Is it time to downsize the governance board?

About a quarter of surveyed board members and CEOs say their boards are bloated, too large to be efficient, according to a new study from the Commonwealth Center for Governance Studies.

Researchers asked 14 large nonprofit health systems, including Mayo Clinic in Rochester, Minn., Sutter Health in Sacramento and Banner Health in Phoenix, about how effective their boards are.

They found that there's virtually no interest from either CEOs or board members to expand the size of the board. Together, 24 percent of CEOs and board members felt their boards were too large, with several boards considering downsizing. Sixty-five percent thought the size was just right.

"Very small or very large governing boards may not adequately serve the needs of the organization," one leader wrote in the survey. "Small boards run the risk of not representing a sufficiently broad public interest and of lacking the required skills and other resources required to effectively govern the organization. On the other hand, very large boards may have a more difficult time getting down to business and making decisions."

All the hospital systems surveyed said they place limits on the number of voting members, although that number varies among individual organizations. The report noted that there's no clear answer as to how large a board should be. Nevertheless, the Health Research and Educational Trust and the Center for Healthcare Governance's Blue Ribbon Panel recommend nine to 17 voting members, which most of the 14 systems comply with, at a median size of 15. However, one board has as many as 60 members as the outlier.

Aside from the requirements from the Internal Revenue Service, The Joint Commission and other state statutes, governance is usually left up to the individual health system, leaving room for universal standards to be developed.

Most surveyed systems (79 percent) limit terms, incorporated into bylaws and policies, compared to the 64 percent of the nation's hospitals that have term limits. It's often a three-year term with a limit of three consecutive terms for a maximum of nine years on the board, the report noted.

Overall, many CEOs and board members (63 percent) agreed that board committees are organized and effective but more than a third noted there's plenty of room for improvement. Eighty-two percent of CEOs and board members felt the executive committee was somewhat important to the overall effectiveness, and 18 percent saw it as very important; no one said the executive committee was not important.

For more information:
- check out the governance report (registration required)

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