H' Duane Taylor, Esq', MPP, MCPH

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H. Duane Taylor, Esq., MPP, MCPH
Effective Board Governance Strategies

• 26th MACHC Annual Meeting

September 25, 2008
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Goals for Workshop

• Provide the participant with a clear
  understanding of Board Governance for Federally
  Qualified Health Centers.
• Enhance participants knowledge of Board
  Governance Strategies to advance their
  organizations Board Development.
• Assist participants in developing effective
  strategies for ushering Board Members off their
  Board.
• Create an effective dialogue with participants
  about key characteristics of desirable Board
  Members.
• Provide strategies to foster effective
  communication between Executive Directors and
  Board Members.

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Outline
1. Governance-Overview
2. Strategy Development
3.
Financial Health and Wellbeing
4.
CEO and Board Dynamics
5. Developing Your Board
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Governance Overview

• There are over 1 ½ Million Non Profits in the US
  today.
• Universal to all of them is that there were
  developed with a mission to serve the community.
• The Board of Director is one mechanism that can
  ensure that the mission of the organization is
  always in being adhered to and that the community
  remains central to the agencys activities.
• Board Governance is the ability to ensure that
  the Board of Directors understands their roles
  and responsibilities, including authority and
  accountability.

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Board Governance for FQHCs

• Boards for FQHCs are unique and is one of the
  only federal programs to require that FQHCs have
  at least 51 of the Board Members be patients or
  consumers at the health centers.
• FQHCs Board are more involved than other Boards
  in advocacy for the program
• FQHCs Board tend to more dynamic and involved in
  other Boards

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Unique Characteristics of FQHC Board

• At least 51 patients/consumers 49 non
  consumers.
• 49 non consumers must be representatives of
  other areas served by the CHC (e.g. Finance, HR,
  Fund Raising)
• Consumers on the Board Members must represent the
  individuals served by the health centers relative
  to demographic factors
• Ethnicity
• Race
• Sex
• Socio-economic

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Board-Authority and Accountability

• The Board of Directors of an organization has
  authority to make binding decisions on the
  organization and are responsible for assuring the
  welfare of the organization
• The Board is also accountability for all actions
  it takes in concert.
• The Board serves the legal and moral compass for
  the agency.

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Legal Duties of the Board

• Duty of Care
• Pay attention to the affairs of the organization.
• Stay engaged by attending meeting, reading
  materials, and being fiscally present.
• Duty of Loyalty
• Align yourself with the organization in
  meaningful ways that assist in the growth of the
  organization
• Duty of Obedience
• Stay True to the Mission and Bylaws

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Key Roles of the Board

• Establish Strategic Vision for the Organization
• Ensure the necessary resources are afforded to
  the organization to make it vibrant
• Provide Oversight, Direction and Accountability

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Board Role-Set Direction

• Establish Strategic Vision for the Organization
• Vision
• Of what the organization intends to be like at
  some point in the future (3-5 years) and/or
• Of the effect on the community of successful
  implementation of health center goals
• Strategic Goals
• Values by which the organization will operate

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Ensure Resources

• Identify resources need
• Financial
• Leadership Chief executive and board
• Credibility/good reputation
• Establish policies for how these resources will
  be acquired
• Including the responsibility of board members for
  participation in fundraising.

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Board Oversight

• Program Oversight
• Monitoring-
• Evaluating-
• Financial Oversight
• Establish budget guidelines
• Fiscal Management-Review Financials
• Laws and Ethical Standards
• Ensure compliance with appropriate laws
• Avoid interested directors transactions

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Unique Board Responsibilities for FQHCs (Program
Expectations)

• Meet at least once a Month
• Select the services to be provided by the health
  center
• Schedule the Hours of Operations with the FQHC
  Team
• Long and Short Term Planning (including expansion
  and new services)

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Unique Challenge of FQHC Boards

• Understanding Data and Finance
• Understanding Potential Conflict of Interest.
• Executive Sessions
• Fundraising
• Recruitment

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Strategy Development

• Strategic Development is developing a destination
  for the organization
• Focus on operations
• Future orientation
• Strategic planning includes choosing how to
  respond to an ever-changing environment.
• Requires a commitment to engaging key
  stakeholders in building a consensus.

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Benefits of Strategic Planning

• Engage in serious examination and reflection
• Build higher levels of understanding and
  commitment to the work
• Improve decision making process
• Enhance organizational confidence form managing
  by design and not crisis.
• Engage in internal and external examination
• SWOT Analysis

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Steps to Strategic Planning

• Prepare the Plan
• Board and Staff Partnership
• Market Analysis
• Establish or Review the Mission/Vision
• Scan Environment
• Develop Goals and Objectives

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Preparation for Planning

• Develop a plan for planning
• Will we have a facilitator the strategic planning
  process
• Who will be involved in the planning process
• Who will drive the process?
• How much will it cost?
• What is the time line for the planning process
• Are we going to have external partners involved
  in the planning process?

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Gather Information

• Examine external factors that influence your
  organization
• Funding Trends
• Economic Trends
• Political Environment
• Client Demographics
• Examine internal factors
• Staff Competency
• Staff Turnover

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Mission and Vision Statement

• Both are crucial guides for organizational action
• A Vision statement describes the destination
  while the mission statement serves as the compass
  for ensuring that the organization is moving in
  the right direction
• Why develop a shared vision
• To inspire commitment
• To align organizational energies and resources
• To mobilize support
• To explain organizational actions to external
  audiences
• Funding Trends
• Economic Trends
• Political Environment
• Client Demographics

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Create an Elevator Pitch or Unique Selling
Position

• An elevator pitch is a two sentence brief of what
  your organization does and who you serve. This
  statement should align with your mission/vision
  statement but should tell why your organization
  is unique
• Example. Our organization provides.. For a
  specialized population.

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Environmental Scanning

• Internal Analysis
• Strengths
• Weaknesses
• Financial
• Operations
• Leadership
• Management

• External Analysis
• Opportunities
• Threats
• Social
• Political
• Economic
• Community

• .

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Perform Analysis

• Perform an analysis by comparing your SWOT
  Analysis and Market Analysis with the mission and
  community needs that exist.
• Question to ask?
• Are our programs still needed as much as they
  once were?
• Can others meet these needs more effectively than
  we can
• Are there unmet needs that exist that we can fill
  to assist the community?

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Goal Setting

• Strategic goals are major achievements for the
  organization.
• Do not choose more than 12 goals for the
  organization.
• Remember each goal should have a number of
  objectives on how the goal will be carried out
• Be realistic in your goal setting-remember
  available funds and resources.

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Strategic Plan Monitoring/Evaluation

• As the group responsible for organizational
  governance, the board must continually monitor
  progress of the strategic plan and modify the
  plan as need if conditions changes
• Dashboard reporting-helps keep track of key
  measures.
• Project Management is critical to ensure that
  goals and objectives are met.
• Evaluation Evaluation is needed at the end and
  beginning of the strategic planning process and
  should be utilized.

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Create Core Values for All Parties

• Ensure buy in to the strategic planning process
• Create Core Values for all parties so that
  everyone is a part of the strategic planning
  process.
• Develop ground rules around respect and input
  from all parties
• Create a standing committee within the Board to
  perform Strategic Planning/Thinking

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Grooming Your Board!

• Strategic Planning and Strategic Thinking are
  completely different things!
• Create professional development opportunities to
  assist your board and yourself in enhancing
  strategic thinking
• Lean Theory Management
• Balanced Score Cards
• Core Values
• Employ your Board in their own development!

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Lean Principles Example

• Understanding Customer Value-Value must be
  externally focused Only what your customers
  perceive as values is important
• Value Stream Analysis
• Flow
• Pull
• Perfection
• Theses five lean principles work together and are
  fundamental to elimination of waste.

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Financial Oversight

• Fund Raising
• Planning
• Investment Policies
• Monitoring
• Internal and External Controls

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Key Financial Roles of the Board

• Establish Mission and Future Direction
• Ensure Resources
• Funds
• Leadership (e.g. CEO and Board)
• Reputation
• Provide Oversight

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Funding Strategy-1

• A funding strategy needs to answer the following
  question
• How much money is needed to get done what we want
  or need to accomplish?
• What are potential sources of funds?
• What kind of balance do we aim to develop between
  the various funding streams that might be
  available to the organization?
• Who will be responsible for doing the work of
  securing the funds.

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Funding Strategy-2

• Diversification of Revenue Streams
• Fund Raising-think about utilize a cooperate
  volunteers to assist-
• Operational/Capital Revenue
• Contracting Services
• Lines of Credits

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Funding Strategy-3

• Is all money good sources of funds for your
  entity?
• Need to balance long-term and short-term needs
• Budget
• Financial expression of strategic priorities as
  well as ongoing commitments.
• Must balance needs and resources.
• Board gives guidance and approves the budget
• Staff and/or committee prepare the budget

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Financial Oversight-Fiduciary Accountability

• Ensure Financial Planning
• Adoptive investment policies
• Monitor Performance
• Ensure adequate controls

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Financial Planning

• Lines of Credit
• Cash Flow Analysis
• Reserves
• Endowments
• Investments

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Reserves

• Definition
• Those unrestricted assets that are reasonably
  liquid, minus those liabilities that must be paid
  off fairly soon.
• Needed for
• Rainy day when expenses exceeds income and/or
  for investment in equipment, property, program
  expansion
• Must be built over time
• Board needs to establish target level and plan
  for how to achieve the desired level of funding.

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Endowments

• Funds established to provide income in the
  future.
• May be restricted or unrestricted depending on
  the endowment
• If restricted must be used per the restriction.
• My be established by donors or by the board.

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Reserves and Endowments

• Policies are needed for how and why funds will be
  disbursed
• Policies must be developed for how funds will be
  invested.

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Budget Monitoring

• Board determines
• What financial statements are needed
• How often
• In what formats (e.g. use of graphics?)
• At what of variance the board will need
  explanation and discussion.
• Role of Finance Committee

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Enhancing the Board Financial Knowledge

• Have accountant come in and do training on
  Financials-Reading Financials Dash Reports, etc.
• Provide them with Articles on Cash Flow
• Ensure that the Board understand exactly what
  financial picture you have.

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Tips on Creating Successful Financial Management
System

• Utilize Dash Reports with your Board including
  current ratio-measures solvency including
  Accounts Payable, Accounts Receivable Reserves
  Revenue to Expense
• Create a Finance Committee that is financial
  savvy
• Utilize internal experts and do not be afraid to
  bring in external experts
• Use the your accountant and auditors

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CEO and Board- Creating an Effective Partnership

• It is imperative that the Board and the CEO
  create an effective working relationship
• Often times, there is a struggle for power
  between the Board and the CEO.

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The Delicate Balance-The Governance Partnership

• The Board governs the life of the organization
• Has ultimate responsibility
• Is accountable to the public trust
• Chief Executive Officer directs and coordinates
  the affairs of the organization
• Daily administrative oversight
• Strategy Development for the organization
• Is accountable to the board

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CEO

• The CEO is hired to develop the strategy and
  perform the daily oversight of the operations of
  the organization.
• Remember, that you are not a member of the board
  but a key partner of the board to ensure that the
  collective mission and vision of the organization
  is accomplished.
• The CEO must learn to manage up in a way that
  affords information sharing but does not invite
  micro-management.

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CEO

• The CEO is hired to develop the strategy and
  perform the daily oversight of the operations of
  the organization.
• Remember, that you are not a member of the board
  but a key partner of the board to ensure that the
  collective mission and vision of the organization
  is accomplished.
• The CEO must learn to manage up in a way that
  affords information sharing but does not invite
  micro-management.

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Developing Your Board

• Creating an effective Board is a challenge.
• To identify the various steps in the
  board-building cycle
• To identify actions that will help develop an
  effective board for the present and the future.

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Board Building Cycle
Approaches to expand
Identify
Cultivate
Evaluate/ Rotate
Development
Recruit Orient
Involve Educate
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Identify Human Capital for the Board

• What do we need to move forward in the next
  several years?
• Skills
• Knowledge
• Perspective
• Connections
• What do we have?
• Examine diversity of the board? (Profession,
  education, demographics (race/ethnicity
• What is missing?

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Cultivate Potential Directors

• Identify sources of potential board members with
  the needed characteristics?
• Develop relationships-ask community/business
  entities for perspective board members?
• Identify potential board members
• Cultivate them, get them interested, and keep
  them informed.
• Ask them to take on specific short-term tasks on
  behalf of the organizations.
• Be specific on what you are looking for relative
  to prospective board

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Recruit

• Conduct and interview (Take it seriously)
• Describe why a prospective board member is wanted
  and needed.
• Describe expectations and responsibilities.
• Invite questions
• Do not minimize requirements
• Make sure the prospect understands and supports
  the mission
• Ask if prospect would be willing to serve if
  elected for the next several years.

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Orient

• To the organization programs, history, by laws
  pressing issues, finances, facilities,
  organizational chart\
• To the Board names, bios, board handbook, team
  building.
• Involve and Engage The new board member-Assign a
  immediate task that they can get involved in,
  assign buddy, solicit and ask for feedback.

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Education

• Provide information about issues facing the
  organization and the field of healthcare
• Electronic Medical Records
• E-Pharmacy
• Telemetry
• CARE Act Reauthorization
• Provide opportunities for the Board Members to
  drive their educational development as well.

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Evaluate

• Engage the board in assessing its own performance
• Encourage individual self assessment
• Identify ways in which to improve the board
  development

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Rotate Board Members

• Consider establishing and using term limits for
  Board Members
• Encourage individual self assessment
• Identify ways in which to improve the board
  development

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Thank You!!!

• H. Duane Taylor
• Chief Operating Officer
• MACHC