Three new governance surveys prepared by outside consultants and released in October offer particular lessons to boards of sophisticated nonprofit health systems on a broad variety of commitment, service, performance and other relevant governance topics.

For example, a new survey by the national accounting firm BDO USA indicates that a substantial number of director/respondents supported specific, stringent limits (e.g., less than five) on the total number of outside company boards on which a director may serve. In addition, a separate survey published with a group associated with Spencer Stuart reported a substantial gap between the oversight expectations placed on corporate governance, and the actual ability of a board to exercise oversight over the organization. Other relevant results from the Spencer Stuart survey included an acknowledgment of the increasing preparation requirements being placed on board members, and the value of recruiting director candidates with strategy experience.

The annual Corporate Directors Survey from the consulting firm PwC identified several governance trends of relevance to health systems, including the need to identify and “call out” underperforming directors; the need to expand the pool of director candidates to include qualified candidates at levels below the executive suite; the value of moving beyond the recommendations of fellow board members as the primary source of identifying potential director candidates; a gender-based “disconnect” between male and female board members on the value of board diversity; a lack of concern with increasing director workload; and an interest in spending more director time and attention in (and avoiding complacency with respect to) CEO succession planning.

Many of the leading director surveys reflect data gleaned from public company directors, whose experiences can be substantially different from those of nonprofit directors. However, given the increasing size, scope and complexity of the nonprofit health system, the instances in which there is consistency of experience are becoming much more common. For that reason, the leading results of these three surveys may be worthy of note by the health system governance committee.

Corporate Law and Governance Update

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