I n ff oo r r mma at ti oi on n B uB lul le lt ei nt i #n 1 # 9
GOV GOVERNANCE SERIES
For more information contact Jacqueline C. Leifer, Esq., Michael B. Glomb, Esq., or Michael D. Golde, Esq. Feldesman, Tucker, Leifer, Fidell LLP 2001 L Street NW Washington DC 20036 Telephone (202) 466-8960 Fax: (202) 293-8103 Email:
[email protected] or Malvise A. Scott Vice President, Programs and Planning National Association of Community Health Centers, Inc. 7200 Wisconsin Avenue, Suite 210 Bethesda, Maryland 20814 Telephone (301) 347-0400; Fax (301) 347-0459 Email:
[email protected] This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, financial or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Cooperative Agreement Number U30CS00209 from the Health Resources and Services Administration, Bureau of Primary Health Care (HRSA/BPHC) supported this publication. Its contents are solely the responsibility of the authors and do not necessarily represent the official views of HRSA/BPHC.
National Association of Community Health Centers, Inc.®
The Board’s Role in Adopting and Overseeing Health Center Policies and Procedures
A
dopting general policies and procedures for implementation by the management team (as well as ongoing monitoring of those policies and procedures) is a critical responsibility of a health center governing Board. Indeed, the broad scope of the Board’s policy making role is mandated by Section 330 of the Public Health Service Act, its implementing regulations1 and the Health Resources and Services Administration’s Bureau of Primary Health Care (HRSA/BPHC) policy guidance, in particular the Health Center Program Expectations.2 These policies that the health center Board must adopt include: ◆
Criteria for the selection, evaluation, and dismissal of the chief executive of the health center.
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Personnel policies and procedures, including selection and dismissal procedures, salary and benefit scales, employee grievance procedures, and equal employment opportunity practices.
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Financial management policies and practices, including a system to assure accountability for health center resources, approval of the annual budget, health center priorities, eligibility for services, including criteria for partial payment schedules, and long-range financial planning.
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Health care policies, including scope and availability of services, location and hours of services, and quality-of-care audit procedures.
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Policies for evaluating health center activities, including service utilization patterns, productivity of the health center, patient satisfaction, achievement of objectives, and development of a process for hearing and resolving patient grievances
1 42 C.F.R. § 51c.301 et. seq. 2 BPHC Policy Information Notice (PIN) # 98-23.
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Notwithstanding the clear statement of what policies health center governing Boards must approve, there is very little guidance available regarding how a governing Board should undertake its policy approval and oversight responsibility. Accordingly, the purpose of this Information Bulletin is to attempt to fill this knowledge “gap” by suggesting a methodical process and pertinent considerations for the Board to use in developing health center policies in an efficient and cohesive manner and, ultimately, in promoting the effectiveness of those policies.
Decisions that affect the entire health center – including those required by law or by regulatory agencies, e.g., HIPAA compliance and corporate compliance – are broad policy decisions for the governing Board to adopt and evaluate.
POLICY DEVELOPMENT Distinguishing Policy Decisions from Management Decisions In order for the Board to set policy effectively, it is important that Board members clearly understand which decisions are policy decisions and which decisions are management decisions. As a practical matter, the management team necessarily will make some decisions to establish a specific implementing policy or procedure for the health center in order to implement Board-established policies, sometimes without consulting the Board. Board members, who often are selected for membership precisely because they have management or organizational skills, may find it tempting to try to address such operational issues. However, a Board that inappropriately intrudes into day-to-day management does a dis-service to itself and to the health center by diverting resources from its important broad policy-making duties.
Policy Decisions – One way to distinguish a policy decision from a management decision is to ask this question: Does the decision affect the activities, programs, or services of the health center as a whole or does it affect individual operations, departments, or employees? Decisions that affect the entire health center – including those required by law or by regulatory agencies, e.g., HIPAA compliance
and corporate compliance – are broad policy decisions for the governing Board to adopt and evaluate.
Management Decisions – On the other hand, the application of Board policy to specific operations or units of the health center involves management decisions which properly are delegated to the management team and, as noted previously, may well require management to implement polices and procedures. For example, the governing Board adopts broad policies to implement its corporate compliance program, including the stated commitment to provide appropriate training to all employees and contracted staff, as well as Board members. However, it is management’s responsibility to establish the specific training protocol and tracking system to implement those policies.
Initiating Policy Decisions The policy development process begins with identifying and defining what health center need, concern, or objective requires a new policy or the modification of an existing policy. This identification and definition process frequently, but not always, occurs at the governing Board or Board committee level. The Board, having perceived the need for a policy or being required by law to establish a policy, may ask the management team to prepare a recommended policy draft for Board action. Alternatively, the management team might advise the Board of the need for a particular policy and, if the Board agrees, be directed to prepare a recommendation for the Board. Of course, the
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need for a particular policy (or change in policy) can also come from external sources, such as advocacy groups, government evaluations, e.g., BPHC performance reviews, and accrediting agencies. In identifying a need for a particular policy, it is important for the Board to consider questions such as:
the confidentiality of patient health information, require the Board to establish policies to implement the Federal rules, which will inevitably cost money both in terms of expenditures for new systems and in terms of staff time and training necessary to assure compliance. Fortunately, the HIPAA rules allow a health center to “scale” its compliance in accordance with its available resources. There are very similar considerations involved in establishing a corporate compliance program. In each case, the Board must face the challenge of assuring compliance within available resources.
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What objectives, goals, or behavior is the health center attempting to promote?
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Is a policy (or a change in policy) the appropriate solution? Is ineffective management implementation of existing policy the real problem?
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What are the risks involved in establishing a policy and how can they be minimized?
Gathering Relevant Information
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How will the Board measure the effectiveness of a policy? What are the expected results? What are the indicators of success?
important that the Board consider financial implications in connection with policy initiatives. For example, it does little good for the Board to significantly expand the health center’s hours of service if the center does not have the resources to staff the operation or if there is not sufficient patient demand for expanded hours to cover the additional costs that will be incurred.
Gathering information is key to effective policy making. The energy and resources utilized in this aspect of the policy development process should be significant and should not be short-changed. While this may make for a slightly tedious process, one positive result – in addition to ensuring a better policy – is that it almost certainly will serve as an educational tool for both Board members and health center staff, which can pay collateral dividends as the policy is implemented. The types of information needed, as well as appropriate information sources, will vary depending on the policy under consideration.
Regulation Compliance Policy –
Health Center Staff – It always
Be mindful, however, that regardless of financial implications, Boards may be legally required to establish policies in a certain area. For example, the HIPAA Privacy and Security rules intended to protect
is important for the Board to solicit, and to be responsive to, the views of the health center’s management team and other key staff, as may be appropriate. 1) Those persons have the necessary day-to-day experience
Financial Policy – It is extremely
and expertise in operating the health center to ensure that the “right questions” are asked and that all key variables are considered. 2) Moreover, they usually have contacts with other providers in the community and other leaders in the health care industry that put them in a position to identify trends even before they directly impact the community, thereby giving the Board the opportunity to anticipate events. 3) Finally, staff can be the most reliable source in determining what outcome measures and performance indicators are available and most appropriate for monitoring the ongoing impact of a particular policy. In short, the Board should treat the management team as its “partner” in the policy making process as management’s views, which are based on expertise and daily experience in operating the health center, are critical to successful policy setting.
Health Center Patients – Information sources should also include the views of health center patients, especially regarding decisions related to the scope, location and availability of health center services (e.g., adding a new site location, downsizing a particular service or program), and quality assurance. While information can be obtained from consumer Board members, patient “complaints,” and other anecdotal sources, the importance of an effective system to assess patient satisfaction and dissatisfaction (through surveys and the like) in developing policy cannot be overstated.
Other Relevant Sources – Other valuable key sources of information may include internally or
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externally performed program assessments or evaluations of the health center, external experts/consultants, State and national associations, and other health centers or similar provider organizations. For example, it is important for the Board to utilize appropriate executive compensation studies in setting the compensation of the health center’s management team to assure that the compensation levels are “reasonable” under all of the circumstances so as to avoid possible income tax sanctions.
Considering Policy Initiatives in Light of the Health Center’s Mission Statement Policy initiatives always should be reviewed for consistency with the health center’s mission statement,3 its current strategic plan, and its key organizational documents (such as the rationale for the health center’s income tax exemption as explained in the health center’s exemption application) that define and guide the health center’s activities. If the proposed policy is not consistent with the center’s guiding principles, the Board is faced with a critical decision: is the proposed policy change so important as to justify a fundamental change in the health center’s mission? That question may stimulate significant debate and, of course, it is a major policy question for which there may be no easy answer. What it is important to remember is that the Board should not adopt policy without
considering the health center’s mission and certainly should not adopt a policy that is hostile to its mission.
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Is the policy reasonable and/or practical?
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Is there anything arguably arbitrary, capricious or discriminatory in the policy?
to consider the issue if there is no appropriate standing committee. The standing committees of the Board are likely to be more familiar with certain topical areas (e.g., human resources) for which a policy is being developed. The committee’s familiarity with the broader subject matter can be extremely important, especially if numerous, complex judgments will be required in developing a particular policy. Delegation will help ensure that, to the extent possible, the hard work is done before recommendations are presented to the full Board, allowing the Board to complete its work in regular monthly meetings.
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Does the policy adequately address the particular need it is meant to address?
Support from Health Center Staff – As previously noted, health
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Will the policy require changes to other health center policies?
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Can the policy be enforced and administered in a reasonable manner?
Other Considerations In addition to the foregoing considerations, the Board should continue to keep the following questions in mind as a policy is developed:
It often will be advisable to have a policy proposal reviewed by qualified legal counsel to ensure compliance with applicable local, State and Federal law and the specific legal requirements applicable to health centers.
Utilizing Board Committees The Board of Directors should consider delegating responsibility for developing policies to an appropriate standing committee of the Board, or create a special committee
center staff is a critical resource in the policy development process and should be invited, as appropriate, to work with and to advise the Board and its committees. Health center staff involvement will help ensure that a proposed policy is “realistic” and, as the staff will be responsible for implementing the policy, will promote compliance.
Support from Health Center CEO – The health center’s chief executive officer (or appropriate designee) should help each committee in crystallizing the relevant policy need/issue and explaining how it relates to broader program operation objectives. In addition, the chief executive should direct the process of gathering the information necessary to develop the policy, as well as the information necessary to monitor the ongoing effectiveness of a policy.
3 A mission statement establishes the organization’s underlying purposes and values and defines the reason for the organization’s existence.
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Drafting the Policy There are several approaches to formulating the specific terms of a policy.
or interpretation. Specifically, the policy drafting process should begin by: ◆
Establishing the general ends, priorities, parameters or constraints related to the topic to be addressed by such policy and,
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Working from that basis, continue tailoring with more specific constraints or parameters to meet particular circumstances, or to limit management’s ability to interpret the policy in a particular way.
Identify the Need – As previously noted, policy initiatives typically originate either with the Board identifying a need and directing staff to prepare a proposed policy for Board consideration or with senior management determining a need and requesting that the Board adopt a policy.
Prepare a Written Draft – In either case, as a practical matter, it is likely that the health center staff will actually prepare a written draft of the proposed policy for consideration by the Board. Further, keeping in mind the distinction between “policy” and “management” discussed above, the policy draft presented to the Board should lay out the broad health center-wide objectives of the policy and not focus on the details of implementation, that being the obligation of management. In drafting the policy, the drafter(s) should strive to write a policy that is clear, concise and to the point. Jargon and “legalese” should be avoided, unless absolutely necessary for legal or other reasons. Boards may want to consider using the “policy governance®” model,4 which is one of the more widely accepted systems for policy development. In terms of policy drafting, the model rests on the theory that the Board should begin with a policy draft that is written broadly, but which can accommodate special exceptions or circumstances that may require a narrower application
Send to Full Board for Review and Discussion – Once a first draft is developed and approved by the responsible committee, the policy should be sent to the full Board for preliminary review and discussion. The Board should then consider the range of interpretation that the broadly written policy allows and determine whether any interpretation could be considered unreasonable, and if so, the policy should be revised accordingly by adding an increasing level of detail.
Adopt (or reject) the Policy – Eventually, the policy should reach a point where it is sufficiently detailed and specific for addressing particular circumstances or concerns that the Board should feel comfortable that any interpretation of the policy by management would be reasonable. At this point, the Board should formally adopt the policy.
Once a first draft is developed and approved by the responsible committee, the policy should be sent to the full Board for preliminary review and discussion. Under the policy governance® model, so long as management does not take any action or make any interpretation that is inconsistent with the established policy, management should be free to implement the policy as it deems appropriate.5
Establish Methodology for Review of Policy Implementation – Of course, as no policy is likely to be perfect, future modifications based on experience arising from the implementation of a policy may well be required. However, in order to make these modifications, the Board will need to establish a sound methodology for the ongoing review and monitoring of a policy’s implementation.
4 The “policy governance®” model for non-profit organizations was developed by John Carver and Miriam Carver. A more detailed analysis of this model (as well as a complete bibliography of books and articles related to this model) and its broader application to non-profit corporate governance is available via the internet at www.carvergovernance.com. 5 See Carver’s Policy Governance® Model in Nonprofit Organizations, by John Carver and Miriam Carver, at www.carvergovernance.com/model.htm.
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POLICY IMPLEMENTATION AND OVERSIGHT Consistent with BPHC program expectations regarding the proper delegation by the governing Board to the health center’s chief executive and management team of the responsibility for the day-to-day administration of the health center’s operations, the chief executive (with the assistance of other senior management team members) should be responsible for implementing Board policies. Accordingly, the Board should appropriately have little to no role in the actual day-to-day implementation. While a health center Board’s role in policy implementation is extremely limited, the Board should play a major role in the ongoing review and evaluation of the policy’s implementation and in the policy revision process. This monitoring function should occur on a regular, periodic basis and, in many cases, may appropriately be delegated to Board committees, which should report relevant findings and recommendations to the full Board for review and appropriate follow-up action.
Selecting Oversite Measures
Monitoring Corporate Compliance Elements
In order to effectively perform this evaluation and oversight function, the Board must establish appropriate markers or measures to enable it to determine whether a particular policy is achieving its intended goals in the intended manner. In developing these measures/indicators, health center management and staff will likely be the most reliable sources in determining what outcome measures/performance indicators are reasonably available and most appropriate for monitoring the ongoing impact of a relevant policy.
The monitoring and evaluation function of the Board (as well as the policy development process generally) is strongly related to the monitoring functions expected to be conducted by a health center as part of its voluntary corporate compliance program.7 Specifically, one of the seven core elements of a corporate compliance program is the development of internal auditing and monitoring plans and techniques and the ongoing utilization of these plans and techniques on a periodic basis for the purpose of evaluating health center performance in key areas, including to determine whether internal policies are properly implemented and compliant with current law.8 Indeed, the effectiveness of the corporate compliance program itself must be regularly evaluated. For example, if no employee ever reports a compliance concern or request for clarification, the “employee-friendly” reporting process may need to be revisited and refined based on an evaluation of what may or may not be working.
The indicators/measures need to be able to speak directly to whether a policy’s objectives are being achieved, e.g., more patient visits on weekends, fewer employmentrelated disputes, etc.6 In general, in order to be reliable and effective in the long-term, it is important for these indicators/measures to be able to be generated in the normal course of business as opposed to requiring special studies or outside evaluations.
6 See Carver’s Policy Governance® Model in Nonprofit Organizations, by John Carver and Miriam Carver, at www.carvergovernance.com/model.htm. 7 Over the past few years, the Office of the Inspector General (OIG) within the U. S. Department of Health & Human Services (DHHS) has issued a number of “compliance program guidances” designed to aid specific sectors of the health care industry in developing and implementing voluntary corporate compliance programs. Of particular importance to health centers is OIG Compliance Program for Individual and Small Group Physician Practices, 65 FR 59434, Oct. 5, 2000. 8 For a more thorough analysis of corporate compliance vis-à-vis health centers, as well as the role of health center networks in supporting the corporate compliance function, please refer to NACHC Information Bulletin #7 of the Integrated Services Delivery Network Series, “Assisting Network Members Develop and Implement Corporate Compliance Programs”, October 2003.
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CONCLUSION The adoption of general policies and procedures for implementation by the health center’s management team, as well as the ongoing monitoring of such policies and procedures so as to promote the health center corporation’s mission and goals, is an important part of a health center governing Board’s responsibilities. As a first step, the Board must understand the distinction between policy decisions – Board decisions that affect the health center organization as a whole – and management decisions, which are conducted by the management team and impact the daily operations of the health center.
Once this distinction is clear, a host of considerations should be contemplated, including: the health center’s mission, strategic plan and specific organizational purposes; the specific needs and objectives promoted by the proposed policy; the manner in which the policy can be implemented, enforced and measured effectively; the reasonableness and practicability of the policy; whether the policy would require other changes within the health center; and, of great importance, the financial implications related to the proposed policy initiative. Judging by this list (which is by no means exhaustive), policy-making is no small task.
that the health center governing Board establish a methodical process for the development of policies and for monitoring their effectiveness, and utilizes all resources available to inform and facilitate these processes. Ultimately, whichever policy-making processes are chosen, if conducted properly, the policies developed will help form the framework for a successful health center project.
As such, in order to properly perform the policy-making function in a competent manner, it is important
...it is important that the health center governing Board establish a methodical process for the development of policies and for monitoring their effectiveness.
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Governance Information Bulletin #9
National Association of Community Health Centers, Inc.® 7200 Wisconsin Avenue, Suite 210 Bethesda, MD 20814 Telephone: 301-347-0400 Fax: 301/347-0459 Website: www.nachc.com
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