Hospital Prototype Corporate By-law

1. Hospital Prototype Corporate By-law Overview and Key Concepts February 2010 1

2. Overview Part I - Background/Context Part II - Overview of Key Components Part III - Implementation and Adoption 2

3. Part I - Background/Context

4. Background/Context • Hospital governance practices have changed since the Prototype By-laws were last updated in 2003 • Recommendations made by the Auditor General highlighted the value of skills-based hospital boards and the importance of recruiting board members with the required competencies toavoid conflicts of interest • The jury in the Dupont/Daniel Inquest made recommendations aimed at strengthening the hospital-physician relationship and ensuring and promoting the safety of hospital staff and patients • The 2003 Prototypes are simply not reflective of current practices, and as a result, recent adoption by hospitals has been minimal 4

5. Background/Context • In 2008, a joint OHA/OMA Task Force was established to provide overall direction and support to a targeted review of the 2003 OHA/OMA Prototype By-laws • The Task Force concluded its work in March 2009 because the OMA declined to continue discussions with the OHA on significant change • The OHA then proceeded on its own to develop new Prototype Hospital By-laws that we believe are well-suited to improving health system performance

6. Background/Context Features of the 2010 Prototype By-laws • Two distinct components: • Hospital Prototype Corporate By-law • Hospital Prototype Board-Appointed Professional Staff By-law • The Prototype By-laws are streamlined, shorted in length, and more focused on providing options for varying hospital needs • Hospital by-laws generally take this form given that corporate by-laws require less frequent updating and amendment • The Prototype Corporate By-law deals with a hospitals administrative functions • The Prototype Board-Appointed Professional Staff By-law deals with the appointment and privileging of medical, dental, midwifery staff and extended class nursing staff within the hospital

7. Background/Context The new Prototype Corporate By-law is: • Reflective of the current operating environment for hospitals and meant to guide hospitals in amending and developing their organizational directives • Consistent with good governance practices and the Guide to Good Governance • Aligned with recommendations made by the Auditor General which highlighted the value of skills-based hospital boards and the importance of recruiting board members with the required competencies toavoid conflicts of interest • Compliant with the Corporations Act, Public Hospitals Act and other relevant legislation • Less prescriptive and more flexible that previous versions, and available in digital format, so can be fully customized by hospitals 7

8. Background/Context Development of the Prototype Corporate By-law • Drafted by external legal counsel • Feedback and input on a comprehensive draft was sought from reviewers with experience and expert knowledge of good governance practices

9. Part II – Overview of Key Components

10. Key Components Corporate Membership The Prototype Corporate By-law provides for a model of Membership where the Directors are the only voting members Consistent with the 2008 Auditor General’s Annual Report which specifically referred to literature on best practices in hospital governance that suggests that “a community advisory committee can provide community input without the need for community shareholder members” This model reflects an increasing trend in hospitals and provides an opportunity to ensure Board stability and quality Minimizes the risk that a single-issue or “special interest” group may destabilize a Board through actions such as inappropriately initiating removal of the Directors or block voting at Members meetings 10

11. Key Components Corporate Membership (continued) • The Notes to the Prototype Corporate By-law set out: • Language for three additional options for membership: • Two Classes of Members – Voting and Non-Voting (Advisory); • Limited Constituency Model; and • Membership Extended to “Related” Organizations • Commentary and suggestions for boards in considering the appropriate model for membership

12. Key Components Board Composition and Recruitment & Role of the Board • The Prototype Corporate By-law contemplates twelve (12) elected Directors, and four (4) ex-officio Directors • Directors shall be elected and shall retire in rotation as set out in the By-Laws, and shall be elected for a term of three (3) years, with a maximum term for Directors of six (6) consecutive years (excluding partial terms) • The Notes to the Prototype Corporate By-law suggest that the Board should: • Adopt a statement of Board Roles, Responsibilities and Functions, including specific wording regarding the board’s role and responsibility for quality • Be comprised of individuals who have the necessary skills, competencies, experience and independence to collectively perform the roles and responsibilities of the Board, and that the Board adopt transparent recruitment processes • Contemplate that such a process or policy will be adopted by the Board and sets out criteria for hospitals to consider in developing such a process

13. Key Components Board Committees • The Prototype Corporate By-law sets out general provisions for the Board to establish Committees from time to time, and to determine the duties of such Committees, without identifying specific Committees that should be established • Provides that the Committees of the Board shall be Standing Committees and Special Committees and that the functions, duties, responsibilities and powers of Committees shall be provided in the resolution of the Board • The Notes suggest that the Board may want to include Committee Terms of Reference as set out in the OHA’s Guide to Good Governance.

14. Part III – Implementation and Adoption

15. Implementation and Adoption Hospital Annual General Meeting • Requirement for hospitals to hold annual general meeting between the 1st day of April and the 31st day of July in each year on a day fixed by the board (section 9 of Regulation 965 under the Public Hospitals Act) Amending Current Hospital By-Laws • Generally, amendments are effective once passed by the board subject to confirmation of members • Board will need to consider which amendments will require member approval at the annual general meeting • Ministry of Health and Long-Term Care and/or LHIN approval is not required to amend hospital by-laws

16. Implementation and Adoption What Should A Board Do? • Conduct a review of current practices • Determine process for board and member approvals of by-law amendments • Consult with internal and external stakeholders, where appropriate, if board determines that amendments to current hospital by-laws are required • Ensure a transition strategy is in place, where appropriate, to move towards the adoption of new or amended hospital by-laws

17. Implementation and Adoption • OHA strongly encourages adoption of the Prototype Corporate By-law, in whole or in part, specifically: • Movement away from non-recommended membership models where appropriate/possible • The adoption of a statement of Board Roles, Responsibilities and Functions that describes the role of the Board and its key performance areas, including for quality • Alignment with the recommendations of the Auditor General regarding skills-based hospital boards and the importance of recruiting board members with the required competencies toavoid conflicts of interest • Adoption of the Prototype Corporate By-law is one way of demonstrating continued hospital leadership with respect to improving governance and accountability

18. Discussion 18