Rural hospitals in Texas and elsewhere face more legal and financial challenges than ever before. This puts a premium on the leadership qualities of the hospital’s chief executive officer as well as those entrusted with helping the CEO navigate these challenges – the hospital’s board of directors.

Last week, Kevin Reed and I had the privilege of discussing the challenges faced by hospital boards at the annual Healthcare Governance Conference presented by Texas Healthcare Trustees, a statewide association whose members are Texas hospitals, health systems and health-related organizations.

Our presentation served as a primer on what new board members, many of whom have built successful careers in business, need to know about healthcare governance. Topics ranged from  who are the licensing entities,  the different between Medicare and Medicaid, and the various enforcement rules.

While each community and its hospital is unique, all U.S. hospitals – particularly standalone, general acute care facilities – face many similar challenges, including decreasing inpatient censuses, reduced revenues, the move toward value-based reimbursement models, and growing capital-intensive needs. As a result, the expectations for boards have grown significantly. From there, we explored the impact some of the healthcare regulations could have on their hospitals, including the federal Stark law, the federal anti-kickback statute, the Affordable Care Act and the Emergency Treatment and Active Labor Act (EMTALA).

Finally, a topic that got everyone’s attention was the role of the board member with regard to the CEO and other employees. It’s important to keep in mind that a board member’s only managerial responsibility is the CEO. I have seen relationships between board members and CEOs splinter when the chief executive is embarrassed publicly by a board member. It is critical for board members to praise their CEOs in public and criticize, if necessary, in private.

Another key point for board members is to not fall into the trap of assuming a managerial role with other hospital employees. When board members offer a sympathetic ear to these employees, it will only serve to undermine the CEO. It’s far better to encourage employees to discuss hospital-specific issues with their managers, and then advise the CEO of the conversation. No board member wants to be called as a witness in an employee lawsuit.