Health Center Board Member May Training Dave Brown

Health Center Board MemberHealth Center Board MemberTrainingTraining

May 15, 2009May 15, 2009

Mt. Pleasant, MIMt. Pleasant, MI

Presented byPresented by

David L. BrownDavid L. Brown

Beacon Consulting Group LLCBeacon Consulting Group LLC 22

AGENDAAGENDA

Why we have a Board?Why we have a Board?

What is a Board supposed to do?What is a Board supposed to do?

Safeguard the assets of the Center.Safeguard the assets of the Center.

Legal Obligations of Health Center Board Legal Obligations of Health Center Board MembersMembers


Why Have a Board?Why Have a Board?


To GovernTo Govern– Provide leadershipProvide leadership– Guide the center in doing what it was intended Guide the center in doing what it was intended

to doto do– Requires and understanding of mission, Requires and understanding of mission,

ensuring programs and services fulfill its ensuring programs and services fulfill its missionmission

– Requires providing a vision – a direction for Requires providing a vision – a direction for the organizationthe organization

– The board governs the present and plans for The board governs the present and plans for the future in a way that preserves the missionthe future in a way that preserves the mission


To Link to the CommunityTo Link to the Community– Serve as the voice of the communityServe as the voice of the community– Represents the community and its needs to Represents the community and its needs to

the center.the center.– The center was established to meet a specific The center was established to meet a specific

need – to provide primary care services to the need – to provide primary care services to the community’s medically underserved and community’s medically underserved and vulnerable residents.vulnerable residents.

It’s the boards role to represent the community in It’s the boards role to represent the community in assuring the center maintains the proper assuring the center maintains the proper management and staff necessary to provide the management and staff necessary to provide the scope of services needed for the communityscope of services needed for the community

– The board is required to promote the center The board is required to promote the center and its mission to the communityand its mission to the community


It’s RequiredIt’s Required– Incorporated and granted tax-exempt status Incorporated and granted tax-exempt status

by the State and Federal Government to fulfill by the State and Federal Government to fulfill a needa need

– A non-profit business has rules regarding how A non-profit business has rules regarding how its managedits managed

One of those is it must establish and maintain a One of those is it must establish and maintain a board to make sure it operates and does what it board to make sure it operates and does what it was set up to dowas set up to do

– Required by grant and Federal RequirementsRequired by grant and Federal Requirements


What is a Board Supposed to do?What is a Board Supposed to do?


Define and preserve the mission of the Define and preserve the mission of the organizationorganization

Everyone, including each board member, center Everyone, including each board member, center staff, executive director and the community staff, executive director and the community should understand why the center exists and should understand why the center exists and what it hopes to accomplishwhat it hopes to accomplishIt is the board’s job to continually clarify the It is the board’s job to continually clarify the mission of the center.mission of the center.Board should also understand of the goals and Board should also understand of the goals and objectives based upon the mission statement of objectives based upon the mission statement of the centerthe centerMission should be well crafted and relevantMission should be well crafted and relevantIf this done making policy will be easierIf this done making policy will be easier


Make PolicyMake Policy

Policies should ensure uniformity and Policies should ensure uniformity and consistency of action throughout the consistency of action throughout the organizationorganizationPolicies should be consistent with the mission, Policies should be consistent with the mission, goals and objectives of the center, other policies goals and objectives of the center, other policies and applicable laws and regulationsand applicable laws and regulationsWhy and when the board sets policyWhy and when the board sets policy– To initiate action to accomplish the missionTo initiate action to accomplish the mission– Response to a changing need in the Response to a changing need in the

communitycommunity– Response from a funding agencyResponse from a funding agency


Never make financial and programmatic Never make financial and programmatic decisions independently of each other!decisions independently of each other!

Boards must constantly:Boards must constantly:– Reassess prioritiesReassess priorities– Interpret and evaluate it’s policiesInterpret and evaluate it’s policies– Change, discard or create new policiesChange, discard or create new policies– This in order to meet the changing needs of:This in order to meet the changing needs of:

The CommunityThe Community

Health CenterHealth Center

Funding SourcesFunding Sources


Governing Boards of Health Centers Governing Boards of Health Centers typically have policies within one of 4 typically have policies within one of 4 categories:categories:

1.1. OperationsOperations

2.2. PersonnelPersonnel

3.3. FinancesFinances

4.4. Quality AssuranceQuality Assurance


1. Operations1. Operations

The board is responsible for the efficient, The board is responsible for the efficient, effective operation of the centereffective operation of the centerBoard should establish policies that:Board should establish policies that:– Address the process of selecting, reviewing and Address the process of selecting, reviewing and

dismissing the executive directordismissing the executive director– Provide effective organizational structureProvide effective organizational structure– Determine scope, location, and availability of servicesDetermine scope, location, and availability of services– Establish process for handling and solving patient Establish process for handling and solving patient

grievancesgrievances– Ensure the center is in compliance with all Federal, Ensure the center is in compliance with all Federal,

State and local laws and regulations that are State and local laws and regulations that are applicableapplicable


2. Personnel2. Personnel

These policies will guide the executive director in These policies will guide the executive director in developing a sound program that includes:developing a sound program that includes:– Selection and dismissal proceduresSelection and dismissal procedures– Employee compensation, including salary scales and Employee compensation, including salary scales and

benefit packagesbenefit packages– Position descriptions and classificationsPosition descriptions and classifications– Performance review and evaluations Performance review and evaluations – Employee grievance proceduresEmployee grievance procedures– Equal opportunity practicesEqual opportunity practices


3. Finance3. Finance

The board should establish policies that ensure The board should establish policies that ensure proper administration of funds and record proper administration of funds and record accurately the centers financial activitiesaccurately the centers financial activities

The board should:The board should:– Establish financial prioritiesEstablish financial priorities– Long range financial planningLong range financial planning– Review and approve the annual budget and annual Review and approve the annual budget and annual

auditaudit


Board should also ensure the creation of:Board should also ensure the creation of:– Internal control proceduresInternal control procedures

– Purchasing policies and standardsPurchasing policies and standards

– Protocols for determining eligibility for services, Protocols for determining eligibility for services, including criteria for sliding fee scheduleincluding criteria for sliding fee schedule

– A billing and collection system that:A billing and collection system that:

Establishes charges based on local prevailing Establishes charges based on local prevailing charges and cost to the centercharges and cost to the center

Sliding fee adjustment based on ability to pay and Sliding fee adjustment based on ability to pay and family sizefamily size

Bills and collections for third party payersBills and collections for third party payers

Procedures for accounts receivablesProcedures for accounts receivables

Procedures for writing off bad debtsProcedures for writing off bad debts


4. Quality Assurance4. Quality Assurance

The board is obligated to make sure the The board is obligated to make sure the executive director and staff make continuing executive director and staff make continuing efforts to maintain and improve quality of care efforts to maintain and improve quality of care that the center providesthat the center providesBoard should make sure that:Board should make sure that:– Director hires a competent, qualified Medical Director Director hires a competent, qualified Medical Director

who will supervise other clinical staffwho will supervise other clinical staff– Generally accepted principles of quality health care Generally accepted principles of quality health care

are developed and followedare developed and followed– Internal QA program provides for the periodic review Internal QA program provides for the periodic review

of the center’s performance in meeting the needs of of the center’s performance in meeting the needs of the communitythe community


Once policies are approved Once policies are approved implementation must be reviewed and implementation must be reviewed and approved by the board as wellapproved by the board as wellBoard is responsible for making sure the Board is responsible for making sure the director implements the approved policiesdirector implements the approved policies– Once implement the board must support the Once implement the board must support the

ED and staff in their effortsED and staff in their efforts

Board has the role of making policy ED Board has the role of making policy ED and staff have the job of implementingand staff have the job of implementing– It is important the board accept the ideas of It is important the board accept the ideas of

the policy from ED and staff as they have first the policy from ED and staff as they have first hand knowledge in day to day operationshand knowledge in day to day operations


Safeguard the assets of the center.Safeguard the assets of the center.


The board has placed in a position of trust The board has placed in a position of trust by the community and funding sources to by the community and funding sources to protect the center’s assets and make sure protect the center’s assets and make sure the center’s income is managed properly the center’s income is managed properly and the mission is preservedand the mission is preserved

Board is Board is FIDUCIARYFIDUCIARY responsible for the responsible for the management of the centermanagement of the center


BylawsBylawsDetailed rules about how the organization Detailed rules about how the organization will be governedwill be governed

They Should address:They Should address:– MissionMission– MembershipMembership

SizeSize

CompositionComposition

ResponsibilitiesResponsibilities

Terms of officeTerms of office

Selection/dismissal processSelection/dismissal process


CommitteesCommittees– StandingStanding– Ad-hocAd-hoc– MembershipMembership– ResponsibilityResponsibility

Meeting scheduleMeeting schedule

OfficersOfficers– SelectionSelection– Terms of officersTerms of officers– Selection/removal Selection/removal

processprocess

MinutesMinutes– RecordingRecording– StorageStorage– DistributionDistribution

Conflict of interestConflict of interest

Executive sessionExecutive session

DissolutionDissolution

IndemnityIndemnity

Acceptable meeting Acceptable meeting venuevenue

QuorumQuorum


Center FinancesCenter FinancesThe boards job is to:The boards job is to:– Make policies that clearly defineMake policies that clearly define

Sources of revenue and categories of expedituresSources of revenue and categories of expedituresProcess for adjusting to meet the actual financial situtation as Process for adjusting to meet the actual financial situtation as the year progressesthe year progresses

Leaves the details to management (as long as Leaves the details to management (as long as decisions are within board approved policy)decisions are within board approved policy)Monitor the status of income and expenditures Monitor the status of income and expenditures against budgetagainst budgetCompare the actual financial condition of the Compare the actual financial condition of the center against policies set by the boardcenter against policies set by the boardPlan for needed revenue sources and plan and Plan for needed revenue sources and plan and budget for capital improvementbudget for capital improvement


The BudgetThe Budget

Board must review and approve the annual Board must review and approve the annual budget (usually prepared by the Ed and staff)budget (usually prepared by the Ed and staff)– Approval of the budget is one of the most Approval of the budget is one of the most

important decisions the board will make as it important decisions the board will make as it sets in motion the programs, personnel and sets in motion the programs, personnel and fiscal decisions.fiscal decisions.

Should think of the budget as the center’s Should think of the budget as the center’s business planbusiness planCompare the actual to budget on a regular basisCompare the actual to budget on a regular basisIf monitored monthly will help identify problems If monitored monthly will help identify problems as they occuras they occur


Since the board is responsible for the Since the board is responsible for the center’s finances they should assure that center’s finances they should assure that at least one member has financial at least one member has financial expertise.expertise.

The board can only truly monitor the The board can only truly monitor the performance of the budget if they performance of the budget if they understand the financial statementsunderstand the financial statements

Financials should be understandable, Financials should be understandable, accurate and timelyaccurate and timely


Board should review monthlyBoard should review monthly– Fiscal status reportsFiscal status reports– Comparison of budget to actualComparison of budget to actual– Balance sheetBalance sheet– Forecast of future income and expendituresForecast of future income and expenditures– EncountersEncounters

Against budgetAgainst budget

By payerBy payer

Finance committee should review reports Finance committee should review reports before presentation to full boardbefore presentation to full board


Other Important questions to be Other Important questions to be addressed monthly:addressed monthly:

Are productivity goals being met?Are productivity goals being met?Are revenues being collected?Are revenues being collected?Is the organization making enough money Is the organization making enough money to meet expenses?to meet expenses?Are expenditures within budgeting Are expenditures within budgeting “limits”?“limits”?Are there any cash flow problems?Are there any cash flow problems?Are bills paid promptly?Are bills paid promptly?Are the accounts payable increasing?Are the accounts payable increasing?


Important questions to addressed quarterly Important questions to addressed quarterly or semi-annually:or semi-annually:

Are patient utilization goals being met?Are patient utilization goals being met?What is the profile of the client population? Demographic, What is the profile of the client population? Demographic, socio-economic, cultural?socio-economic, cultural?Have these profiles changed? If so why? What are the Have these profiles changed? If so why? What are the implications for reassessment of the service mix?implications for reassessment of the service mix?Have the operations been cost effective for the past six Have the operations been cost effective for the past six months?months?Are there some program areas that consistently generate Are there some program areas that consistently generate revenues and some program areas that run a deficit?revenues and some program areas that run a deficit?Are standards for operational performance being met and Are standards for operational performance being met and reviewed by the Board?reviewed by the Board?What additional information is needed from administration for What additional information is needed from administration for follow-up or to develop new programs and/or services?follow-up or to develop new programs and/or services?


The AuditThe Audit– Must be conducted by independent accountig firm or Must be conducted by independent accountig firm or

CPACPA– Be in accordance with GAAP and other Federal Be in accordance with GAAP and other Federal

requirementsrequirements– Firm should be changed every 3 years or at least Firm should be changed every 3 years or at least

rebid. rebid. If the same firm is retained person within the firm conducting If the same firm is retained person within the firm conducting audit should be changedaudit should be changed

– ED/CFO should meet with auditor before audit beginsED/CFO should meet with auditor before audit begins– All board members should receive a copy of final All board members should receive a copy of final

auditaudit– Must be approved by the boardMust be approved by the board


Board should watch carefully for increased Board should watch carefully for increased cost in certain areascost in certain areas– Personnel (staff salaries and benefits)Personnel (staff salaries and benefits)– Contractual servicesContractual services– Miscellaneous expense account spendingMiscellaneous expense account spending– Past due billsPast due bills

If a board member sees expenditures If a board member sees expenditures (actual) are greater than the budget it is (actual) are greater than the budget it is their responsibility to ask their responsibility to ask WHWHY?Y?

Select, Evaluate, and support Select, Evaluate, and support the CEOthe CEO

The Board hires the CEO to The Board hires the CEO to manage the day to day manage the day to day

operations. The Board is operations. The Board is responsible for making sure the responsible for making sure the CEO fulfills the requirements of CEO fulfills the requirements of

this position.this position.


Monitor and Evaluate the Center Monitor and Evaluate the Center and Boardand Board

Center:Center:– The best way to see if the Center is succeeding is to The best way to see if the Center is succeeding is to

see how it measures up to its mission.see how it measures up to its mission.

BoardBoard– Have a written policy to do annually.Have a written policy to do annually.– Focus on the strengths and weaknesses.Focus on the strengths and weaknesses.– Look at:Look at:

How well the Board meets its responsibilities.How well the Board meets its responsibilities.

Board’s interaction with CEO.Board’s interaction with CEO.

Board Member’s interaction with each other.Board Member’s interaction with each other.

Plan for the long range future Plan for the long range future of the Center:of the Center:

Strategic planning deals with Strategic planning deals with long term objectives and long term objectives and

programs for accomplishing programs for accomplishing them. The future is defined as them. The future is defined as

3 to 5 years.3 to 5 years.


Legal Obligations of Legal Obligations of Health Center Board MembersHealth Center Board Members


Health Center Board Members, Health Center Board Members, have certain fundamental legal have certain fundamental legal obligations as board members. obligations as board members. These obligations are imposed These obligations are imposed by law for the fact an individual by law for the fact an individual

serves on the board.serves on the board.


Board Members should be Board Members should be familiar with these basic legal familiar with these basic legal

obligations.obligations.

Board members can be Board members can be personally liable if those personally liable if those obligations are not metobligations are not met


Health center boards operate in Health center boards operate in a complex legal environment. a complex legal environment.

Some things are unique to Some things are unique to those who seek Section 330 those who seek Section 330 funding of the Public Health funding of the Public Health Service Act or qualify as a Service Act or qualify as a

FQHC.FQHC.


Legal difficulties faced by Board Legal difficulties faced by Board Members – and the threat of Members – and the threat of

personal liability – can be traced to personal liability – can be traced to the board’s failure to fulfill one or the board’s failure to fulfill one or

more of these basic duties.more of these basic duties.


Board members can request and Board members can request and rely on consultants (including staff rely on consultants (including staff and outside consultants) for advice and outside consultants) for advice and information, and delegate tasks and information, and delegate tasks

((but not their fiduciary obligations but not their fiduciary obligations as board membersas board members


Board members must carry out Board members must carry out certain functions required by certain functions required by

federal regulations.federal regulations.

These include, among others:These include, among others:– Approving the selection/dismissal of CEOApproving the selection/dismissal of CEO– Establish personnel policies and proceduresEstablish personnel policies and procedures– Adopt health care policies for financial Adopt health care policies for financial

management and practices.management and practices.– See 42 CFR 304(d) and PIN 98-23See 42 CFR 304(d) and PIN 98-23


Disclaimer – legal information is Disclaimer – legal information is not legal advice.not legal advice.

For legal advice consult For legal advice consult organization’s legal counselorganization’s legal counsel


The Bureau in PIN 98-23 The Bureau in PIN 98-23 requires centers to have a requires centers to have a

conflict of interest policy. This conflict of interest policy. This should cover both board and should cover both board and

staff.staff.


A conflict of interest policy should A conflict of interest policy should include issues such as:include issues such as:

Disclosure of business and personal relationships that Disclosure of business and personal relationships that create an actual or potential conflict.create an actual or potential conflict.Extent to which a board member can participate in board Extent to which a board member can participate in board decisions where the member has a personal or financial decisions where the member has a personal or financial interest.interest.Policy regarding board member to provide services to Policy regarding board member to provide services to the center.the center.Board member expense reimbursement policies.Board member expense reimbursement policies.Policy regarding acceptance of gifts and gratuities.Policy regarding acceptance of gifts and gratuities.Policy regarding personal political activities of board Policy regarding personal political activities of board members.members.Statement of consequences for violating the conflict Statement of consequences for violating the conflict policypolicy. .

Avoiding Personal LiabilityAvoiding Personal Liability

A board member who neglects his A board member who neglects his or her duties as a board member or her duties as a board member can be personally liable for the can be personally liable for the harm to the center that results harm to the center that results

from their neglectfrom their neglect


Some ways to eliminate or reduce Some ways to eliminate or reduce the risk:the risk:

Diligently fulfill obligations of officeDiligently fulfill obligations of office

Study information on issues brought Study information on issues brought before the board.before the board.

Voice your views on the issuesVoice your views on the issues

If opposed to an board action, make sure If opposed to an board action, make sure vote is recorded in the minutes.vote is recorded in the minutes.

Do your job to the best of your ability.Do your job to the best of your ability.


Claims against individual board Claims against individual board members are not common. members are not common.

Even the most diligent attention Even the most diligent attention to your duties do not guarantee to your duties do not guarantee

a lawsuit will not be fileda lawsuit will not be filed


Make sure the center is properly Make sure the center is properly protected. Some ways to do this:protected. Some ways to do this:

Make sure bylaws have the broadest Make sure bylaws have the broadest indemnification clause allowed by state indemnification clause allowed by state law.law.

Have Directors and Officers insurance.Have Directors and Officers insurance.

FTCA deemed for malpractice exposures.FTCA deemed for malpractice exposures.

Some state law’s provide legal immunity Some state law’s provide legal immunity for volunteers, such as board members for for volunteers, such as board members for non-profit organization.non-profit organization.

Corporate Compliance Corporate Compliance ProgramProgram

Federal regulations require a health Federal regulations require a health center’s board of directors to ensure center’s board of directors to ensure

that the center is operated in that the center is operated in compliance with all federal, state, and compliance with all federal, state, and

local laws and regulations.local laws and regulations.


Establishing a corporate Establishing a corporate compliance program can compliance program can

demonstrate the board has fulfilled demonstrate the board has fulfilled their “Duty of Care”. The program their “Duty of Care”. The program

assures that an adequate system of assures that an adequate system of internal control exists to ensure internal control exists to ensure

compliance with appropriate legal compliance with appropriate legal standards.standards.


Key Components of a compliance Key Components of a compliance program are:program are:

Designate a compliance officer.Designate a compliance officer.Conduct initial internal audits and evaluations looking for Conduct initial internal audits and evaluations looking for possible compliance problems.possible compliance problems.Develop policies and procedures to implement the Develop policies and procedures to implement the program.program.Train both staff and board on issuesTrain both staff and board on issuesDevelop clear lines of communication between Develop clear lines of communication between compliance personnel and staff and management.compliance personnel and staff and management.Investigate identified compliance issues and develop Investigate identified compliance issues and develop corrective actions.corrective actions.Develop and implement disciplinary standards so that all Develop and implement disciplinary standards so that all personnel understand the consequences of non-personnel understand the consequences of non-compliant behavior.compliant behavior.


The proper role of the board is to The proper role of the board is to establish the corporate compliance establish the corporate compliance

program, budget sufficient funds program, budget sufficient funds necessary to carry out required necessary to carry out required

activities, and act aggressively to activities, and act aggressively to correct any problems identified by correct any problems identified by

management team.management team.


The board should resist any The board should resist any temptation to serve as an outlet temptation to serve as an outlet for employees who want to “end for employees who want to “end run” the compliance process by run” the compliance process by

taking their individual taking their individual grievances directly to the boardgrievances directly to the board


QUESTIONS????QUESTIONS????

Health Center Board Member May Training Dave Brown

Health & Medicine

Transcript of Health Center Board Member May Training Dave Brown