Physicians have all they can do to focus on providing excellent care to patients while maintaining practice profitability. But to really achieve a thriving medical practice, physicians may require the assistance of a governing board of directors to help ensure the practice meets technological and regulatory goals, uses resources wisely and creates an achievable plan for future development. Sooner or later, every practice needs to consider establishing a governing board to take their practice to the next level.
The What, When, How and Why of Implementing a Board of Directors for Your Medical Practice
Before your practice forms a governing board, your group of physicians needs to address some specific questions, such as:
- What’s the reason for a board?
- How might a board help the practice address challenges currently facing it?
- Will it have a traditional structure — including formal responsibilities, terms of office and bylaws?
- What powers will it include?
- Will the board choose the practice’s chief executive officer?
- Will the owners and other physicians be willing to turn over control of the practice to the board?
Perhaps most important, what authority will the board have? If the physicians who are not on the board don’t comply with board directives, what, if anything, are the consequences? This should be, at least in broad terms, agreed to up front, so that everyone understands how things will work.
When first establishing a governing board, it’s essential the members understand their decisions must represent the interests of the entire organization, not those of one individual or a single specialty.
After you decide to formalize the governance process, you must address a few basic issues, such as:
- How frequently the board should meet,
- Who should set the agenda and handle minute-taking,
- Who will distribute notes to participants, and
- How to select a board chairperson.
You’ll also need to consider compensation for the board or the managing member, recognizing much of the administrative work will be done outside of “office hours.”
What Board Duties Should Your Practice Prioritize?
When those items are out of the way, attention should turn to the board’s duties in these priority areas:
Management oversight. If the board will evaluate management’s performance, it must have a process that objectively monitors and measures that performance against predetermined objectives. The board should have clear expectations for the chief executive that are expressed in his or her job description. The evaluation should cover how well that person makes decisions, accomplishes agreed-upon objectives, uses capital and other resources, drives human resources, and provides vision and direction to the entire organization.
Quality assurance. A core fiduciary duty of a practice’s management is to provide quality care, equitable access and patient safety. To meet the practice’s quality measurement and reporting obligations, it must be capable of capturing and reporting data on the value that the practice is providing to patients. It’s the job of the governing board to ensure management fulfills this critical responsibility.
Financial accountability. Financial management is another prime fiduciary duty of governing board members. Through interactions with management, they must maintain complete financial accountability. As the board approves proposed budgets, it must ensure they’re suited to the practice’s strategic plan, financial resources and financial objectives. To accomplish this, board members must have a solid understanding of financial statements and management.
Strategic planning. The primary tool the board should use to steer the practice into the future is a shared vision of the planning process. The process — which should include and may be led by practice management — will identify key challenges and develop goals to meet the challenges, action plans to reach those goals and monitoring systems to observe their progress.
A well-thought-out strategic plan takes into account the organization’s strengths, weaknesses, opportunities and threats. It’s founded on its mission, vision and values. A physician practice without a strategic plan will react impulsively to payer demands, government mandates and restrictions, operational calamities and competitor threats.
A small medical practice may be content to stay small, asking its physicians to wear several hats to manage everything from patient care to strategic planning. But to prevent physician burnout and help ensure the practice stays solvent, turns a profit and grows over time, a board of directors can provide invaluable expertise.
Please contact a member of your service team, or contact Kathy Walsh at email@example.com for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.