Introduction
Have you ever wondered how not-for-profit (hereafter referred to as NFP) faith-based healthcare organizations are governed? How those organizations are able to charge “the going rate” for services? Do you sometimes wonder if Christians with good intentions can intentionally ignore money idolizing and the lure of power? Have you seen hospital board members and leader- ship display surprising levels of consumer excess? Can the mindset of “how can we serve those in need” be replaced with “what’s in it for me?” Is it possible for leaders with good intentions to make self-serving decisions? In the midst of it all, what role does governance play? While this article is primarily focused on governance issues of NFP healthcare organizations in the United States, the issues addressed have broad application to governing boards and leadership beyond healthcare.
As a registered nurse, licensed in both Canada and the United States, I am often asked about the differences between Canadian and American health-care. Canadian healthcare is a publicly funded system with oversight from provincial and territorial governments where “all Canadian residents have reasonable access to medically necessary hospital and physician service without paying out-of-pocket” (Government of Canada, 2023, para. 1). After considering that “everyone is in,” and the critical fact that care delivery and information accessibility span the country, perhaps governance is one of the biggest differences between the two countries. The Canadian government is “responsible for the management, organization and delivery of health care services” (Government of Canada, 2023, para. 3). Healthcare in Canada is a basic human right.
The American healthcare system is one of the most complex and ever-changing in the entire world (ISPOR, 2023). It’s made up of “intertwining relationships between providers, payers, and patients receiving care” (ISPOR, 2023, para. 1). There is no universal healthcare converge, although Medicare and Medicaid publicly financed government programs coexist with privately funded coverage (ISPOR, 2023; National Institute of Health, 1992).
Governance of healthcare delivery varies widely, reflecting policies, by-laws, designation of healthcare institutions, and goals and preferences of healthcare entities. The 2022 American Hospital Association (AHA) survey of hospital boards reports some improvements in board diversity and engagement (AHA, 2023). However, the same report also lists lingering board deficits, including no board term limits, low turnover, and no continuing education requirements (AHA, 2023). What is clear is that hospital boards come in different forms, with differing missions, goals, and scopes of authority. However, all boards are responsible for oversight and are accountable to the communities and healthcare system they serve (AHA, 2023).
Many religious denominations operate healthcare facilities around the world with a mission focus on meeting the healthcare and medical needs of the most vulnerable in a Christ-centered way. The global Seventh-day Adventist Church is no exception, with six medical schools, 70 nursing schools, and 650 hospitals, dispensaries, and clinics. These denominational entities are all considered NFP and employ over 250,000 professionals. “Over 19 million outpatients and 1.5 million inpatients are served each year. Charity healthcare to the value of over 1.1 billion US dollars is extended to various communities worldwide annually” (General Conference Adventist Health Ministries, 2024, para. 9).
Within the context of organized denominational healthcare, the responsibility of ethical and moral governance includes faith integration into every aspect of the organization’s operations. And yet, societal pressures, status issues, modern funding models, consumerism, and the profit potential of healthcare may easily corrupt a mission-minded board and healthcare leadership. Respect for prudent governance can easily give way when opportunity for financial gain is within arm’s reach.
Within the Adventist denomination, Ellen White speaks powerfully about healthcare and the administration of healthcare institutions. In Testimonies for the Church, she states,
The Lord years ago gave me special light in regard to the establishment of a health institution where the sick could be treated on altogether different lines from those followed in any other institution in our world. It was to be founded and conducted upon Bible principles, as the Lord’s instrumentality, and it was to be in His hands one of the most effective agencies for giving light to the world. It was God’s purpose that it should stand forth with scientific ability, with moral and spiritual power, and as a faithful sentinel of reform in all its bearings. (White, 1901, p. 223)
It is within this context, as the Lord’s instrumentality, that governance and fiduciary responsibility of Adventist NFP healthcare is explored. Board leadership, Adventist missional alignment, board member responsibilities, board challenges, best practices, and Christ’s medical ministry will be examined.
NFP Governance 101—Board Responsibilities
NFP healthcare organizations are charged with a fiduciary responsibility to their communities, and hospital boards are “expected to hold hospital assets in trust for the community and to manage those assets for the benefit of the community” (Alexander, Lee, Wang, & Margolin, 2009, p. 181). Boards are responsible for assessment, evaluation, oversight, and alignment to organizational and management performance—in a manner that aligns with the strategy and mission of the organization (Alexander et al., 2009; Lee, Alexander, Wang, Margolin, & Combes, 2008). In addition, NFPs must intentionally make efforts to develop external relations by specifically focusing on meeting their local community health needs (Alexander et al., 2009; Lee, Chen, & Weiner, 2004).
Healthcare in the United States is unique to other developed countries, but in spite of that, the United States has been a partner in global organization and discussions of government policy to promote well-being of members of their society (Department for Professional Employees, 2016). In 1961, twenty countries, including the United States, created the Organization for Economic Co-Operation and Development (OECD). Today OECD boasts membership of over 50 industrialized and emerging economy countries (Ditzel, Strach, & Pirozek, 2006; OECD, 2019a). The goal of OECD countries is to “make tangible improvements to the lives of their citizens” (OECD, 2019b, p. 1).
Adventist healthcare across the United States is set up as NFP organizations. An NFP is an organization that does not earn profits for its owners. All the money earned by the organization is used to pursue the organization’s objectives and operational costs (Kenton, 2023). Healthcare within the United States is not a uniform system; rather it is provided through Medicaid, Medicare, private for-profit organizations, and NFPs. As a result, the United States spends significantly more on healthcare than other OECD countries (16.4% gross domestic profit [GDP], versus other OECD countries at an average of 8.9% GDP) (Department of Professional Employees, 2016). Even so, healthcare ranks among the largest public sectors in OECD countries (Ditzel et al., 2006). In this environment, Adventist healthcare organizations continue to maintain a missional presence in a very expensive industry.
Regulated policy and procedure of governance can collide with the uniquely Adventist worldview in the practice of missional healthcare delivery. Governance boards have a solemn task of guarding the mission of Adventist healthcare. Mission-true board members understand their top priority is to be keepers of the organization’s mission (Greer & Horst, 2015). “Board members set policy, guide strategy, and manage the senior executive. They govern the organization. But even more they protect the mission. Board members are guardians” (Greer & Horst, 2015, p. 79). They bear a great responsibility. Collectively they are responsible for defining organizational mission and objectives, measures of success, and oversight provision (Oss, 2003).
In faith-based NFP organizations, the board creates the tone and protects the mission from many potential threats opposing it (Greer & Horst, 2015). Boards “play the pivotal role in governance as they help to ensure that man- agement achieves the stated community or non-profit goals and objectives, as well as long term survival” of the organization (Langabeer & Galeener, 2008, p. 22).
One of the biggest jobs of the board of a faith-based board is making difficult, often financially compromising decisions in order to maintain the mission of the organization. In an environment where nearly 10% of hospitals nationwide are near bankruptcy levels of distress, many boards are unwilling to do so, resulting in potential mission drift of the organization (Greer & Horst, 2015; Langabeer & Galeener, 2008). While organizations regularly wrestle with budgets, regulations, mergers, acquisitions, and collaborations (Oss, 2003), their key responsibilities are in governance, specifically over-sight and monitoring NFP activities (Alexander et al., 2009).
Healthcare boards have several additional roles in governance. These include determining mission, vision, and objectives; ensuring reasonable return for shareholders; and approving the organization’s strategic plan, objectives, and resource allocation (Alexander et al., 2009; Lee et al., 2004; Oss, 2003). In addition, the board selects the CEO and provides support and guidance. It assures compliance with regulatory requirements and established broad policies to tether mission and strategy (Alexander et al., 2009; Kuhlmann, Rangnitt, & Knorring, 2016; Langabeer & Galeener, 2008; Oss, 2003).
Board Challenges
NFP healthcare organizations face many challenges, from vastly different efforts in impacting missions, strategy, performance evaluation and oversight, and building external relationships, to feelings of ambiguity and frustration over complex, seemingly arbitrary regulatory frameworks (Lee et al., 2008; Mekel, 2010). This frustration can decrease organizational energy and innovation and create apathy within the governing board (Mekel, 2010). Faith-based organizations do not often have endless supplies or revenue, and this is also true of NFP healthcare organizations. Boards must be mission sure in order to maintain organizational strength and focus. The faith-based organization exhibits its core values only as long as the faith component is central to everything the organization does. This includes whom the organization received funds from and how they choose to conduct business (Oss, 2003).
Finding the balance between organizational oversight and micromanagement (Oss, 2003), NFP healthcare organizations have an increased call for transparency and good governance in the corporate world. And yet, the watchdog organization SustainAbility reports that credible governance structures, accountability, and transparency are sometimes concerning issues found in these very organizations (Mueller, 2007). Often, NFP healthcare boards lack significant participation in key strategic decisions (Langabeer & Galeener, 2008; Lee et al., 2008). Relatively invisible boards result in passive governance at best. In addition, many NFPs do not have ethics committees who address the ethics issues of their business practices and corporate culture (Hurtle, Walz, Zucker, & Boyle, 2017). Ethical decision-making should be a priority in faith-based organizations. This ethical decision-making faith-centric focus should be incorporated into financial decisions, facilities planning, human resources, and all other aspects of healthcare (Hurtle et al., 2017).
Additional board challenges are clarifying authority distinction between the CEO and the board (Oss, 2003), oversight of the organization’s top executive (Alexander et al., 2009; Lee et al., 2008), and managing the composition of the board (Oss, 2003).
Best Practices of the NFP Board
Best practices of a board can significantly augment NFP healthcare organizations (Langabeer & Galeener, 2008). One best practice is to educate board members about the business through modifications to the format of board meetings. A board should receive the information necessary to do its job while reducing department presentations to the essentials. Creating a knowledge-sharing culture involves establishing knowledge leaders who exhibit organizational ideals, beliefs, and principles (Lehman, 2017).
In addition, board members should be able to disagree within a safe environment, using generative questions that encourage detailed discussion. Strategies for effective board communication include being well-informed. The best understanding and dialogue happen when communication is relevant, accurate, authoritative, and useful (Smith, 2005). This is especially true when it comes to policy and application. The ability to discuss in a civil, informed way requires all members to do due diligence specific to policies, procedures, and resolutions prior to attending boards. And finally, it is important to remember this principle: the board governs and the CEO manages (Oss, 2003; Rhode & Packel, 2011). This distinction is critical. Good manage- ment can be defined as coping with complexities and doing things the right way, while good leadership is doing the right thing and coping with change (Kotter & Rathgeber, 2016a, 2016b; Rhode & Packel, 2011).
The healthcare organization’s board can have high impact on the organization. At their best, NFP boards should balance efforts on three things: mission and strategy, performance evaluation and oversight, and building external relationships (Lee et al., 2008). NFP organizational boards should challenge assumptions, sharpen, and focus the organization (Greer & Horst, 2015). The best boards are highly involved, participatory, and visible, increasing both board function and organizational performance (Langabeer & Galeener, 2008). They adopt key quality and performance metrics, develop robust succession planning for executive positions, and ensure the vision continues to focus on achieving goals and objectives (Langabeer & Galeener, 2008).
Lastly, good boards help community hospitals demonstrate accountability to the local communities in a tangible way (Lee et al., 2004). It is this particular aspect of boards that may most motivate Adventist NFP boards specific to mission and ministry to the community. The “why” of the board’s existence is both organizational and biblical. The faith-based healthcare organization is built on Christ’s example. Jeremiah 33:6 says, “Nevertheless, I will bring health and healing to it; I will heal my people and will let them enjoy abundant peace and security” (NIV). Philippians 4:19 says, “And my God will meet all your needs according to the riches of His glory in Christ Jesus” (NIV). And finally, Revelation 21:4 presents the hope that Christians everywhere can share with others: “He will wipe every tear from their eyes. There will be no more death or mourning or crying or pain, for the old order of things has passed away” (NIV). The biblical foundation of faith-based health care organizations is critical to unshakable institutional governance.
Consistent governance should result in a financially stronger organization. Board governance using up-to-date industry best practices help protect NFP healthcare agencies from scandals (Barr, 2004). When considering faith-based healthcare organizations, it can be seen as simply setting a good example. Organizations can also choose to self-impose regulation to strengthen their function and reputation. Implementation of such acts as the Sarbanes-Oxley Act of 2002, known as the “Public Company Accounting Reform and Investor Protection Act & Corporate and Auditing Accountability, Responsibility, and Transparency Act” (to help protect investors from fraudulent financial reporting by corporations), can add significant annual costs to an organization; however, they have been proven to result in stronger non-profit healthcare entities (Barr, 2004). Momentum from industry, ratings agencies, bond insurers, state attorneys general, state legislators, the Internal Revenue Service (IRS), and Congress all provide reason for a proactive, protective approach to healthcare organizational governance (Barr, 2004).
The gap in NFP board governance does not appear to be in theory, regulatory frameworks, or expectations but rather in deployment. This is where Adventist healthcare organizations can either excel or fall short in board oversight and influence. Consideration of the profound fiduciary responsibility of board members is both humbling and potentially exceedingly frightening, given the vastness of what is expected from a high-functioning board.
Key Take-Aways
Faith-based Adventist NFP healthcare boards should act as guardians of the institution. Their fiduciary responsibility reflects both their theistic worldview and their mission to humankind. By-laws and legal structures should be agreed upon and followed in order to uphold the uniquely Adventist mission of the organization. Missional alignment is key. Transparency and compliance are critical within the NFP board. In some cases, where the lines of preference versus duty are blurred, these requirements can annoy and disrupt NFP board chairs and members. However, compliance is necessary.
It may be that NFP Adventist healthcare governance may currently reflect Adventist organizational governance in general, focused on reporting more than decision-making. Adventist boards are often minimally interactive, having made decisions prior to reporting to the board. Board members are reduced to listening to members with little input. This has the potential of limiting the practice and depth of responsivity they have in guarding and guiding the organization. Listening NFP boards can easily become complicit, assuming all is well. However, NFP Adventist healthcare boards cannot assume all is well; too much can go wrong very quickly.
NFP Adventist healthcare boards hold the opportunity to spread Christ’s love within the by-laws and activities of the board. They carry a heavy responsibility in ensuring financial prudency of both care delivery and personnel expenditures associated with the NFP Adventist healthcare entity and its leadership. They may not be able to make decisions based on reports alone; rather they need to engage in dialogue with NFP representatives in order to do the right thing. Board excellence reflects adequate organizational information and the desire and courage to make hard decisions. Above all, boards must practice what they preach; behavior misaligned with mission is highly observable, and it discounts everything the board says they stand for.
Adventist healthcare NFPs, along with other faith-based healthcare NFPs, are the hands and feet of Christ’s mission on earth. It is the gravity of that responsibility that should set the governance tone for healthcare boards and leadership. Adventist author Ellen White counsels,
No line is to be drawn between the genuine medical missionary work and the gospel ministry. These two must blend. They are not to stand apart as separate lines of work. They are to be joined in an inseparable union, even as the hand is joined to the body.” (White, 1932, p. 250)
She also writes,
Let every means be devised to bring about the saving of souls in our medical institutions. This is our work. If the spiritual work is left undone, there is no necessity of calling upon our people to build these institutions. (White, 1932, p. 191)
Lastly, Proverbs 3:7 reminds us of the cornerstone of fiduciary responsibility: “Do not be wise in your own eyes; fear the Lord, and turn away from evil” (NRSV). Christ’s goodness and justice are guardrails for NFP healthcare governance. The highest duty is to Him.
Sharon Aka, PhD, MSN, RN, is currently an associate professor in the graduate program in the School of Leadership at Andrews University. She is also a virtual global events consultant with the General Conference of Seventh-day Adventists. Prior to her current role, Dr. Aka worked as the director of governance for a not-for-profit Adventist healthcare network in the United States.
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