What if there were a low-cost yet highly effective way to generate strategic insights for your independent medical group? If you have an empty chair at your board meetings, consider filling that seat with an experienced healthcare executive.
Typically, medical group boards consist of the physician partners and perhaps the practice's accountant or attorney. In some cases, the accountant or the attorney might have an understanding of your healthcare business environment. However, in my experience, too often even highly competent financial and legal advisers may not understand the complex dynamics of hospital systems and competition in healthcare. Your medical group faces unprecedented challenges to compete and thrive over the coming years. Having an experienced executive participate, at least quarterly, in your board meetings could add a perspective that helps you address these many challenges.
The cost could be minimal—maybe less than $3,000 per year—but the value to your practice could be immense. A seasoned senior leader can provide insightful and thoughtful commentary to your ongoing strategic discussions. Imagine having someone who understands local hospitals and medical groups bringing that expertise to bear on your group's major decisions.
It’s likely that your corporate bylaws or partnership agreement would need to be amended. This should be an easy and inexpensive change. Your attorney can amend your governance documents to recognize the possibility of adding a nonvoting member to your board. The documents could also stipulate that any candidates would need to be approved by the board. You could consider a term of one, two, or three years, though you might want an initial one-year term for evaluation purposes.
To attract a nonvoting board member, you could offer compensation of $500 per meeting plus limited expense reimbursement for up to four meetings per year. This would keep your costs low while yielding significant return on investment.
Of course, there are many caveats. Foremost, you need to locate an experienced healthcare executive who: (1) understands the physician perspective and (2) is free from conflicts of interest. This may seem like an impossible quest, but such experienced former executives are more plentiful than you would think. As hospital systems have cut costs and executive positions, and as the baby boomers reach (sometimes early) retirement ages, I have observed a national pool of underutilized senior healthcare executives.
It is important for you to assess the executive's ability to see physicians' business perspectives. Many of these executives have extensive networks of peers at local hospitals, so you'll also need to assess your trust level in the executive. A well-crafted Conflict of Interest Policy could help ensure that your practice retains confidentiality and receives unbiased advice.
Some attributes to consider when seeking a nonvoting board member:
|Work status||Retired, semiretired or consultant (no conflicts)||Hospital executive with conflicts of interest or consultant for competitors in your specialty|
|Experience||Former senior executive for an employed medical group, independent medical group or hospital system||Executive without healthcare business knowledge|
A retired physician leader who meets the criteria above could be a great add to your board. However, a physician leader who lacks "big picture" business experience would not be a good add.
It would be worthwhile to identify a sharp and experienced executive who could apply his or her knowledge to your board's discussions. If there's an empty chair at your board meetings, why not fill it with a high-powered individual—without breaking the bank.
David Cook, CPA, MBA, CMPE, David Cook has over 25 years of executive experience in healthcare and recently established ProMedicis Advisors to serve physicians and medical groups. More information on David can be found at www.promedicis.net.