Hospital Governance Structures Explained in Details

In United States, a medical institution must satisfy a set of requirements detailed by American Hospital Association in order to be recognized as hospital. One of these requirements is governing board.

Professionally, the chief of executive (CEO) is the middle link between the hospital staff and top layer where the governing body stands officially responsible for the overall arrangement of their medical services. They do not exactly oversee every aspect of the day to day business. The attributes of the governing body usually vary according to the hospital ownership types and their missions such as making profits, clarity and fulfillment of the government policies. And with that their duties in the society vary. In US, we generally have three kind of hospital ownership structures which are: for-profit, nonprofit and public. Here nonprofit and for profit are usually held as private. But it is never easy to handle each. The issues will be discussed below as we go in details about their governance structures.

Significance of what this doctor says is connected to hiring process of each type of hospital

For-profit Hospital 

Generally, for-profit hospitals are also called investor owned. They are business oriented and follow a governance structure similar to those that large private companies follow. With terms being limited, the number of people serving within the board is less than ten and they may be a group of physicians and businessmen accountable to shareholders. It is actually quite beneficial to invest on these hospitals. They tend to generate a lot of profit, allowing the investment to see greater light throughout the years. On the top of that, if these hospitals do poorly and accumulate debt, investors are not required to make any attempt to pay any portion of it. To generate fund, just like a corporation, these hospitals can offer stocks. However, they have an obligation to pay both property and income taxes. Furthermore, they are least likely to get any donation because the government does not allow it to be tax deductible for the donor.

In corporate world, services, quality improvement and location of the businesses are mostly influenced by the mission to make profit. Services that do not work are replaced or discontinued to avoid unnecessary spending and losses. Governance structure of for-profit hospitals goes by this same formula. As a matter of fact, studies show that for-profit hospitals are usually located in urban areas. The aim here is to attract the rich patients. These hospitals offer medical services that have more potential to bring in a good amount of profit, but completely stay away from those deemed financially valueless and because of this, they are more inclined to perform open heart surgery while eluding the idea of establishing trauma center within their premises.

When it comes to oversight, strategic planning and evaluation of performance, the governing boards of these investor owned hospitals score the lowest. Some experts claim it has to do with the small governing body. They say that it is not easy for a small number of people to govern every aspect of the hospital. But research reveals that mortality rate is much higher in these hospitals and this may be associated with the fact that people who suffer from complex illnesses prefer to be treated by these hospitals. As mentioned earlier, businesses focus heavily on profitable services and prefer to improve their quality to attract loyal customers. It seems that this factor is not fully compatible with an organization like hospital. In fact, it backfires in the form of bad reputation.

Certainly, there is nothing wrong in offering treatment for complex illnesses. But by rejecting financially valueless treatments, they take the road to irrationality. The problem is that cures for all kinds of illnesses have yet to be found. So by choosing to offer treatments just for those that have no cure they are attracting only those patients who will not live longer. This actually brings in another negative effect. Businesses focus on profit and quality to get loyal customers. For-profit hospital is known for quality also. However, attracting only terminally ill patients means they fail to garner loyal customers.

For-profit hospitals are notorious for dishonesty. They have been caught more than others with upcoding activities. The meaning of it is that they create fraudulent bills by falsely increasing the prices of their services.

Examples of for-profit hospitals are:
Providence Memorial Hospital (El Paso, Texas)
Saint David's Medical Center (Austin, Texas)
Summerlin Hospital Medical Center (Las Vegas, Nevada)

Nonprofit Hospital 

There are at least two types of nonprofit hospitals. While one is faith based and has mostly church members as directors in the board, the other is run by influential community members or physicians. There is no limit in how many years they can serve. The board consists of more than 10 directors. The aim of nonprofit hospitals is to provide care instead of maximizing profits to be distributed among different investors. Just like for-profit hospitals, they rely on fees paid by the patients. They are extremely good at attracting donations and when needed they can issue tax-exempt bonds. In terms of active duty related to strategic planning, evaluation and oversight, the governing body of these nonprofit hospitals scores the highest. Technically, the directors are more focused on providing value to the community, gaining respect from the governments.

Now what makes these hospitals different from the for-profit is that they do not require paying taxes. The prices of their services are usually lower and sometimes they may even see patients for free. This is one reason why they are known as charitable. They offer a wide range of treatments and have enormous amount of facilities. Studies reveal that they do not only get more patients because of this, but also are heavily challenged by their for-profit rivals and as a result of this, they are now forced to accepting the corporate models. Majority have already done so.

One of the biggest issues of these hospitals is that their governing body is usually overworked. Plenty of reasons are associated with this. First of all, because of the enormous amount of facilities, they need to hire a huge number of professionals. Secondly, since many patients are entering and leaving, the hospitals are always busy. Third, the governing boards consisting of priests are often subjected to criticism coming from scholars. It is thought that since they do not have experience in medical, they cannot make practical decisions. This is connected to these priest mission of providing the value for people through discounted and free treatments. Problem is that healthcare services are expensive. Being overly lenient here means making the hospital financially challenged.

In past studies, this is what often appeared in the conclusion. Nonprofit hospitals used to face a huge amount of financial issues. But at recent time, due to accepting the corporate model, they are making more profit than the investor owned hospitals. This has created another issue. Many critics are now urging the government to take taxes from these hospitals.

The pie chart does prove that government is losing a lot by not taxing the nonprofit hospitals
Some examples of nonprofit hospitals are:
Kaiser Foundation Hospitals (8 states have it)
Shriners Hospitals for Children (Found all across US)
St Rose (Hayward, California)
Washington (Fremont, California)

Public Hospitals 

There is no general way to describe their governing structure. The reason behind this is that there are many different kinds of public hospitals under separate control of different governments. This creates difference in how they are run. Their governing bodies may include third party contractors, local government or public university officials. They usually receive funds from both federal and state governments which they use to provide free medical services to underprivileged population. They can issue bonds to raise money. In many situations, they have the right to bill the patients. It all depends on whether they are treating those with good jobs and salaries. Public hospitals are favorites of uninsured group. Studies show that during economic crisis, these hospitals are more prone to falling under worst setbacks. This is comprehensible in the sense that they depend largely on government fund. The fee they charge sometimes cannot be taken as enough and also its effect is overridden by the free medical services given to underprivileged patients. 

One big issue surrounding the governing structure of public hospitals with the exception for those under the control of universities is slowness in taking decisions and this is said to be connected to promotion of transparency and government policies designed to prevent the directors from abusing their power. Their meetings are usually recorded. There maybe a camera in the room or the transcript is made available. This is what leaves the directors in discomfort. They fear talking openly.

Examples of public hospitals are:
Monroe Community Hospital (Rochester, New York)
Carolinas Medical Center (Charlotte, North Carolina)
Parkland Hospital (Dallas, Texas)

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