The five critical areas for effective governance of not-for-profit hospitals

The pressures on hospitals continue to mount. Voluntary boards increasingly are nervous, making management's tasks all the more difficult. We believe the environment demands a new approach to the process of not-for-profit institutional governance. The volunteer board model has worked very well, but it must be adapted to the changed environment. There must be a direct link between the function of institutional governance and the priorities identified through the strategic planning process. It is our observation that truly effective boards have the following areas clearly in focus within the board and between the board and management: (1) a common working definition of "governance"; (2) a clearly defined mission with specific goals and objectives; (3) a well-planned decision-making process; (4) a board structure tailored to the priorities at hand; and (5) an information, reporting, and communication system that keeps the priorities clearly in focus. This article explores these factors and suggests ways to link the board's work directly to the strategic plan.