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Keywords

governance, governing boards, health networks, health systems

 

Authors

  1. Alexander, Jeffrey A.
  2. Lee, Shoou-Yih D.
  3. Bazzoli, Gloria J.

Abstract

Debates about the relative advantages of health systems versus more loosely structured health networks have largely ignored issues of how these different organizational forms are governed. Based on comparisons of two large samples of health systems and health networks, our findings indicate that the majority of both types of organized delivery systems have governing bodies separate from those of affiliate organizations, high proportional representation by affiliate organizations, and similar board size.

 

Institutional governance assumes broad responsibility for an organization's survival and well being.1 The act of governance is distinguished from that of management. It involves the process of setting and monitoring organizational goals and the development of strategies through a board of trustees or directors to which the top administrative officer reports.2 In freestanding health delivery organizations (e.g., hospitals, nursing homes), the board's role is fairly clear-cut. Most boards of freestanding organizations are community based and designed to represent and act as agents for the community that the organization serves. Policies and strategies under the board's oversight are often judged by the standards of local community benefit.3 However, with increasing consolidation and the emergence of organized delivery systems as the dominant form of health care delivery,4,5 governance forms have become more complex and the role of governance more ambiguous. Questions have arisen about (a) how governance should balance affiliates' adherence to the strategic goals of the system against autonomy at the affiliate level,6 (b) the extent to which local interests should be represented at the corporate level of the system,7 (c) how much control to cede to affiliates to allow them to respond to local market conditions,8 and (d) what particular interests should be represented on the system board to help shape a 'systematic' approach to health care delivery.9 In the context of complex delivery systems consisting of multiple corporations and boards, it may be particularly important to have a clear definition of governance roles, responsibilities and authority, and a clear delineation of centralized and delegated powers. Furthermore, how boards of organized delivery systems are structured, who comprises them, and their relationship to affiliates in the system may both reflect and shape the policies they make.

 

Despite the potential importance of these issues, little data exist that describe the structure and practices of governance in organized delivery systems and how these systems are dealing with these thorny issues. Moreover, none of this work has explicitly acknowledged and explored differences in governance forms between the two dominant types of organized delivery systems-hospital-based health systems and health networks. To the extent that these two types of organized delivery systems are based on different principles of control and participation, different governance forms are likely to manifest themselves between the two.10 Although we believe such broad categorical comparisons are important, it is unrealistic to expect that each type is completely homogenous. Within each type we anticipate that subtypes exist that reflect the specific strategic, institutional, and environmental conditions facing health systems and networks. These conditions should correspond to the governance forms employed.

 

To address these issues, we investigate two research questions in our study: (a) Do hospital-based health systems and health networks differ systematically in their governance forms? (b) Do hospital-based health systems and health networks differ systematically in their governance form as a function of system or network type?

 

Results of these comparisons will provide managers and policymakers with information on four issues. First, given the general paucity of information about health care governance in organized delivery systems, the article will provide a more empirically grounded understanding of board roles and functions in these organizations. This may balance the more anecdotal prescriptions offered by consultants in this field. Second, our results may contribute to the development of more pluralistic models of governance based on differences between hierarchical and nonhierarchical organizations. For example, because health networks are structured on voluntary rather than hierarchical principles, it cannot be assumed that models of governance common to hospitals and health systems are appropriate in health networks. Third, study results are likely to identify important sources of variation in governance forms, which in turn can serve as the basis for specifying key independent variables for future analytic studies of governance effectiveness. Finally, study results will provide leaders of health networks and systems with specific information regarding governance in their peer institutions. In other words, rather than suggesting a common approach to network and system governance, our study describes governance for specific categories of networks and systems, thus permitting more relevant comparisons of governance forms.