C12 transformation governance

Faculty/Presenter Disclosure • Faculty: Karima Kanani • Relationships with financial sponsors: • • • • •

Grants/Research Support: None Speakers Bureau/Honoraria: None Consulting Fees: None Patents: None Other: None

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ALLIANCE FOR HEALTHIER COMMUNITIES HEALTH EQUITY ACTION AND TRANSFORMATION CONFERENCE

Transformation Governance: Best Practices for Boards Engaged in Health System Renewal June 13, 2018 Karima Kanani kkanani@millerthomson.com

416.595.7908 VANCOUVER

CALGARY

EDMONTON

SASKATOON

REGINA

LONDON

KITCHENER -W ATERLOO

GUELPH

TORONTO

VAUGHAN

MARKHAM

MONTRÉAL

Agenda 1. Board Responsibilities 2. Enterprise Risk Governance 3. Applying the Enterprise Risk Governance Lens to Health System Renewal Initiatives

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Board Responsibilities • CHC Boards: • Governed by a Community Board • Have a range of relevant skills and experiences that reflect the community being served

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Board Responsibilities • Act in best interest of the Corporation • Act with honesty and good faith • Confidentiality • Board solidarity (respect the decision of majority) • Avoidance of conflict of interest

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Board Responsibilities • Duty owed to the Corporation (not to any one group or interest) • All directors owe same duty

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Board Responsibilities • Standard of care and other responsibilities addressed in the Corporations Act and the Notfor-Profit Corporations Act • A Director must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances

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Board Responsibilities Generative Framing questions; Shifting the cognitive paradigm

Strategic Prospective and Reactive

Fiduciary Oversight and Policy

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Board Responsibilities • Fiduciary – oversight/stewardship of operations and assets • Strategic – priorities and strategies re: resources, programs and services • Generative – underlying purpose and values; long term sustainability

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Enterprise Risk Governance • Governance best practice in fulfilling fiduciary, strategic and generative duties to engage an enterprise risk lens

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Enterprise Risk Governance • Term of art is ERM or Enterprise Risk Management but applies to both management and the Board • ERM is defined as “a process that focuses an organization on the important risks to achievement of its overall objectives and then measures the degree to which the organization is successful in controlling these risks.”

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Enterprise Risk Governance • Addresses all types of risk across the organization • Intended to aggregate and evaluate risk information in combination with determining probability and impact on the organization's objectives as a whole • Does not replace other risk management processes

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Enterprise Risk Governance Management should: • Identify, mitigate, manage and monitor risks to the organization on day-to-day and ad-hoc basis • Report to the Board material risks with mitigation and management strategies

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Enterprise Risk Governance Board should: • Set organizational standard for risk appetite/tolerance • Engage an enterprise risk lens as part of Board decisionmaking, strategic planning and generative exploration of system renewal options • Have understanding and oversight of key risk exposure and Management's intended response • Ensure appropriate programs and processes in place to protect against risk

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Enterprise Risk Governance • Framework: • Type of Risk (Reputational, Strategic, Operational, Legal)

• Category of Risk (Quality of Care, Financial, Regulatory, Assets/Infrastructure, Business Continuity, Staff)

• Impact • Likelihood • Mitigation Options • Risk Tolerance

• Key is to adopt a consistent procedure to identifying and communicating risk 15

Transformation Governance • Exercising good governance in leading and assessing health system renewal options for the CHC and the community it serves requires applying the Enterprise Risk Governance lens to integration opportunities

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Transformation Governance What is Integration?

• Local Health Systems Integration Act, 2006 • LHSIA calls for identification of integration opportunities s.24 “Each LHIN and each HSP shall separately and in conjunction with each other identify opportunities to integrate the services of the local health system to provide appropriate, co-ordinated, effective and efficient services.”

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Transformation Governance What is Integration?

• Under LHSIA “Integrate” includes: • to coordinate services and interactions • to partner in providing services or in operating • to transfer, merge or amalgamate services, operations, persons or entities • to start or cease providing services • to cease to operate, dissolve or wind up operations

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Transformation Governance What is Integration?

• Under LHSIA “Service” means: • services or programs provided directly to people • services that support such a service or program • a function that supports the operation of a person or entity that provides a service or program

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Transformation Governance Integration Spectrum

Management

Operational

Corporate Governance

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Integration Spectrum Operational Integration • Collaboration/Joint Ventures • Examples • Group purchasing • Partnering in pursuit of contracts/engagements • Technology hosting and data sharing

• Service Co-ordination • Examples • Regional service programs • Integrated services

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Integration Spectrum Management Integration • Consolidation of Back Office Functions • Examples • Human resources • Accounting • IT

• Shared Senior Management • Examples • Executive Director/CEO • Other Senior Officers

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Integration Spectrum Governance Integration • Joint Board • Examples • Independent Boards that meet and consider matters jointly with shared vision and strategy for system integration • May include one or more joint committees

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Integration Spectrum Corporate Integration • Program Transfer/Corporate Merger • Examples • Single program transfer • Transfer of all assets/operations of one organization to another • Full merger of assets/operations of more than one entity

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Transformation Governance • Apply Enterprise Risk Governance to system renewal plans and initiatives: • Engage in external due diligence on potential partners and acquisitions

• Consider impact on patients, staff, finances, liability exposure, relationships with regulators, program sustainability, etc.

• All opportunities assessed through an enterprise lens to determine whether and how to proceed 25

Transformation Governance Relationshi p with funding agencies Administrat ion & IT infrastructu re needs

Adequacy of funding for obligations

CHC Data access and manageme nt

Quality of service

Service stability 26

Transformation Governance Workforce stability

Legal risk exposure

Community reputation

CHC Legal and contract compliance

Strategic plan

Operationa l readiness 27

Transformation Governance • Enterprise Risk Governance assessment of integration opportunities will identify vulnerabilities • Identified vulnerabilities may be mitigated through structure, approach and terms of integration • Contractual agreements to: • Provide clarity on roles and responsibilities • Allocate risk and liability • Establish standards and expectations

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Summary • CHC Boards have fiduciary, strategic and generative governance duties • Broad spectrum of present and future integration opportunities • Governance best practice to engage enterprise risk lens on system renewal opportunities and initiatives • Assess enterprise risk tolerance and mitigate risk through legal approach to integration and contract terms 29

Karima Kanani Corporate Lead, Health Industry Group Miller Thomson LLP kkanani@millerthomson.com T: 416.595.7908 F: 416.595.8695 Karima Kanani leads the corporate commercial practice in the Toronto Health Industry Group at Miller Thomson LLP. She provides corporate counsel to health and social service organizations of all sizes on matters of corporate governance, procurement, joint ventures, corporate structuring and reorganizations, mergers and acquisitions, infrastructure development, government relations and other commercial matters. She has been named as one of the "Best of the New Generation of Lawyers" (Precedent Magazine) and as a “Rising Star� and "Leading Canadian Corporate Lawyer to Watch" (Lexpert Magazine).

For industry updates and tips follow me on Twitter: @KarimaKanani 30

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VANCOUVER

CALGARY

EDMONTON

SASKATOON

REGINA

LONDON

KITCHENER -W ATERLOO

GUELPH

TORONTO

VAUGHAN

MARKHAM

MONTRÉAL