Evolving Accountability of Nonprofit Health System Boards


More than 17 percent of the United States’ gross domestic product currently is devoted to health care, far more than other industrialized countries for which the median figure is less than 10 percent. Health care expenditures per capita in the U.S. are about $8,000 per year, more than twice the median figure for other industrialized nations (Commonwealth Fund, May, 2012). However, despite our large and growing investment of resources, the U.S. lags behind on many indicators of population health such as infant mortality and life expectancy, and there is abundant evidence of wide disparities in access, cost, and quality of health care services (Wennberg, 2010).

While a broad array of factors—economic, environmental, lifestyle, political, and social— contribute to this vexing paradox, much attention is being focused on the performance of non-governmental, nonprofit health systems, which are growing in numbers and provide a large proportion of all inpatient and outpatient services. Nonprofit hospitals and health systems in the private sector are regulated and/or influenced by local, state, and federal government requirements, accrediting commissions, bond rating agencies, payers, and many other external parties. Governing boards, with the assistance of their management teams, are responsible for staying abreast of this complex web of ever-changing expectations and overseeing enterprise-wide compliance with them.

As the number and size of health systems continue to grow, an increasing share of overall governance responsibility is coming to rest with the system or parent boards of these health systems. According to the American Hospital Association, more than 60 percent of our nation’s community hospitals (3,007 of 4,973) are part of non-governmental, nonprofit health systems, and the proportion is growing steadily (American Hospital Association, AHA Hospital Statistics, 2012).

Moreover, an increasing share of physicians are employed or contractually integrated into systems, adding a new dimension to their complexity. According to a recent study by Accenture, Inc., the proportion of physicians in independent practice decreased from 57 percent in 2000 to 39 percent in 2012; and this trend is expected to continue (Creswell and Abelson, November 30, 2012). We are in an era where government, the media, and society at-large are scrutinizing all nonprofit organizations more closely. In such an environment, governing and managing large, complex health care organizations poses many challenges and requires high levels of expertise. It also demands greater performance transparency, a clear understanding of accountability at all levels, and specific mechanisms for demonstrating how accountabilities are being fulfilled.

This monograph addresses the multiple accountabilities of nonprofit health system boards for the cost, quality, and safety of the services their facilities provide, the manner in which these accountabilities are being fulfilled, and issues we believe warrant attention by system leadership in order to retain and build public confidence, respect, and trust.

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