[/vc_column_text][vc_column_text]With a staggering number of rural hospitals having closed in recent years, learning the best practices for effective governing is essential for revitalizing our rural healthcare systems. A strong governance within hospital management is imperative for the continual growth of the rural hospital systems across the United States. Boards have a large impact on how hospitals are run financially and qualitatively. Data shows that hospital boards that spend at least 25% of its time together on quality and safety measures have statistically significantly lower severity adjusted mortality rates than hospital boards that spend less than 25% of its time on quality and safety. The Effective Governance/ Best Practices Model and Governance of Systems Model has been in place since 1990.

This document serves to provide information on the duties required by boards, advice on governing effectively, and to supply resources for boards struggling with ineffective governance.


  • A Board Only Exists When It Is Meeting
    • The single most important commodity to a board is its time together to discuss pressing issues since discussions only happen during board meetings.
  • The Board is an Entity, Not A Collection of Individuals
    • The Board must speak as “one” and not as a collection of voices.
  • The Authority of the Board Derives from the Whole, Not from Any Individual Member.
    • Board members should not individually promise community members that the Board will or will not do something, nor should individuals give direction to Chief Executive Officers on handling problems.

The Fiduciary Duties of a Board

It is very important for hospitals, with their legal counsels, to gather state-specific and organizational-specific understandings of their fiduciary duties. These duties vary from state-to-state and organization-to-organization. Generally, they are comprised of the following three legal duties:

  • The Duty of Care
    • Legally requires Board Members to exercise the same care in the oversight of all activities in the corporation. It is not solely for financial responsibilities.
    • Board members need to do the work to be knowledgeable and ready to act. If the members do not know the topic of conversation, they must seek expert advice from multiple reliable sources of information.
  • The Duty of Loyalty
    • Requires Board Members to always act in the best interest of the hospital even if doing so will be harmful to one’s own business or relationships
    • Requires Board Members to know and be willing to follow Recusal Policies when the Board determines someone has a Conflict of Interest.
    • One cannot use knowledge they get as a Board member for personal or business benefit.
  • The Duty of Obedience
    • Requires Board Members to obey the law, the charitable purpose of the hospital, the state corporate laws, and the organization’s Bylaws and Board policies/ procedures
    • Internal policy and practice reviews are promising ways to ensure the following of these laws and rules.


When boards do not govern effectively, an evaluation of the system should be completed. There are seven common complications that should be assessed for first:

  • Representational Governance
    • As counterintuitive as it is, representational governance can lead to a lack of mission focus.
  • Lack of Mission Focus
    • The less mission-focus a board has, the more likely it will be to revert to representational governance.
  • The Tendency to Resist Change Rather than to Lead It
    • If the sole focus is to keep a certain aspect of the hospital the same way, it may impede the progression of the hospital’s capabilities.
  • Bad Governance Information
    • Well-run Boards always fine-tune information they receive to ensure the consistency with their strategies that will lead hospitals to progress. Continuing Governance Instruction can be found here.
  • Reluctance to Remove Non-Performing Board Members
    • Some Boards do not have the ability or responsibility to do this. However, for the Boards that can, implementing rules and expectations for board members to understand gives the Board leverage to remove members if the rules are not being followed.
  • Cumbersome, Outmoded Governance Structures
    • Unnecessary committees, too many Boards, and too many board members can lead to an uncontrolled and ineffective structure for governing properly. Ineffective boards tend to let the governance structure control them.
  • No Job Descriptions
    • Providing written job descriptions for the Board, Board Members, the Board Chair, Committee, and the Committee Chairs avoids the problem of ‘personality-driven governance’ which sees policy and principle-based governance.

The foundation of a well-run Board should be based on a group-belief system, an understanding of who is being served, and an agreement on what the Board will be doing.


There are many ways for a hospital board to turn around its governing style and govern effectively. Historically, well-run boards develop a governance model that begins with a mission. The mission sets a path to meet annual board goals/ objectives that are then used to determine what committees, work plans, and agendas would be needed to accomplish their goals. The Performance Objectives should form the basis for the Performance Evaluation. Productive disagreement with the CEO should develop into the support of decisions and strategies being used by the board. To be effective in its governing, a board must control its time, agenda, information received, structures, and policy. Because boards are only effective during meetings, there are several recommended steps to create a more effective board meeting:

  • Consent Agenda
  • Agenda Clearly Tied to Strategy, Board Goals and Objectives
  • CEO Report- Verbal Report must not duplicate written report in agenda materials
  • Decision Sequencing (CEO, Committees, MS)
  • Who is in the room? (Board management, staff) When?
  • Deep Dive Discussions
  • Post Board Meeting Evaluation