Q. How and why should business owners create and utilize a board of directors/advisers?
A. Many or most HME providers do not have a board of directors or advisers, but here's why they should. First, let's examine the difference between the two. A publicly traded healthcare company has a board of directors, which is a group of people elected by shareholders with the legal responsibility to govern the corporation. The company CEO will report to the board of directors. A board of advisers may or may not have equity in the business, and typically do not have the legal authority to govern the company. Since this scenario applies to most HME providers, I'll focus on the value of establishing such a board.
In his book, "Blueprint to a Billion," David Thompson outlines the seven essentials of blueprint companies, including establishing a board of essential experts. An HME advisery board may consist of a sophisticated patient; a physician with an interest in the evolving homecare industry; fellow healthcare entrepreneurs; a case manager and/or discharge planner; a payer representative; industry leaders; and/or vendor partners.
An effective advisery board will keep the owner focused on important business issues, such as executing the "seven essentials," and not just the urgent issues of the day. The HME owner/CEO will prepare and review key business metrics, such as financial performance compared to the operating budget. If the board is doing its job well, it will push the owner outside his/her comfort zone to test assumptions and plans, and prevent the owner from becoming complacent. All too often, business owners without accountability to a board lose focus and lack deadline sensitivity.
Board compensation can vary from meeting fees to stock options. Ultimately, this cost will be a bargain for experienced, effective advisers that help the HME owner achieve the company mission and build a company of value.
Bernie Lambrese is a senior partner at Healthcare Strategies. Reach him at email@example.com.