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Expansion of ECH board deemed matter of "survival"

Members of the El Camino Healthcare District Board of Directors agreed last week to restructure the El Camino Hospital board to add two new appointed members, retain all five elected district members and strip the hospital CEO of voting power.

The decision, creating an 11-member board, was a compromise balancing the need for experts to address increasingly complex hospital issues with preserving publicly elected representation at the public hospital.

District board members and speakers debated among three hospital board governance options at a well-attended May 15 meeting that was occasionally tense and often philosophical.

Models A, B and C

Board members Dennis Chiu and Julia Miller, as well as most of the speakers, favored Model A, which retained the current setup of five elected and three appointed members.

A few speakers, as well as district board members Dave Reeder and Peter Fung, M.D., favored Model C, which called for five appointed members but reduced elected members to three.

Board member John Zoglin, however, thought Model C “went too far” in its dilution of elected board members. He opted for Model B, which the other board members ultimately embraced as a compromise alternative.

Miller, who cited conflict-of-interest concerns, advocated for a nonvoting role for the CEO. Despite others’ fears that the move would dissuade CEO candidates from applying – the district is still searching for a successor to previous CEO Tomi Ryba – the board unanimously adopted Model B, with the CEO given a nonvoting role.

“It was a good decision,” Reeder said after the meeting. “The reality is, you can’t always get what you want – you have to go with what you think will fly.”

Cost-effective measures

Discussion of the proposed governance changes comes at a time when the federal government and insurance companies are limiting funds to the most cost-effective programs. This emerging climate spurred the district board in 2012 to add three appointed members deemed experts in health-care management specialties such as finance and risk management.

“Our experience to date with the three appointed board members is that they have made significant contributions to the hospital,” Zoglin told the Town Crier. “My belief is that there may have never been a single vote which placed district board members on one side and appointed members on the other side.”

Board expansion pros and cons

Months of discussion among hospital leaders, who hired expert strategists Nygren Consulting to develop the three governance options, culminated in last week’s compromise.

Hospital officials sent fliers about the proposals to residents in the district, which includes Los Altos, Los Altos Hills, Mountain View and Sunnyvale.

Those opposed to options B and C feared a loss of elected board control and a transition into hospital business conducted outside the public eye. Representatives of the hospital’s unions also cited concerns about decreased accountability and transparency.

“Assuming the hospital exists to benefit the public, is it appropriate for the district to cede oversight from our elected representatives to other people?” asked Mountain View resident Paul Donahue. “It doesn’t seem right to me to outsource the oversight to people not accountable to (the) public.”

Los Altos resident Bill James reminded the board that in 1992, the district board “gave away” its authority to an integrated delivery system that lost the hospital money. James noted that the board bought into the concept “with the idea that they would have greater competence in running this hospital.” The succeeding district board sued to restore its original governance structure.

Other opponents openly questioned why such experts also had to be board members.

“(The proposal) implies neither our elected community representatives nor the clinicians that work daily at the hospital are adequate at assisting to guide decisions about El Camino Hospital’s future,” said former hospital clinician Kris Peterson.

More expertise needed

But Reeder said pulling in experts as needed, such as hiring consultants, is less effective and costly.

He said hospital leadership needs more expertise than ever as it prepares to launch a long-term strategic plan.

“Health care is much more complex than any business I’ve been involved in, and it is constantly evolving,” said the former aerospace engineer and Los Altos City Council member.

Former district board member Patricia Einarson, M.D., supported the expansion of appointed members.

“Fulfilling its duty to make sure ECH has the strongest governance and oversight possible, the district board is to be commended, not accused of doing something underhanded, for grappling with the need for more expertise and the possibility that directors other than themselves may be in the best position to provide it,” she said.

“The health-care market is changing very rapidly,” Fung said. “The situation is such that all hospitals are going down in revenue and they have to adjust in order to be sustainable. We need to survive. … It’s like rafting down the river and knowing the big drop is coming.”

Reeder, Fung and Zoglin pointed out that district board members retain “reserve powers,” allowing them to dismiss appointed hospital board members for “inappropriate behavior,” as Zoglin put it.

Hospital board members are appointed to three-year terms.

District board members are set to revise bylaws next month reflecting the May 15 changes.

The hospital board runs day-to-day operations of the hospital and oversees its annual $800 million budget. A separate, elected board represents the El Camino Healthcare District, which owns the hospital land. It oversees bond funds and community grants.

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