COVID-19 pandemic could result in permanent governance changes at hospitals

Elvera Bartels

The COVID-19 coronavirus pandemic will undoubtedly result in some permanent societal changes — such as the potential rise in the popularity of video conferencing. But the healthcare industry itself will also likely see permanent change in the way governance is handled, especially the purchasing authority given to healthcare CEOs.

Bill Horton, co-chair of the national Healthcare Industry Team at law firm Jones Walker, and former general counsel for one of the nation’s largest publicly-traded healthcare providers, said the pandemic has created some unique governance challenges.

One thing he’s noticed is that a lot of hospitals have large, often community-based boards that are not necessarily accustomed to switching gears and operating in crisis mode. They’re simply not well-equipped to do it, and have scrambled to implement fixes, such as meeting more often and holding meetings virtually — practices to which they’re not accustomed.

“We’ve got to look at what kind of systems we need to have to respond as a board, and make sure we have taken appropriate action to empower the CEO, COO and other leaders,” said Horton. “One of the things this may mean long-term is sort of a renewed effort to make sure hospital boards are really given an opportunity to understand the challenges facing their hospital on a more granular basis, so they’re in a position to respond quickly and make appropriate decisions.”

There is now an impetus to ensure that hospital boards are organized and systems are in place that keep them informed on a more contemporaneous basis.

One area ripe for re-examination is the level of spending authority granted to the CEO. Typically, CEOs can enter into contracts involving X amount of money without coming back to the board for approval. This situation has been complicated by hospitals’ ongoing struggles obtaining personal protective equipment and testing kits, which has resulted in providers bidding against each other in the market.

In response, some hospitals have been passing emergency resolutions approving more spending for their CEOs.

“If the CEO has a chance to grab a bunch of PPE that we need, we don’t want them having to come back to the board and be given that authority 48 hours later, when the opportunity might already have passed,” Horton said.

There was a trend for a while, he said, for hospitals and health systems to concentrate a lot of their boards’ power in an executive committee, which created some concern as to whether this was too much authority to delegate to a small group of trustees and directors. Because of that, many in the industry have moved away from that model to a degree.

It may make more sense, said Horton, to establish a kind of emergency committee to do things like streamline approval processes during situations such as COVID-19 — though, like many in the industry these days, those who are pursuing such measures are basically flying by the seats of their collective pants.

TIMES, THEY ARE A-CHANGIN’

Whatever changes there may be, there’s a good chance many become permanent.

“In any setting, it’s harder to turn back the clock and reduce the amount of authority or power someone has been given,” Horton said. “So some of this could be sticky. One thing I expect, when we look back at what worked and what didn’t, is perhaps hospital boards and executives will say, ‘What does this tell us about our normal operations? What processes can we put in place that can help us respond proactively and quickly so we’re well-positioned to deal with an emergency?'”

One thing he expects is that hospital executives will have to figure out most of this on their own, rather than relying on federal intervention.

“One of the things that has become clear is there’s a tendency to rely on the government to intervene and force a cooperative system,” he said. “But we’ve seen in this situation there are limits to how quickly the government can react, what they can do, and there’s a greater premium on any healthcare organization to having some sort of plan as to how it’s going to react independently when there’s not a comprehensive crisis management strategy in place.”

The way things play out will be different across disparate organizations. Horton does direct work with physician practices, and virtually all of them have struggled with what to do with their employees and physicians. Many primary care practices are seeing a downturn in their business because regular patients who believe they’ve been exposed to COVID-19 don’t want to come in for things they’d normally visit the practice to address.

Those practices have had to make cutbacks or furlough workers in some cases, and many have had to reduce the compensation they pay physicians because they don’t have enough revenue coming in. Some have taken advantage of the government’s loosened restrictions around telehealth, but that has been largely dependent on the specific dynamics of the practice, including patient profile and organizational culture.

So while there are some common themes, every organization has to make decisions based on its own structure and dynamics.

Either way, some changes will likely be permanent, while others may revert to the way things were before. There are a lot of temporary waivers and other measures that have been adopted under the aegis of the national emergency declaration, but when the declaration goes away, those things will change back to the former status quo unless there’s a formal rulemaking process to change them in a more lasting way.

Horton hopes that changes to the way telehealth is practiced and administered stick around after the coronavirus has gone.

“Telehealth is giving us an opportunity to see how much it can expand access to care,” he said. “I hope we won’t go back to business as usual in that regard, because we’re seeing that it would be beneficial even in a normal circumstance, where access to care is one of our biggest problems. If we go back to the way things worked before and don’t learn some lessons from this, we set ourselves up to repeat the process next time there’s a health emergency like this.”

Twitter: @JELagasse

Email the writer: [email protected]

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