Governance is an essential element of any modern business or organization. It may be defined as a specific framework that is in control of and responsible for all processes that take place in an organization. In most industries, administration plays a significant role in the process of decision-making and direct management, which is closely linked with achieving organizational objectives and fulfilling its purpose. The healthcare industry is not an exception as it relies considerably on governance and depends on its effectiveness on different levels. However, management in the healthcare industry has some unique features that distinguish it from other industries.
The Importance of Governance in Healthcare
As already mentioned, governance is an inseparable part of the healthcare system as it provides valuable decisions and maintains their implementation. In the healthcare industry, the administration is responsible for its usual functions such as human resource management, financial management, social activity, and administration. There are also some other functions of governance, which significantly benefit the healthcare system if implemented properly. According to some sources, there are three main dimensions in which control is conducted, including policy making, decision making, and oversight (Arnwine, 2002). The development of efficient policies is vital in terms of improving the performance of a medical facility. Proper policies may prevent emergencies and accidents or provide sufficient frameworks to handle such events. Rational decision-making is another essential element that contributes to the successful operation of the organization. Oversight is one of the most important functions of governance implemented by boards. Proper oversight provides sufficient information required for both policy and decision-making, which contributes to the improvement of the organization’s workflow.
Non-profit and For-profit Organizations
In most aspects, governance utilizes similar methods and approaches in both non-profit and for-profit organizations. However, there are some fundamental differences between the structure and purposes of these two types of organizations, which influence the methodology of administration. The most distinct difference is closely related to the purpose differences. For-profit organizations aim at accumulating as much value as possible for the benefit of their shareholders, and hence the governance in these facilities pursues a similar goal (Price, 2018). In contrast, non-profit entities pursue charitable goals and their approach to management views serving society as a primary objective. Moreover, some sources state that governance in non-profit organizations focuses more on community relationships (Arnwine, 2002). Finally, in most cases, for-profit organizations have more resources, and hence higher staff turnover rates, including board members.
Three Governance Models in Practice
There is a wide variety of governance models, which focus on diverse aspects and choose distinct directions. In some cases, the differences or adjustments are minor, whereas, in others, there are significant distinguishing features. According to Macnamara (2005), there are five most commonly identified governance models. These models include traditional, cortex, consensus, and competency models. Each of these models has its strengths and weaknesses, and they should be implemented following the circumstances. It may be highly beneficial to adjust the chosen model and combine it with other models to address the environment better.
The traditional or structural model is one of the oldest on the list, yet some of its principles may still be utilized in modern practice. The model views the board as a legal representative and even the body corporate related to the facility. In this model, the board has most of the decision power, whereas board members may provide ideas yet cannot influence the final decision. Therefore, the model faces several significant issues, such as a lack of accountability mechanisms and the interference of operating committees with board committees.
In contrast, the consensus model, which is also widely implemented, views all members of the board as equal participants in the decision-making process. Moreover, the model acknowledges the difference in areas of expertise of board members, adjusting the decisions following the credibility of a member in a specific field. The model relies on contributions from all members and hence may provide high governance efficiency. However, it may be problematic to handle differences of opinion and propose final decisions regarding controversial issues.
The competency model focuses on improving the performance of both the board and board members. Hence, it is designed to test the skill set of board members to identify if they have sufficient knowledge and abilities. The model is particularly effective during the early stages of recruiting and training. Nonetheless, it does not sufficiently address strategic management, monitoring, and policy development. Therefore, it may be necessary to combine several models to optimize governance.
The Healthcare system in general and medical facilities, in particular, may not operate effectively without appropriate administration. Governance plays a central role in healthcare as it provides sufficient resources and frameworks for both decision and policy-making. Moreover, rational management is vital for healthcare organizations regardless of whether them being non-profit or for-profit. A relatively big number of diverse models allows for adjusting governance following internal and external environments accurately. Conclusively, a combination of rational governance with an appropriate board structure may significantly improve the performance of healthcare organizations.
Arnwine, D. L. (2002). Effective governance: The roles and responsibilities of board members. Baylor University Medical Center Proceedings, 15(1), 19–22. Web.
Macnamara, D. (2005). Models of Corporate / Board Governance . Banff Executive Leadership. Web.
Price, N. (2018). Corporate governance structures in the nonprofit realm. BoardEffect. Web.