Through laws and traditions, society has established two basic criteria for the actions of governance boards. First, their actions must be prudent and reasonable, rather than simply well-intentioned or successful. Board members should be careful, thoughtful, and judicious in decision making. They need not always be exactly right.

Second, since board members hold a position of trust for and with the owners of the facility, they must not take unfair advantage of their membership, and must, to the best of their ability, direct their actions to the benefit of the whole ownership. In for-profit veterinary systems, this means avoiding situations that give special advantage to some participants, particularly the directors themselves. For example, requiring all radiology referrals to access the facility radiologist through another service first, or the inverse, requiring all films within the multi-practice facility to be read by the staff radiologist on a fee-for-service basis.

In human healthcare, governance has undergone many changes and has had many formats. Consensus on the best system has eluded even the most skilled healthcare administrators, since the variances between for-profit and not-for-profit, community demographics, fiscal structuring, provider affiliation, and system interrelationships cause each situation to be different. Sometimes slightly, and other times, radically different.

As a consulting firm, we have experienced the same wide environmental and staff variances in veterinary medicine. Many governance boards start with a list of elements that can be done best by the individual members. Then, as they mature in cooperation, they expand their charter with a list of things they think they can do best. With the most successful governance boards, they begin their list with those activities that only they can do.

As a diplomate of the American College of Healthcare Executives, one of the ten areas of my personal certification, by written and oral exam, was governance. There are common themes, with little or no disagreement, on the essential functions of governance:

 Select and sanction the hospital administrator.

 Establish the mission focus, vision, and core values for operational decisions.

 Review strategic community and facility decisions on a recurring basis.

 Approve the annual program-based budget, including establishing equitable lease allocation agreements with the tenants.

 Resolve boundary disputes and monitor other conflict resolution actions.

 Credential services and members of the professional staff.

 Monitor system performance against plans and budgets.

While the structure, authority, and operational integrity of governance varies, the following systems are monitored within any governance system:

1.  Trustee or governing board. The board concept is an old and essential part of human hospitals. When hospitals have tried to dispense with the governance board concept, within six months they have had to redefine and rebuild the governance board for conflict resolution and hospital survival planning. The board's functional role has evolved toward boundary spanning, identifying exchange opportunities, and strategic assessment of community trends and demands. The board's planning emphasis has moved away from daily operational issues to a broader and more generalized policy and precedent function, including establishing the core values for making tough decisions. While human healthcare uses community leaders for their boards, veterinary medicine tends to use only internal players, thereby limiting the resources available to the board, and adding a "conflict of interest" potential, when board members start arguing for the protection their own sacred cow. As said by Robert Kriegel and David Brandt, "Sacred Cows Make The Best Burgers", which is also the title of their 1996 bestseller on developing change-ready people and organizations.

2.  Executive/leadership system. This function was often the "president and chief executive officer" in early human healthcare facilities, but becomes the "hospital administrator" in veterinary medicine. It actually describes the functions of a centralized management support team for the facility, which we call "coordinators" in Chapter Five of this text. It also describes the implementation agent for the policy and precedent parameters set by the governance board. This executive administrative team, the administrator and zone coordinators, plus or minus the medical director, provides the day-to-day operational support for all tenants and credentialed professionals/services, who operate within the facility, as well as supporting the needs of the governance system.

3.  Medical staff. Although the functions of the medical staff are clinical, the nature of the standards of care commitment by the staff members and the organization as a whole is a critical governance activity. In human healthcare delivery employees began as open staffs almost a century ago, and gave way to closed staffs between World Wars I and II. It became privileged staffs in the mid-1970s. Quality reviews were made increasingly rigorous through the post-war decades and were enforced by a peer utilization review process. In veterinary medicine this is a governance board issue, and utilization review of professionals and services is called the credentialing process. In some larger veterinary hospitals, and by AAHA terminology, a chief of professional services (CPS), or medical director, is often added to the executive system to act as liaison between the governance board and professional staff. The organizational system requires the medical staff to be highly involved in developing the skills and knowledge of all staff into a level of productive competency as veterinary extenders.

4.  Operational/human resource systems. In the beginning, God and faculty created the veterinarian in the school's image. The beginning was in an agrarian society and the schools were land grant colleges. Most faculty came from the real world of practice. As a veterinarian graduated, they had to be ready to practice the art and science of veterinary medicine, since there were no large practices, and before 1930, not even "small animal" practices. In most cases, they were on their own!
Then came the 1980s, and specialization crept into the hallowed halls of academia, turf wars started, and, when no one was looking, most curriculums centered on secondary and tertiary healthcare delivery models. General practice primary skills were impractical to develop, with the specialty referral practice case load. General practices concurrently grew to multi-doctor facilities, so no one had to be on-call all the time. Emergency medicine became a high-demand specialty.
In the new millennium, it was discovered that while new veterinary students still had drive, they did not have adequate character development. New modalities of training were needed. Balanced life skills and leadership were identified as the key success factors, not scientific or technical knowledge. Yet, the universities only had academic professors, who knew and lived by scientific or technical knowledge, as in research dollars. The balanced life skills and leadership have become required for the associations and individual practices to embrace, promote, and train, for staff, as well as doctors and owners. Thus, making most practices, again, on their own! Practices must monitor their community for operational growth potentials, and seek methods to increase utilization of their equipment and professional knowledge for better liquidity and economic security of staff, doctors, and owners.

5.  Planning and marketing system. Well-managed community hospitals did not start rudimentary market niche planning until the mid-1970s, when federal legislation resulted in concerns about cost and equitable access. Healthcare promotions have evolved to establish a market niche within the community, which means assessing, evaluating, influencing, and responding to exchange opportunities. Human healthcare has never advertised price, but to our dismay, in the absence of knowledge, all decisions are made by price. As such, since most veterinarians have no training on strategic assessment, internal promotion, or marketing, this lack of basic knowledge forced the early "panicking practices" into price competition. Now we are seeing some stand-alone human healthcare clinics, such as, laser eye surgery, getting into price competition, rather than quality only. This is not unlike the veterinary specialty hospital that serves the general practices in the area or region. They deal in professional value, while the general practice deals in discounts and promotions
In specialty practice, the cost control associated with economy of scale operations feeds a more aggressive strategic planning position, being developed concurrently with any marketing concept. In general veterinary practice, service and caring lead the "client wants", while price was in ninth place, as shown in the AVMA Mega Study of 1999. Yet, no one is addressing the primary client wants. Until we get our heads on straight as a profession, external marketing by price will be a major downfall of most practices.

6.  Public relations and relationships. In the broadest sense, this includes not-for-profit fund raising in some animal welfare facilities. However, it is also a critical function for specialty hospitals, including emergency and critical care facilities, trying to influence referrals from general practices. Promotion of services, which is part of marketing, includes both advertising and public relations. In most communities, the veterinarian is the best source of information about zoonotic diseases, and the animals are the sentinels of disease. Most any practice can become a knowledge broker in its own community and establish a clear market niche as professionals.
The current terrorist awareness and disease identification are, in the simplest terms, the way the practice or institution can be perceived as "essential" to the well-being of the community. By exchanging knowledge with community partners, a veterinary practice becomes an essential support system for the families and general population in their area. This type of public relations and community support relationship was underutilized by most practices, during the Larval Migrans, Anthrax, West Nile, BSE, and related zoonotic disease concerns. See Appendix A in this text, where Dr. Jim Humphries shares some insightful communication information.

7.  Information management. Information arises from the activities of three major operational systems: clinical, finance, and governance. The contributions from these three sources develop at unequal rates, but as the raw data becomes processed into useable information, the importance and interrelationships of the three become essential to the decision-making process. There are both open and closed system requirements, due to the confidentiality of client/patient information, the segregation of function for fiscal matters, and the forensic liability associated with drugs and veterinary healthcare delivery. In governance, the "sequential list of motions", and the methods to handle recurring issues, allows a more streamlined decision process to evolve. In larger veterinary facilities, information management often becomes an operational function of the hospital administrator. In mega-facilities, it falls to an information service coordinator.

There are many operational systems concurrently functioning with any veterinary facility, including: client relations, patient admission and disposition (PAD), finance, clinical specialties, medical care, clinical support services, nursing care, human resource management, physical plant, central medical supply (CMS), and other related activities. These are day-to-day operations entrusted to the hospital administrator and the executive team. The governance board seldom gets involved in any of these, except for the initial credentialing and mediation of the boundary issues associated with inter-service relationships, which cannot be resolved between the facility occupants and may result in de-credentialing.