Leadership: Staying Civilized

The meeting was supposed to concern long-term growth, but it marked the beginning of the end for the 15-physician practice. Although the confab took place more than a decade ago, Tom Peterson vividly remembers the verbal sparring and the jabs.

“We got into a debate about whether we were a multispecialty group, with specialists and general practitioners working together, or a bunch of independent contractors joined together for financial reasons,” says Peterson, now executive director of Idaho Emergency Physicians in Boise, which provides emergency room staff under contract.

“The specialists became so concerned with their share of overhead that they could no longer see the value that the group brought to them,” he says. “We couldn’t come back from that. The medical group broke into small two- and three-man practices.”

That searing experience taught Peterson valuable lessons about boardroom behaviors. “That’s when I realized we hadn’t laid the ground rules to ensure topics stayed on track,” he says. “That’s the biggest problem that most people have with medical group board meetings. You end up with a lot of emotion without action.”

By many accounts, physician board meetings are bastions of inefficiency, with finger-pointing and personality conflicts too often replacing productive debate. At best, such meetings waste valuable time. At worst, they foster incivility and dysfunction under which no physician group can survive.

Boardroom tussles have been par for the course in the medical community for generations, but many say that is changing. Physician groups today can no longer bear the weight of poor governance, says James Orlikoff, president of Orlikoff Associates Inc., a Chicago-based governance consulting firm specializing in healthcare.

Heightened competition from hospital systems and other medical groups, along with declining reimbursement levels, is squeezing inefficiencies out of the system, he says. At the same time, Medicare and private payers are demanding accountability, forcing boards of directors to standardize policies and demonstrate cost control.

“Physician groups can no longer keep the peace at the expense of efficiency,” Orlikoff says. “A lot of groups are circling the drain because they can’t get their act together to compete effectively.”

With the right tools and a little direction, however, board meetings can provide a rare opportunity to strengthen ties among board members, practice partners, and staff. It all comes down to leadership, and that begins with assembling the board.

Boards need “the right stuff”

Elect board members with a diverse mix of talent and expertise to begin with. Though each practice has unique needs, most benefit from having specific individuals who are skilled in finance, research and analysis, negotiating, human resources, and, increasingly, regulatory compliance.

“It’s a matter of building a board that has varied skills, being aware of what those talents are, and drawing upon them,” says Jeff Sinaiko, president of Sinaiko Healthcare Consulting in Los Angeles. “Then it’s up to the board chair to delegate responsibility to those members.”

If an important skill set is missing (such as expertise about mergers or information technology), consider appointing one or two nonphysician shareholders to the board who can bring a dispassionate perspective and an additional knowledge base to the group.

Most physician practice boards are elected by shareholders who bitterly resist the idea of giving board members any additional decision-making power. And those who are on the board often stay too long.

“If a physician violates a conflict-of-interest rule or he can’t disagree without being disagreeable, there is no consequence,” Orlikoff says. “The board members should be able to, at a minimum, remove that member for cause.”

Some problems stem from the fact that physician boards are composed almost exclusively of practice partners, says Orlikoff.

“Physician groups represent the only model of governance where the worker bees are also the board members,” he says. “The boards of most other organizations are inherently dispassionate because they use outside members, but physicians who sit on their own board have skin in the game. They have to live with the consequences of their decisions. It’s incredibly difficult for anyone to [be objective]. That’s why General Motors doesn’t have line workers on its board.”

Nuts and bolts of effective meetings

Boards of directors, of course, are impaneled to set policy for the greater good of the corporation, which means they wrestle with highly contentious issues such as compensation formulas, scheduling, cost-efficiency initiatives, and the allocation of shared resources. To prevent conflicts from escalating, carefully plan and tightly control board meetings.

An effective board chairman starts meetings with a clear, concise agenda that outlines the issues being discussed, summarizes the progress made so far, and identifies “action needed today,” says Randy Bauman, president of Delta Health Care, a practice consulting firm in Brentwood, Tenn.

Another tactic? Distribute the agenda well ahead of each meeting, especially when major decisions are on the docket. “This is extremely helpful from a strategic decision-making standpoint so that board members are prepared for the meeting and they stick to the topic better,” Sinaiko says.

When should you meet and how often? Though there’s no rule, he says, most practice boards should meet monthly and no less than quarterly to keep the flow of information fresh and interested parties apprised of important decisions.

Practices struggling with wayward debates might consider moving their board meetings to first thing in the morning. “Holding your meetings at, say, 7 a.m., time-limits you by necessity,” Bauman says. “If you have [meetings] at 6 p.m., I guarantee you’re still going to be sitting there at 9 p.m.”

To help impart a sense of urgency, some groups even run their meetings like congressional hearings or quiz shows, setting time limits for each topic. “If you’ve got one hour to address eight items, you would allot two minutes for one agenda item, 10 minutes for more complex issues, and so on,” Bauman says. “That psychologically keeps everyone tuned into the clock.”

Choose someone to ensure those time limits are observed. And don’t forget to assign a different person to the job each time, which will sensitize board members to the challenge of keeping discussions focused.

Steer discussions back to the middle

“A good leader must be conscious of where the discussion is heading at all times and will recognize immediately when it’s veering off course,” Bauman says. When that happens, he recommends saying, “We don’t have time to address that today,” and taking it off the agenda.

If it’s a matter of genuine concern, Bauman suggests setting up a committee or assigning a specific doctor to address the issue and report his findings at the next board meeting.

Orlikoff agrees, noting points of contention are inevitable and must be properly handled. “Leadership should not try to quash debate, but encourage it at the appropriate time,” he says. “Then you have rules. There should be argument and then consensus and coalescence.”

Orlikoff adds that members of physician boards are often guilty of making a decision but continuing to argue their point: “A good board leader says that everyone on [the board] will be bound to support the view of the majority.”

Consensus voting is one effective tool for keeping tensions at bay. Peterson’s board makes all its important decisions using the “five-finger approach.” Members who back a proposal completely hold up five fingers, those who support it with some reservations hold up four, and so on.

“If you see a lot of board members voting twos and threes, you can talk about it openly, which allows that individual element of discussion,” he says. “People want to feel they’ve been heard. That way, if they’re out-voted, they can agree to move forward because they have voiced their objections.”

Though physicians are highly educated in their own fields, most are unschooled in business administration, which also serves to undermine the productivity of meetings. Add the fact that board meetings are typically the only time members convene to resolve issues and air grievances, and you’ve got a recipe for disaster.

“Corporate governance is not [the physicians’] background,” Peterson says. “There is often a lack of understanding about how to be a board member and what their responsibilities are.”

The best boards today require new members to complete an orientation program that provides guidance on what functions the board is expected to fulfill, the culture of good governance, and acceptable norms of behavior, Orlikoff says. “Good governance is based on principle, policy, and process. Bad governance is based on personality.”

Keep connected after the meeting

It’s also good business to assign every physician in the group to a specific board member, who may be linked to several physicians, Peterson says.

“You need to give them a representative,” he adds. “You’ve got to keep those communication links open so those not on the board know their concerns are being addressed. Otherwise, you get a board that becomes so independent and self-sufficient that it starts operating outside the normal culture of the group.”

Larger groups whose boards are made up of a small percentage of shareholders have a heightened responsibility to keep channels of communication open between meetings. The minutes of each board meeting should be distributed to all practice partners as quickly as possible to keep shareholders apprised of new developments and to give non-board members the opportunity to raise questions.

As competition forces practices to streamline operations, many are looking to corporate America for tips and tools on how to improve boardroom culture. Consensus voting, the use of outside expertise, and new-member orientation can all make meetings more productive, but it’s up to leadership to facilitate change.

“It’s a much more challenging market that doctors are functioning in today,” Orlikoff says. “Those that have tightened up their boardroom rules don’t have problems because they govern themselves like a business.”

Shelly K. Schwartz is a freelance writer in Maplewood, N.J., who has covered personal finance, technology, and healthcare for 12 years. Her work has appeared on CNN/Money.com, Bankrate.com, and Healthy Family magazine. She can be reached via editor@physicianspractice.com.

This article originally appeared in the July/August 2006 issue of Physicians Practice.