Hospitals and their foundations are complex organizations that rely on good governance to keep critical parts of the public health system running smoothly. But what does good governance actually look like, and are these standards being met?
In this third article in our series looking at the makeup of hospital boards in Toronto, we examine the gap between the skills required to run hospital boards properly, and the business and corporate interests of those who are actually sitting on the boards. We also examine how and why boards function the way they do.
Our top-line analysis shows that 37 per cent of board members come from the financial sector. While corporate executives and lawyers are also well represented on these boards — at 8.3 and 7.7 per cent respectively — other important expertise, like technology and labour, are glaringly absent.
How Governance Is Supposed To Work
On paper, the government, hospitals, regions and professional associations are all in agreement about the vital role that hospitals play in the healthcare system and the challenges that the system currently faces.
An excerpt from the Ontario Hospital Association’s (OHA) current strategic plan reads:
“There is an urgent need to build capacity in hospitals and across the continuum of care and find sustainable, system-wide solutions that address serious health human resources needs. Experience has [...] demonstrated the collective strength of the entire health system when government, providers, and organizations across civil society - including the OHA - are motivated by a single aim: protecting and improving the wellbeing of Ontarians.”
The OHA’s aim is to serve hospitals to build a better health system. The body achieves this through government advocacy, professional resource development, managing stakeholder relations and by providing guides to good governance.
The OHA encourages hospital boards to regularly evaluate the skills needed and represented on their boards, and how these can be strengthened. A skills matrix evaluation form designed by the OHA outlines the current skills and experiences needed on the boards.
Comparing the above skills matrix to the overview of professions that are actually represented on Toronto hospital boards in the chart below highlights significant gaps in the fields of research, labour relations, ethics, diversity issues and information technology.
There are other backgrounds that would benefit hospital boards that aren’t included in the above matrix.
For example: Hospitals are non-profit organizations, but board members largely hail from the for-profit sector. Our analysis shows that there are currently only three hospital board members in Toronto hospitals from the non-profit sector.
A Longstanding Concern
Board composition was identified as a concern in an Auditor General report on hospital board governance back in 2008. When surveyed, 70 per cent of hospital board members at the time indicated that information technology skills in particular were underrepresented on the boards.
This problem appears to be persisting 15 years later, when the need for technology skills has only grown. Currently, just two per cent of hospital board members in Toronto hail from the technology sector.
Meanwhile, amid staffing shortages across the health sector, there are only three human resources professionals and just one individual from the labour movement sitting as hospital board members.
By contrast, there are 234 financial professionals, 52 business executives, 48 lawyers and 40 real estate developers.
The professional backgrounds of members on specific boards highlight the disparities even further:
The Sick Kids Foundation has 23 board members from the finance sector, compared to two philanthropic professionals and one academic.
St. Michael’s Foundation has a large board with 44 positions, and half of them are filled by financial professionals.
Of the 29 board positions at Mount Sinai Hospital, 12 are occupied by professionals from the financial sector, four are held by individuals from real estate and development, four are from the corporate sector, and the remainder come from other assorted sectors.
However, some organizations do have a broader range of expertise represented on their boards:
There are 43 positions between Women’s College Hospital and its respective foundation, and while finance is still overrepresented with 12 individuals, there are multiple non-profit executives, media professionals and legal experts who also hold board positions. There are other skills brought to the table too, with one community leader and a human resources professional sitting on the board.
The UHN foundation follows the pattern of having the largest number of board members come from the financial sector, but it also has experts in media, manufacturing, consumer goods, issues management and philanthropy.
In sum: Even the more diverse boards we examined are still overrepresented by members from the finance, legal and corporate sectors.
Friends In High Places
A key legal requirement for hospital boards is ensuring the quality of its own governance. Achieving this requires recruiting new members, creating succession plans, performing self evaluations and forming committees.
Members nominate and elect directors at their annual general meetings. Whereas the compositions of many other types of non-profit boards are voted on by their membership, with multiple candidates stepping forward for each role, the Ontario Hospital Association’s “Guide To Good Governance” states:“A board may choose to recommend only the number of candidates for whom there are vacancies or a greater number of candidates than vacancies.” The voting process essentially functions as a formality.
Boards have the power to hire and fire CEOs, review senior staff, guide finances and determine priorities. The self-governance model reduces options for recourse for anyone seeking to dispute the boards’ decisions.
The “Guide to Good Governance” goes on to emphasize the importance of skills-based boards: “Care needs to be taken to ensure recruitment is primarily on the basis of skills, experience and knowledge, with diversity as a secondary consideration.”
In theory, protecting the skills and experience levels of a board makes sense. In practice, this form of governance is leading to board appointments that resemble personal and professional networks, with large corporations playing an outsized role.
For example, there are 21 executives from Royal Bank of Canada across the Toronto boards. Loblaws president Galen Weston, Sobeys president Michael Medline, Anthony Longo of Longo’s, and Maple Leaf Foods CEO Michael McCain all hold board positions.
Ira Gluskin and Gerald Schwartz both sit on the board of Mount Sinai hospital. In 2019, Schwartz’s company Onex acquired Gluskin’s company in a $445 million deal.
Gaps in professional skills are just one issue with the current composition of Toronto hospital boards. Diversity, lived experience and even local geographical representation all appear to be treated as afterthoughts. While boards hear from community stakeholder committees, patient advisory committees and medical staff, those voices function only in an advisory capacity.
Public health is complex and our hospitals are in crisis. Governments enacting austerity, largely unchallenged by hospital boards, see a solution in privatization. But, as we will explore in a future article, Toronto has a history of community-led change towards better outcomes.