informed rather than deeply involved.

Routinely getting reports helps board members monitor the health of their hospital. Board members should regularly assess key financial indicators for signs and symptoms of declining financial health. On the positive side, these indicators can also identify operational best practices that support strategic planning efforts, or perhaps guide them.

Increasingly, boards are using technology to track performance indicators. Many hospitals have real-time quality dashboards or scorecards for easy access to indicators, and some platforms benchmark the hospital’s performance against similar hospitals. Education and awareness are both critical for optimal board performance.

When the board identifies challenges beyond the skill-set of hospital leaders, organizations like CHC Consulting offer assistance.

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By , SVP of Business Development June 11, 2019 Financial Performance, Operational Improvement, Hospital Boards
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