Hi everyone,

So I'm getting caught up on the self-study materials and came across a question from the Board & Governance presentation.  The presenter stated that Board Members shouldn't be in a position to benefit from a bargain sale (sounds reasonable enough), but what I haven't been able to determine is what constitutes a bargain sale and under what circumstances would a HCO undertake one?  I can speculate on options, but I'm hoping someone else would be able to clarify.  Thanks in advance!

I had 4 questions that I chose to answer.  The questions are:

 

1. What are the critical skills a CEO brings?
2. What are the professional obligations of the CEO?
3. How does the board know that those skills are present and those obligations fulfilled?
4. What makes the relationship effective, and what erodes the relationship?

The responses are:

1.  The CEO and the senior management team are often the only people in the community who are professionally trained in healthcare delivery.  The training covers technical questions of need, demand, finance, quality, efficiency, law, and government regulation that are not included in the training of doctors, lawyers, or businesspersons.  Other skills that are needed are leadership, strong communication skills, familiarity with the community, a record of success in the healthcare industry and with business decisions.

2

To the HCO, the CEO is accountable for the clinical care quality standards, the financial health of the organization, and effective management.  Additionally, the CEO has several obligations such as supporting external and board relationships, the internal organization, and the medical/professional staff.   The CEO must understand the components of an organization’s bylaws

3.

The board established a process for hiring a CEO and within that process identified specific criteria.   The criteria should cluster around clear elements.  For example, there should be a description of duties and responsibilities. The job description should be translated into selection criteria identifying the skills and attributes of the individual. The priority or importance of these criteria and the ways in which these skills will be measured in specific applicants should be specified. 

4.

Four elements are most likely to impact the relationship.  These are:

1.  Develop a mutual understanding of the employment contract
2. Agree on short-term (usually one year) goals
3. Establish the base compensation
4. Establish incentives for goal achievement

Effective relationships between the board and the CEO are forged initially on these four elements.  Erosion of the relationship is likely due to:

1.  Inconsistent communication
2.  Separate agendas
3.  Dissimilar visions

In my experience when a board begins to micro manage it could be a positive or negative.  For instance our board had become very trusting on major financial project approvals, requesting very little info and asking minimal questions.  Recently as the economy tightens and our performance financially is less positive they have actually "not" approved suggested administrative projects.  The ones not approved were submitted with minimal info and a "not to exceed" requrested dollar amount.  That I believe is positive, too broad and too poorly defined in the project requrest.  However the board has requested a tour of the department to validate the need.  This may be a negative, reflecting a lack of trust and over managment relative to the targeted 30,000 foot view.