However, there are at least four serious issues brewing that demand the board to step up its attention and leadership to the next level in order to ensure that the hospital maintains its financial viability and high-quality health care throughout the next decade.
* Long-term viability: The hospital is wrestling with escalating construction costs for its new earthquake-proof building that have shattered the original budget, from $250 million to north of $350 million. The hospital's own financial projections show that, once repaying the construction bond debt is factored in, its operating profit margin as a percentage of revenues will decline from 9 or 10 percent to below 2 percent. Industry experts warn that profit margins below 5 percent are too low to sustain financial viability.
In addition, the hospital is facing a potential loss of doctors due to its strained relationship with Camino Medical Group, a Sutter Healthcare division. CMG doctors comprise some 55 percent of the doctors who work at the hospital, and that number is growing by a couple of percentage points each year. The ECH board should develop a formal affiliation with CMG whereby that group's doctors agree to send their acute-care patients to ECH, and Sutter agrees not to build a competitive local hospital.
* Expanding the board: Health care delivery in the U.S. has grown more complex and more costly in the last decade, and with the aging population it will be under the microscope for years to come. Having a board of only five directors, two of whom are private practice physicians, makes it difficult for the board to have the depth of expertise and the time necessary to deal with the growing complexities. But there is a solution: The board has the power to appoint up to four additional directors.
If the board was expanded to include four new members — perhaps three individuals with knowledge in health care, business and the law, and one respected citizen from the community — this would dramatically increase its ability to stay on top of things and steer the hospital successfully into the next decade.
* Conflicts of interest: I commend board member Dave Reeder for holding a spotlight on the CT scanner issue, and for bringing in outside legal experts to help the board determine if there was a material conflict-of-interest issue. While the board is updating its narrow conflict-of-interest guidelines, I would strongly urge it to develop a more comprehensive ethics policy that incorporates Sarbanes Oxley policies and procedures — including a formal "whistleblower" policy and mandatory annual training for board members, executives, and hospital staff.
* CEO search and compensation package: The hospital's compensation committee needs to set the tone for excellence in health care delivery at an affordable price. The fact that the U.S. spends twice as much on health care delivery compared with many developed countries and achieves poorer results is a problem that should be dealt with at the local level — and it starts with this committee actively managing compensation levels for the CEO and his or her staff.
I believe that the hospital board is composed of dedicated and energetic individuals who have contributed enormously to the past success of the hospital.
That said, we are at a crossroads in health care delivery at the local and national level, and voters have a right to know how the board is dealing with these critical issues. I urge the board to report on progress in addressing each of these issues at its future public meetings.