CEO Briefing Room Making a Productive Board-CEO Partnership · Created in collaboration with Oliver Wyman In the 2018 CEO Briefing Room this past April, Health Evolution, in collaboration

2018 CEO BRIEFING ROOM—MAKING A PRODUCTIVE BOARD-CEO PARTNERSHIP AT THE HEALTH EVOLUTION SUMMIT APRIL 19, 2018

CEO Briefing Room— Making a Productive Board-CEO Partnership

Created in collaboration with Oliver Wyman

In the 2018 CEO Briefing Room this past April, Health Evolution, in collaboration with Oliver Wyman, brought together 25 innovative CEOs from prominent payer, provider and life science organizations to discuss how to evolve the Board-CEO partnership beyond governance to support deep transformational change. The group was joined by experienced board directors with diverse perspectives, including John Doerr, Deborah Hopkins, and Ron Williams. Together, Briefing Room members dove into a candid and energetic discussion about the ways in which health care CEOs could leverage their boards to navigate change in the face of new disruptive forces.

Guest Discussants:John Doerr, Chairman, Kleiner Perkins; Founding Investor in Amazon and Google; Board of Directors, Google, Amyris, Lumeris, and NunaDeborah Hopkins, former CEO, Citi Ventures and Chief Innovation Officer, CitiGroup; Board of Directors, Marsh & McLennan, Union Pacific, and VentureWellRon Williams, former Chairman, President & CEO, Aetna; Board of Directors, J&J, Boeing, and AmEx

Across Industries, Board Members Are Concerned About Disruption

Beyond Governance: Disruption Requires Board Members To Support Transformational Change As CEOs work to accelerate transformative change in the face of new

sources of disruption – such as digital health, the shift to value-based care,

and the rise of consumerism – they need more from their boards than just

governance. Boards are also feeling the pressure to evolve their game as

the requirements for success are changing.

Business model disruption

Significant industry change

Changing global economic conditions

46%

58%

46%

PERCENT OF BOARD MEMBERS THAT ARE CONCERNED WITH:


Enhancing Strategy Development and Alignment

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the CHALLENGEStrategy boards, unlike governance boards, take an active role in setting goals and expectations. For management, this means board directors become important advisors who draw on out-of-industry experience and check that strategies are aligned with the corporate mission. However, they can only effectively support management when it’s clear what kind of reinforcements are needed.

TAKEAWAYS for CEOSAs a CEO, consider what you need from your board, and ask for it. Would it help you if board members tapped into their networks to help

recruit talent? Would your IT migration benefit from lessons learned

by other large companies? To identify what is needed, CEOs must

recognize the skills board members bring to the table and utilize these

skills so that board capabilities do not remain “untapped.” Leaders

also discussed the importance of setting clear expectations around the

role of the board and even individual board members so that board

directors focus efforts on the high-value needs of the organization.

the HOW Briefing Room CEOs saw an opportunity to better define the role of the board using three key levers:

In addition to communicating organizational goals with the board, call on each board member to apply his or her individual expertise. Build personal relationships and use one-on-one communication to leverage individuals’ skill sets to solve specific problems.

Take ownership of board communications and board meeting structure. Is a 100-page slide presentation effective? How does the boardroom setting contribute to your meeting goals? Make sure your board meetings are intentionally designed.

As several Briefing Room members advised, put yourself in the shoes of the board member. As a CEO, join other boards to understand the strengths, limitations, and strategic needs of the board.


BOARD COMPOSITION 2012 2017

Average board size 10.7 10.8

Independent directors 84% 85%

Average age 62.6 63.1

Women 17% 22%

NEW INDEPENDENT DIRECTORS 2012 2017

Women 26% 36%

Minorities 12% 20%

Financial backgrounds 21% 29%

FIRST-TIME DIRECTORS 2012 2017

% of all new directors 30% 45%

Average age 53.4 55.2

CEO PROFILES 2012 2017

% serving on one or more outside boards 46% 37%

Average tenure 17.2 19.8

Fostering Diversity Across the Organization

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Board Diversity Is Improving, But Slowly

the CHALLENGEStrong board members are not only passionate and experienced, but individually each should bring something different to the table. Within the board, diversity of thought helps build consensus and ensures outlier perspectives do not control decision-making. For health care leaders, both understanding existing board culture and then curating board composition can be meaningful challenges, especially within non-profit institutions.

TAKEAWAYS for CEOSAs a CEO, evaluate board experience and culture against the organization’s evolving strategy. Is there someone on your board

who has retail experience to help you in the patient-to-consumer

revolution? Does your organization need someone with experience

drilling operational discipline into the company culture? More

broadly, does your board represent the ethnic and racial backgrounds

of the populations you serve? Briefing Room CEOs saw an opportunity

to help shape board composition to inject diversity of experience

and thought, even in the face of strict requirements around board

representation.

the HOW Briefing Room CEOs feel it is critical to keep a pulse on board culture and diversity through several means:

Ask directors to share stories around their board experience to better understand their values, skills, and expertise. Listening to board members’ successes and failures in governance can help CEOs determine which directors have values aligned with their organizational culture and needs.

Make diversity a key result, and measure it. Define what diversity means in the communities you serve and create explicit metrics to foster it. In this quest, consider diversity at all levels and extensions of the organization. What does the composition of your legal team say about your organization?

Encourage self and peer evaluations within the board to gather qualitative data on the skillsets your board has. Then, use these data points to make the case for change, especially on health care boards where membership rules may be outdated or unchallenged.

Where board composition rules present a special challenge, leverage board training to evolve the skillsets on the board. Consider how both externally- and internally-led trainings can help your board become steeped in newer risks such as cybersecurity.


Aligning Oversight with Key Business Risks

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the CHALLENGEFrom the board member perspective, it is difficult to have insight into what is going on in a company and understand what parts of the company require oversight. Given this uncertainty, board communication and engagement must be engineered to build trust. Conveying a dual sense of confidence and honesty with the board can be the key to ensuring the board acts in support of management while also delivering the right level of governance.

TAKEAWAYS for CEOSAs a CEO, continuously refine the board engagement model around your organization’s needs. Does director on-boarding and training

help new members connect with your frontline? Are there designated

communication channels that the board can use to dig into certain

business challenges? Briefing Room CEOs discussed the need to

thoughtfully design the board engagement model and leverage the

board chair to push the board to excel.

the HOW Briefing Room CEOs agreed that there are four ways in which CEOs can improve board communications and engagement:

1 Invest in open communication with the board chair to ensure alignment between management and the board. Ask your board chair to help champion continuous board improvement through board evaluations and even quick-fire evaluations of board meeting effectiveness.

3 Foster relationships between the board and management team to make sure directors have access to key decision makers. Consider introducing your board to frontline workers to show them the business “in action.”

4 Be aware of what the board cannot possibly know but should when designing your board communications. How do you keep the board informed around not just what is happening, but why?

2 Onboard new board members in an intentional way. Consider buddying new board members with senior board members as mentors and formal training to help them learn about the core business and organizational model.

• Functions at discretion of CEO

• Limited participation and accountability in decision-making

• Rectifies management preferences

PASSIVE

DEGREES OF BOARD ENGAGEMENT

• Certifies to shareholders that CEO is doing what board expects

• Stays informed of performance and mangement decision-making

CERTIFYING

• Partners with CEO to provide insight, advice, and support

• Recognizes dual role of guiding/supporting and judging the CEO

• Sufficient industry and financial expertise

ENGAGED

• Steps in typically during “crisis” situations

• Intensely involved in decision-making

• Frequent and intense Board meetings often called on short notice

INTERVENING

• Fills gaps in management experience (especially in early-state start-ups)

• Makes key decisions while management implements

OPERATING

How Engaged is Your Board?


Looking ForwardBriefing Room CEOs saw health care boards becoming an increasingly important asset as leaders seek

to fundamentally transform their health care businesses in the face of disruptive forces. At the same

time, as health care organizations adapt to manage new risks, their boards will also need to adapt to

understand and assess these risks. Leveraging perspectives from both sides of the aisle, CEOs and

board members identified a number of tools that CEOs can use to power the Board-CEO partnership from

explicitly defining the role of the board to keeping a pulse on board culture and composition to fostering

open communication and continuous engagement with board members. CEOs and board directors discussed the importance of communication across the aisle to build what one CEO described as alchemy between the two parties. Ultimately, the group challenged itself to discuss three core questions to improve their Board-CEO partnerships:

What are you most scared about? Don’t be optimistic. As one board member put

it, “News does not get better when you hide it.”

Do you have the people who you need to win? What is it

going to take for the company to transform?

How do you want to transform the company?

What are your aspirations and what do you think the company

is capable of?

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FEATURED DISCUSSANTS John Doerr Chairman, Kleiner Perkins; Founding Investor in Amazon and Google; Board of Directors, Google, Amyris, Lumeris and Nuna

Deborah Hopkins Former CEO, Citi Ventures and Chief Innovation Officer, CitiGroup; Board of Directors, Marsh & McLennan, Union Pacific, and VentureWell

Ron Williams Former Chairman, President & CEO, Aetna; Board of Directors, J&J, Boeing, and AmEx

CO-CHAIRS Mark Ganz CEO, Cambia Health Solutions Summit Chair

CEO BRIEFING ROOM— MAKING A PRODUCTIVE BOARD-CEO PARTNERSHIP

CEO Briefing Rooms are intimate gatherings of payer, provider, and life science CEOs designed to catalyze a conversation leveraging deep and diverse member expertise to push the solutions beyond traditional boundaries. These dynamic discussions include executives from renowned companies outside of health care to lend perspectives and transformative insights to stimulate deep, rich, experience-based exchange.

Mark Smith, MD, formerly of California Health Care Foundation

Warner Thomas, Ochsner Health System

Paul Tufano, AmeriHealth Caritas

Steve Udvarhelyi, MD, Blue Cross and Blue Shield of Louisiana

Andrea Walsh, HealthPartners

Penny Wheeler, MD, Allina Health

Julie Brussow, Security Health Plan of Wisconsin

Christopher Chen, MD, ChenMed

Rushika Fernandopulle, MD, Iora Health

Denise Gonick, MVP Health Care

Kim Keck, Blue Cross & Blue Shield of Rhode Island

Terri Kline, Health Alliance Plan of Michigan

Charlene Maher, Blue Cross of Idaho

Paul Markovich, Blue Shield of California

Steven Martin, formerly of Blue Cross Blue Shield of Nebraska

Janice Nevin, MD, Christiana Care Health System

Peter Pisters, MD, The University of Texas MD Anderson Cancer Center

APRIL 18-20, 2018HEALTH EVOLUTION SUMMITRITZ-CARLTON, L AGUNA NIGUEL

BRIEFING ROOM MEMBERS

2018 Governance Briefing RoomFOR MORE INFORMATION, CONTACT [email protected] WWW.HEALTHEVOLUTION.COM

HOST Julie Murchinson CEO, Health Evolution

LEAD PARTNER Sam Glick Partner, Oliver Wyman

Susan Turney, MD, President & CEO, Marshfield Clinic Health System; Summit Chair

CEO Briefing Room Making a Productive Board-CEO Partnership · Created in collaboration with Oliver Wyman In the 2018 CEO Briefing Room this past April, Health Evolution, in collaboration

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