LeadingAge Magazine · September-October 2017 • Volume 07 • Number 05

Organizational Overhaul: Governing Through Major Change

September 18, 2017 | by Gene Mitchell

This multi-service provider had to make dramatic changes to ensure its viability and reimagine its future. That also meant difficult changes to a decentralized governance structure.

In 2014, Lutheran Social Services of New England became Ascentria Care Alliance. While organizational name changes and re-branding efforts have become fairly common, they are rarely just cosmetic, because they are usually accompanied by structural changes under the surface. Ascentria has changed profoundly over the course of a decade.

Ascentria is a multi-state provider that does not limit its work to helping seniors. It maintains 60 programs in New England that serve children, youth and families; offer mental health services and services for the disabled; provide re-settlement, legal, business development and foster care services for refugees and other immigrants; and offer independent living, assisted living and skilled nursing services for seniors.

Lutheran Social Services of New England grew organically over many years into a decentralized group of semi-autonomous pieces. While it did good work over a wide geographic area, its structure led to siloing, duplicative policies and procedures, and finally, potential financial trouble.

Ascentria photo
Ascentria Care Alliance has made dramatic
organizational and governance changes to
overcome siloing and inefficiencies that
threatened the organization’s financial stability.
Pictured: a resident at Luther Ridge in Middletown,
CT, a community for moderate to low income older
adults. Photo courtesy of Ascentria Care Alliance.
 

The organization made dramatic structural changes, both to its operations and its board. One of its most unique changes has been the creation of a partnership with Sheehan Health Group, a for-profit operator of skilled nursing and rehabilitation communities. Sheehan now manages Ascentria’s skilled nursing sites, and the partnership has allowed Ascentria to purchase 2 more nursing homes to boost the number of seniors it serves.

For a picture of this member’s transformation, and the governance challenges it created, we talked with President and CEO Angela Bovill, and William (Bill) Mayo, chair of the Ascentria board.

LeadingAge: Your organization has gone through substantial changes in recent years, including a name change and significant restructuring. Can you summarize what you consider to be the most important changes?

Angela Bovill: The name change is the most obvious from the outside, but not the most significant change. It was the result of a major internal shift. We revised the mission, vision and values of the organization the year before the name change. As a result of that shift, it became obvious the name change needed to happen as part of the larger strategies.

We are a multi-service agency and that makes us interesting. We were the result of some well-intentioned regional pastors’ and churches’ concerns and cares. Over the years we became kind of a cobbled together but not well-thought-out group. In one area, you’d see that we were working with troubled youth. In Maine, it was almost all disabilities and mental health. You shift to Connecticut and you see we were focused almost exclusively on elder care. In another region, we were focused on refugees.

You can see that no one would build an organization like that intentionally from the start. When you’d look at our mission it was clear that it wasn’t clear. We were all over the place, doing a lot of good things for good people, but not sure it was having the intended impact, or maximizing the impact we could have had if we were to back up and really think about who we’re serving and how to know if we’ve been successful.

The other reality, over the last 50 years, is that the role of the church community used to be much more significant. When 50 years ago you got the shift [we saw] in government contributions, one of the unintended side-effects was divorcing a community from its own members. You end up being a government social services provider and unintentionally maybe not helping in the way you thought you were. That’s what led us to ask, “What are we doing, what are we doing it for, how do we know if we’ve done it well, and how do we know we’re the ones that should be doing it?”

I’ll give you an example of a business we exited: We were in adoption [services] in Connecticut for a very long time. Over time that whole field has changed … but we hadn’t necessarily asked if this was still critical to our mission, and if we can do it as well as others.

LeadingAge: This sounds like a recipe for creating silos. Is that what you were up against?

Angela Bovill: Yes. When I first came here in 2008 as CFO, we had 8 operating boards and a loosely federated governing board. Every subsidiary had its own governance, decision-making power, banking system, insurance policies and health care plan. There was no consistency in the way the divisions ran.

LeadingAge: Did different divisions have their own mission statements?

Angela Bovill: It varied. In some cases, there was none. There was a mission statement for the whole organization that said, essentially, that “We care for and serve those in need.” I thought you could drive a truck through that mission statement; who is in need, how are you serving them, what does that mean? It was broad and sweeping. At the time, there was no unified strategy and structure, or vision.

LeadingAge: What kind of governance changes were made?

Angela Bovill: The main governing board had structural power but very little actual power. There was a wholly-owned-subsidiary structure, but it was not enforced and that was not how it worked in practice. The subsidiaries made their own decisions about everything; they had boards of up to 24 people, and didn’t report up to the governing board. We didn’t have consolidated financial reporting or budgeting, or even consolidated quality data at the corporate level. The corporate was a quasi-parent company that offered services to the subs, but it didn’t act as a convener or a unifier like it does now.

“When you’d look at our mission it was clear that it wasn’t clear. We were all over the place, doing a lot of good things for good people, but not sure it was having the intended impact.”

LeadingAge: At the time, did things start to change because everyone knew it couldn’t go on, or was it precipitated by a crisis?

Angela Bovill: I was CFO at that time. There was a lack of understanding of the financial risks that were present. The board didn’t understand the dire situation we were in at the time because no one looked at things that way.

Our financial [problem] was driven by the aging services side. One of our nursing homes in Worcester, MA, was the trigger. It was doing extremely poorly financially, yet [was] raising money for a capital campaign and planning a massive expansion to add beds. We couldn’t fill the beds we had, so adding more didn’t make financial sense.

Ultimately, we sold that nursing home in 2012, to the company [Sheehan] that is now our partner. That was probably the most major pivot-point away from what the organization had done before. We were losing $100,000 per month, and for a nonprofit that’s not sustainable.

LeadingAge: Where did you go from there, especially regarding governance?

Angela Bovill: We had a terrific board chair, Jeff Kinney, who worked tirelessly to help in redefining the board roles, gradually eliminating the subsidiary boards and revamping our leadership. It took a lot of courage on his part to create and support that kind of change.

Bill Mayo: When I came into the organization, many things were already done and it was now preparing for the next level. But when you walk into a large complex organization, it takes a while to figure out, “What’s the normal baseline vs. what you see happening that day?”

In my first meeting, things seemed innocuous enough; we were talking about mission, vision and values, and at the end, the idea of a name change popped up. I thought “Hmm, this is actually a big deal.” But really, the name change just reflected the underlying thinking: How do we partner with people and what services do we focus on?

Ultimately, changing “details” like the name would be a waste of effort if we didn’t also address how the board worked. By the time I arrived, we were down to just the parent board, but still working to figure out the committee structure and how best to populate the board. This also is where we started having the board work more closely with other executives by putting a board member and an executive from within the organization as co-chairs for key committees.

LeadingAge: When the operating boards were done away with, was that traumatic?

Angela Bovill: Yes. The [parent] board decided to start taking powers away from the subsidiary boards, but the substructures still existed. We were in a state of barely controlled chaos in the subsidiary board structure for a few years, while we tried to figure out if we could have an advisory board apparatus, to help us learn and develop at the subsidiary level, because we were very diverse. How could we have a governing board of a reasonable size that had enough knowledge about all the lines of business we’re in?

We attempted to convert to an advisory structure for about 3 years and it failed. People were confused and disconnected and there were hard feelings. The local boards ended up disbanding over another year or 2. There was healing that had to happen because there were a lot of people that were feeling like their contributions weren’t valued or that something wasn’t right. Yet we were just striving to cut a balance between people at the local level, at the program level and at the aggregate level.

The financial overhaul was still occurring, so we were trying to restructure the governing board while radically restructuring the organization at the same time. We are now a very change-oriented organization, but it took years to make that possible.

LeadingAge: In the old days did each division have an autonomous executive?

Angela Bovill: Yes. They also had separate finance support and they were autonomous management structures.

There’s a lot of money and efficiency and time wasted with multiple duplicate structures like that. We cut out about $3 million in operating expenses over 3 years by eliminating duplication. We had not been leveraging the power of the aggregate organization in buying. We looked at all our insurance programs and our banking structure—we used to have 8 banks and have reduced it to one. A lot of money was tangled up in audit fees and bank fees and insurance premiums that didn’t need to be there.

Once we got beyond the administrative waste, we saw the goldmine—what happens when you start aligning your programs around clients. It’s one of the biggest problems with the social sector, because we have such a fragmented delivery system that you have incredible waste and have subpar outcomes.

It’s like an older person who has 5 doctors who are giving prescriptions that work against each other, but nobody knows it. That’s the exact replica of what the whole social services system, I think, looks like: lack of connectivity between providers, lack of communication, lack of coordination between health care and social services. As you look at the social determinants of health, it becomes obvious that this lack of coordination is causing poor outcomes and costs.

LeadingAge: Now that you were down to one main board for the organization, what other governance changes were made?

Bill Mayo: We have slots for 18 people now, but we’re currently running at about a dozen members. One change [for the board] has been a willingness to run “not complete.” In addition to being thoughtful about the programs we’re in and the structure and sustainability of the organization, we’ve worked hard to become “choiceful” in who is on the board. Rather than just saying we have to fill this empty seat, we now would like to have particular skills. Given what we’re trying to accomplish, wouldn’t it be great if we had someone with an entrepreneurial background who’s built their own organization, or maybe someone with more experience in health care, or maybe someone out of higher education?

We also have new board members flow through some of the board committees. This way they get to know the organization better, we get to know them better, and overall it helps both sides make better decisions.

Our structure includes a finance committee, a business development committee, a resource development committee, an audit committee and a leadership development committee. And we have the Executive Committee, which is made up of board officers. For the most part, those [committees] have a board member and an executive [from management] as co-chairs.

LeadingAge: That sounds like a lot of work for 12 people.

Bill Mayo: The board is exposed to a lot of operational detail, but isn’t making operational decisions, nor is it involved in operations. It is a complex organization involved in many lines of business and geographies and we are a fairly high-engagement board, so we ask a lot of members. But I’m not sure how much less each individual would have to do if we had 18 members instead of 12, as so much of the work is in understanding the context in order to advise and challenge management.

Angela Bovill: In the old days, we had 20 to 21 members. We also changed our bylaws because in the old structure, the churches had more of an active role in who got nominated. We eliminated that section of the bylaws, so there’s no requirement as to any specific church body making recommendations. We restructured the bylaws so we can recruit whomever we need with the right skills. I would say we’re very intentional about being small and nimble.

For example, the partnership we have with Sheehan is fairly complicated. As a board member, if you don’t understand the business aspect, and you’re risk-averse, there’s no way you would go with that. We have a great business development committee that can wade through the structure and see the upside of unique partnerships like the one we have with Sheehan.

LeadingAge: Apart from adoption, are there any other lines that you dropped entirely?

Angela Bovill: In some states, we got out of youth residential services entirely. And we no longer manage our nursing homes ourselves because of our innovative partnership with Sheehan. In some states, we’ve exited some of the disability work we used to do, and we’ve exited some [geographical] areas because we’ve been much clearer about what areas we can be most successful in—gateway cities.

We used to have a tiny $40,000 program on Cape Cod and another tiny one in Bridgeport, CT, in volunteer visitation and elderly care, and we had another residential program in northern New Hampshire. We’ve intentionally consolidated out of regions that don’t make sense for us any more—programs that don’t add the value they should.

Bill Mayo: There’s a thread that runs from how we see the delivery of social services, to the name change to the partnership for the nursing homes. The word “alliance” in the new name wasn’t just a tacked-on word. It was an acknowledgement that to provide services in the best interests of our clients, it might mean that in some cases we don’t actually provide the service ourselves. We’re not denying the need, but it might be sub-optimal for us to limp along with it, when it would be better to partner with a top-tier provider of that service.

We started out wondering what our future was, and struggling with our ability to run elder care facilities. And we ended up finding this model that says we can take better care of people, provide better services and be a more sustainable organization by partnering with this for-profit provider in a way that doesn’t require us to take mission out of the facility, but finds an alliance-like solution. That’s the common thread through so many of our decisions now.

“The word ‘alliance’ in the new name wasn’t just a tacked-on word. It was an acknowledgement that to provide services in the best interests of our clients, it might mean that in some cases we don’t actually provide the service ourselves. We’re not denying the need, but it might be sub-optimal for us to limp along with it, when it would be better to partner with a top-tier provider of that service.”

LeadingAge: Talk about the partnership with Sheehan Health Group. How does that further your mission?

Angela Bovill: Ascentria owns the nursing homes and the employees work for us, but Sheehan manages them, and they also have a co-investment strategy. We’ve been able to buy 2 more nursing homes since the divestiture of Lutheran Health Care Center in Worcester. We were on a path out of the nursing home field until we crafted a new way to do this. We knew we lacked knowledge about the regulations, the billing complexities, the insurance, the nursing, and the technology we needed access to and didn’t have.

We also knew we had a huge gap in the capital side. The nonprofit sector—and this is a drum I beat constantly—is undercapitalized, and it makes it difficult to go to the level of innovation you’d have to, to compete on the residential level. We could not keep up with the constant reinvestment necessary, and the skill necessary. We ended up creating this dynamic partnership.

[The partnership] has worked well in filling critical gaps in knowledge and capital, and trims down all the things we have to pay attention to every day. One of the challenges of management is being current on everything. We do in-home care, we do assisted living, we do independent living for seniors, mental health and other community services, so it is difficult to be an expert at everything. It allows us to dial up the things we’re better at, which is how you link human services and health care, especially for elders. We know that if care at home is thoughtfully done, and paired with transportation and inclusion, we can bend that cost curve significantly and decrease acute events.

LeadingAge: To sum up, what lessons did you learn about change, especially at the board level, and about guiding people through change?

Bill Mayo: There is a need for clarity, a need to articulate intent over and over, a need to have many voices telling the story, and a need to continually generate real-world examples that tie to what an individual cares about. Telling the story of the transformation of Ascentria is different if told to an in-home health worker than if it is [told] to someone in refugee resettlement, than if it is told to someone in a nursing home. You have to make it personal to people. It’s lots of repetition, and lots of listening is needed—listening to what really concerns people, to help them through the challenges and understand the hidden concerns underneath.

Angela Bovill: Persistence and clarity about what you’re trying to accomplish is required. There’s a right time and place for people to understand the full scope of things. Sometimes too much is too much. If 8 or 9 years ago I had said the organization would look like it does today, I would have been thrown out on my ear. One technique I’ve used is to make changes small and persistent, so people don’t feel overwhelmed and they don’t feel like change isn’t possible.

Also … we have not had a singular strategic plan for the last 5 years and that’s because we’ve intentionally designed ourselves to be like the Google of nonprofits, that is, fast and flexible and responsive.

As we change, new things become possible. We write goals 18 months at a time, and they are more focused on projects and deliverables, and what I’d call building a foundation for something big.

Now, in 2017, we’re starting to reveal the picture of what’s possible and where we want to be, and influencing the sector rather than being driven by it. Sometimes we’ve done that well and other times not so much. We’ve had to have difficult conversations and really tough changes. Our entire leadership team is new over the past 5 years. We’ve had to gracefully decide to let people go and that’s been difficult, but we’ve been recruiting people who can see that vision.

We’ve made mistakes and had to correct them, but we try to fail fast and cheap, and learn lessons.

Gene Mitchell is editor of LeadingAge magazine.