Laura Orr, a seasoned healthcare executive with extensive experience in navigating governance complexities and executive leadership, joins us this week on the Healthcare Experience Matters Podcast for a chat about subsidiary boards.

This is Laura’s second appearance on our show. In addition to her years of operations, strategic planning, and board governance experience within the healthcare sector, she currently serves as the CEO of Forward Governance Consulting.

• You can learn more about Forward here.
• Check out Laura’s first episode with us, “Navigating the Complexities of Healthcare and Insights for Leadership,” here.

Understanding Subsidiary Boards

Laura begins by defining subsidiary boards, which are one or more boards reporting to a parent board, often referred to as local boards. This structure is common in healthcare systems with multiple business units, such as hospitals, physician practices, outpatient centers, etc. Each of these entities may have its own subsidiary or local board.

The roles and responsibilities of parent and subsidiary boards can vary, leading to a growing interest in understanding their dynamics these days.

Factors Driving Interest in Subsidiary Boards

This increased interest in subsidiary boards arises from healthcare organizations’ evolving structures due to mergers and partnerships. When organizations merge or form strategic alliances, the governance structure often needs adjustment.

A board that once held a particular role may find its responsibilities shifting, creating the need for a better understanding of subsidiary board dynamics.

Effectively Managing Concerns and Expectations

To effectively manage subsidiary boards, organizations must establish role clarity and prioritize action. This involves aligning the subsidiary board’s role with the system’s strategy and educating board members on their responsibilities from the outset.

Strong leadership at both system and local levels is crucial, as pointed out by Laura in this interview.

Making Subsidiary Boards Most Effective

Subsidiary boards can be most effective in the following ways:

• Execution of Strategy: They play a role in executing local strategies aligned with the system’s overall strategy.
• Overseeing Quality: Subsidiary boards monitor, and drive quality improvements tailored to each entity’s unique challenges and opportunities.
• Improving Community Health: Boards focus on addressing local community health needs, recognizing that different communities have different requirements.
• Lending Their Voice: Board members advocate for the organization both internally and externally, enhancing visibility and support.

Communication Between Boards

Establishing clear lines of communication between parent and subsidiary boards is essential. It requires intentionality from both teams of management and board leadership.

Parent boards must share their strategic decisions in a clear way and explain how these decisions will be implemented (when applicable). Board members should understand the system’s strategy and local challenges, acting as resources and advocates for their communities.

Emerging Trends

As healthcare organizations merge and affiliate, there’s a trend toward streamlining governance models, reducing duplication, and simplifying board structures. While this may initially pose challenges, it can lead to much less complexity, greater clarity, and more effective governance in the long run.

Subsidiary boards in healthcare can be a strategic asset when structured with intentionality and clear roles. By understanding their unique roles, subsidiary boards can contribute significantly to the overall success of healthcare systems and lead to a lot of great outcomes in the communities they serve.

Laura’s insights provide valuable guidance for organizations navigating the complexities of subsidiary board dynamics in this ever-changing and evolving healthcare landscape.

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Leadership, PRC