Helping a Medical Group Get Its Governance “Right”

Our firm helps organizations of all kinds improve their governance – corporations, non-profits, and public agencies. We typically start with interviews to gain insights into the current ways the organization makes decisions. We then facilitate improvements, typically by sharing examples of effective practices, discussing the pros and cons of different approaches, and building consensus on the overall direction. We then engage the group in making decisions about structure and roles, documenting the agreements as we go along. And as a final step, we help with implementation, providing coaching and support.

Let me share an example. A medical group in California approached us, looking for help with governance. This was a group of eight physician-partners. The company had grown significantly from the original two founding partners. They now had eight physician partners, plus four associate physicians. There was a managing partner, named Bill, a full-time chief executive officer, several managers, and more than 150 employees, 

Bill, the managing partner told us: “As we’ve grown, it’s become exponentially more difficult for us to make decisions. We’re getting bogged down in details and failing to take advantage of key opportunities, like responding to competition or expanding into new territory. We need a different approach.”

The chief executive, who’d been hired two years prior, told us that he was burned out trying to navigate the individual agendas of eight physicians. He echoed the point that the physicians were too deeply involved in all aspects of the business. “They’re trying to decide the color of the walls, for Pete’s sake,” he exclaimed. He thought the Board should delegate more responsibility to him – but he wasn’t sure if the Board would go along.

We spoke to all the other physicians. Some had very different visions of success for the group. A few of the younger doctors wanted to expand rapidly into new territory. Others wanted to focus on research. “Where do those competing visions get aired out?” we asked. They responded: “We meet with the managing partner, and he’s supposed to bring us all along and help us sort it out.”

After we completed our interviews and fact-finding, we convened an all-day meeting with the partners and the CEO to share our findings and recommendations. 

We shared these findings: 

• The group lacks a coherent governance structure with agreed-upon processes for making both day-to-day decisions and longer-range, strategic decisions. 
• The CEO and managing partner are unclear about their roles.
• There are competing ideas about what success looks like and how to achieve it.
• The group is struggling to find a path forward.

We asked whether people agreed with this assessment. Everyone said “yes.” We asked: “Is  this an acceptable state? Or is there a compelling case for change?” One doctor said: “No, it’s not acceptable. And the case for change is clear – other groups are coming in and chipping away at our market.” Another said: “I think we failed to reckon with the consequences of expansion in terms of our governance.” And the managing partner said: “For me, this is like any of the patients we see each day. We have a responsibility to help them get better. We need to get better.”

We then presented our recommendations: 

• Establish a clear structure of decision-making authority, from the Board of Directors to the managing partner to the CEO.
• Clarify the delegations to the CEO and give him more responsibility for day-to-day operations.
• Clarify how the Board makes decisions – and clarify the voting requirements for different types of decisions. 
• Establish an advisory council, composed of all physicians and managers, to provide feedback on recommendations before they are finalized.
• Determine the voting requirements for Board decisions. 
• Establish a strategic vision for the group, with an action plan and accountability for achieving it.

To help the partners and CEO get an idea of what we were talking about, we shared an example of a written “Constitution” from another professional partnership. This document laid out specific decision-making roles for the Board, the managing partner, the CEO, and an advisory council. It defined Board voting procedures and requirements. It provided clear delegations to the CEO. And it spelled out specific limits on the authority at each level.

The partners agreed to move forward with a process, facilitated by our team, to put in place a similar structure. We met three more times with the same group, sharing examples from other professional organizations, and building agreement around the governance structure. We facilitated refinements in a number of areas, for example, to clarify who had the authority to establish and disband a committee. 

After three months of hard work, the Board adopted its new governance structure. Our firm has continued to support this group in a number of ways. One of our team members provides coaching to their CEO. We’ve conducted a survey to help them assess how well the governance structure is working. We’ve facilitated the development of new business processes to support the governance structure – for example, a weekly report from the CEO to the Board.

In a follow-up conversation with Bill, the managing partner, he told me, “While we recognize there will still be struggles, I don’t think we’re going to fall into the same pattern as before, where we were simply stopped in our tracks.”

Two months later, the CEO called me. There was a note of jubilation in his voice. “We just decided to open a new office and a surgery center. I think it’s amazing to see the progress. In terms of governance, I think we finally have it right!” 

Eric Douglas

Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.