Hospital Leadership, Management and

Governance
Contents
Section 1 Introduction................................................................................................................................2
Section 2 Operational Standards................................................................................................................4
Section 3 Practices of Leadership, Management and Governance Practices............................................5
Section 4 Implementation Gguidance.......................................................................................................28
Section 4. Performance Indicators...........................................................................................................41
Source Documents....................................................................................................................................52
Section 1 Introduction
Effective hospital governance is imperative for ensuring the delivery of high-quality, efficient,
and impactful healthcare services that cater to the needs of the served population. The hospital
board, as the authorized body entrusted with providing strategic direction and overseeing the
hospital's overall operations, plays a crucial role. Concurrently, the management committee is
tasked with executing managerial functions within the hospital.

Hospital leaders must possess a comprehensive skill set to strategically guide and manage the
institution, facilitating collaboration with external stakeholders and the local community. They
are expected to offer clear vision and drive necessary changes to enhance service quality,
proactively addressing emerging challenges.

The Federal Government of Ethiopia, through its Health Care Financing Strategy, has established
a legislative framework aimed at empowering hospitals with enhanced autonomy and
decentralized authority. Consequently, hospitals have instituted governing bodies such as the
Hospital Board (HB), the hospital Management Committee (MC), and Chief Executive Officers
(CEOs)/Chief Executive Directors (CEDs) to provide strategic direction, oversee operational
coordination, and manage functions, respectively. In alignment with the national Health Sector
Investment and Development Plan, hospitals develop and implement their own strategic, long-
term, medium-term, and operational plans. They also engage in revenue generation and various
activities to enhance healthcare service quality.

However, several hospitals face challenges in effectively exercising their governance

responsibilities. Common obstacles include deficiencies in leadership and managerial skills,
unclear delineation of roles and responsibilities between the board and management committee,
lack of vision and focus, insufficient accountability and functionality, delays in decision-making,
inadequate resource mobilization and utilization, and suboptimal implementation.

To address these challenges and ensure the long-term vitality of hospitals in pursuing their
mission, the hospital board and management committee must strive to achieve strategic goals and
objectives effectively. This necessitates hospital leadership possessing the requisite skills to
navigate the dynamic and rapidly evolving healthcare landscape. Emphasizing good governance
in healthcare, all levels of leadership, including the governing board, management committee,
and operational leaders, must acquire comprehensive knowledge and proficiency in their
respective mandates, leadership practices, management principles, and governance protocols.
Specifically, the hospital governing board should adeptly engage in a mission-driven and people-
centered decision-making process that entails;
 Setting strategic directions and objectives for the hospital

 Making policies, rules, regulations, or decisions

 Mobilizing and deploying resources to accomplish the hospital’s mission, strategic goals,
and objectives;
  Overseeing the work of the hospital to achieve its mission

In parallel with the aforementioned challenges, the hospital governing board and management
committee are tasked with devising strategies to effectively achieve strategic goals and
objectives while enhancing the long-term sustainability of the hospital to fulfill its mission. Both
entities require a comprehensive skill set to effectively direct, manage, and lead the hospital
amidst the dynamic and evolving healthcare landscape. To promote good governance in
healthcare, it is imperative for hospital governing boards, senior management teams, and leaders
at all levels to enhance their knowledge and proficiency in leadership practices, management
principles, and governance protocols. By becoming more knowledgeable and skillful in these
areas, hospital leadership can better navigate the complexities of healthcare governance and
ensure the delivery of high-quality, efficient, and impactful healthcare services that benefit the
population served.

This chapter describes the operational standards, implementation modalities, and tools to help
achieve the above stated strategic goals and objectives.

Section 2 Operational Standards

1. The hospital has a functional Governing Board mandated to provide strategic leadership
2. The hospital has a functional management committee that runs the overall function of the
hospital
3. The hospital increases resource generation and improves efficiency
4. The hospital establishes accountability mechanisms
5. The hospital has mechanisms and practices to continuously improve the quality of healthcare
6. The hospital accords adequate attention for implementation of projects, Programs, reforms
and initiatives
7. The hospital has a regular capacity building program for governing board members and
senior managers in accordance with High Impact leadership Program for Health.
8. The hospital board provides guidance and promotes good ethical practice
9. The hospital has created a link between the hospital and its catchment health centers.
Section 3 Practices of Leadership, Management and Governance
Practices

Leadership, management, and governance are interdependent, reinforce each other, interact in a
balanced way and overlap among the roles to serve a purpose and to achieve a desired result.
Effective leadership is a prerequisite for effective management and governance. Leaders need to
know how to scan, focus, align/mobilize, and inspire workforces. Managers need to know how to
plan, organize, implement, and monitor and evaluate. People who govern must know how to
cultivate accountability, engage stakeholders, set shared direction, and steward resources.
Working together and supporting all aspects of a hospital, these practices lead to improved
hospital performance, which, in turn, leads to better health outcomes.
Leadership Practices
Effective leadership practices are essential for guiding staff towards achieving results that meet
the needs and preferences of clients while addressing the interests of key stakeholders. By
providing comprehensive support, frontline staff delivering healthcare services can identify
obstacles to service quality, initiate improvements, and effectively serve clients. To uphold a
high impact leadership and foster a culture of excellence, the following guiding principles and
practices must be considered:
a. Scanning: Continuously gather up-to-date knowledge about management practices to
understand how one's behavior and values impact others, as well as staying informed
about staff, hospital operations, and the external environment.
b. Focusing: Direct the efforts of staff towards achieving the organizational mission,
strategy, and priorities, ensuring alignment with overarching goals.
c. Aligning and Mobilizing: Coordinate and mobilize stakeholders' and staff's time,
energy, as well as material and financial resources to support organizational goals and
priorities effectively.
d. Inspiring: Encourage and inspire staff to remain committed and engage in continuous
learning to adapt and improve their practices continually.

Management Practices
Effective management practices are crucial for ensuring that operational plans and reporting
structures are clear and aligned with organizational priorities. Staff members benefit from
feedback on their work through appraisal, supportive supervision, and monitoring and evaluation
systems that provide timely and reliable information. To effectively manage a hospital, managers
must maintain continuous attention to ensuring that healthcare services consistently meet high-
quality standards to meet clients' needs.
To facilitate effective decision-making, optimize resource utilization, and drive continuous
improvement in hospital management processes, the following guiding principles and practices
should be considered:
a. Planning: Develop plans outlining how to achieve results by assigning resources,
accountabilities, and timelines. Hospitals are required to have both a strategic plan and an
annual plan approved by the governing board. In Ethiopia, the Civil Service Reform
Program mandates public bodies to utilize the Balanced Scorecard (BSC) approach for
planning, a strategic planning and management system aimed at aligning everyone in an
organization towards a shared vision and strategy.
b. Organizing: Establish structures, systems, and processes to effectively execute the plan.
c. Implementation: Execute activities efficiently, effectively, and responsively to achieve
defined results and objectives.
d. Monitoring: Monitor and evaluate achievements and results against plans, continuously
updating information and using feedback to adjust plans, structures, systems, and
processes for future results.

Governance Practices

a) Cultivate Accountability
Cultivating accountability within a hospital setting involves several key strategies:
a. Enhancing Personal Accountability: Governing body members must demonstrate personal
accountability by attending meetings and completing assigned tasks promptly and with high
quality, recognizing their responsibility in managing resources for the common good.
b. Enhancing Internal Corporate Accountability: Internal transparency fosters employee loyalty
and collaboration. The hospital board should facilitate:
 A free flow of information within the organization,
 Encourage calculated risk-taking by acknowledging effort and courage even when
desired outcomes are not met, and
 Provide clear guidance to staff on goals and tasks for which they will be held
accountable, while allowing autonomy in accomplishing them without
micromanagement.
 Monitor the consistent implementation of Managerial Accountability in the hospital.

c. Enhancing External Corporate Accountability: External accountability is strengthened by

internal transparency and accountability. To establish effective external accountability, the
governing board should:
 Establish mechanisms such as hospital-community forums to communicate expected
standards, goals, and targets to the public.
  Ensure Mechanisms in place to hold responsible parties (board members, management
committee, and staff) accountable for failing to meet expected standards or to reward
them for exceeding standards.
 Establish a process where governance leaders, management, and staff are required to
defend their actions, answer questions, and explain themselves to the public and
stakeholders. Periodic community and hospital partnership forums can also serve as
platforms for accountability and transparency.
b) Involvement- Engage with staff, Community and Stakeholders
Involvement in engaging with staff, the community, and stakeholders is pivotal for effective
hospital governance:
a. Engaging Community, Civil Society, and Stakeholders: Building coalitions and networks
across government levels, community, civil society, and various sectors is vital as actions beyond
the health sector influence health determinants. Hospital governing boards and management
committees should:
 Foster partnerships with relevant ministries and bureaus to improve public health, such as
health, women and social affairs, environment, education, agriculture, and trade.
 Establish alliances with other hospitals and networks to facilitate joint action.
 Create community-hospital forums with clear action plans and trackable reporting
mechanisms, ensuring inclusivity in decision-making processes.

b. Addressing the Health Needs of Socially Disadvantaged Communities: Governance bodies

should proactively involve socially disadvantaged groups in decision-making processes to
address their health needs. This entails:
 Collaborating closely with communities at district and Kebele levels, as well as their
associations/organizations, to understand and address their health needs.
 Ensuring that the needs of socially disadvantaged communities are regularly assessed and
integrated into hospital plans and strategies.

c. Engaging with Staff and Senior Clinicians: Staff engagement is enhanced when they have
involvement in decision-making processes, leading to a sense of value, respect, and support.
Similarly, involving senior clinicians is crucial for improving services. The board and
management committee can enhance engagement with clinicians by:
 Establishing platforms for senior clinicians to contribute to service improvement
(Implementation of Clinical Leadership Improvement Program (CLIP).
 Aligning common goals, such as enhancing outcomes and efficiency.
 Making clinicians partners in quality improvement initiatives.
 Involving them from the inception of projects.
 Recognizing and encouraging champions among them.
c) Setting a Shared Direction
Setting a shared direction involves reaching a consensus on the desired 'ideal state' everyone
aims to achieve. Without agreement on this endpoint, devising approaches to reach it becomes
challenging. Establishing a common direction facilitates garnering support for the planning
process, assessing readiness, and defining strategies to realize the vision. This shared vision
enables the creation of a comprehensive action plan with measurable goals and establishes
accountabilities to ensure its accomplishment.
d) Stewarding Resources
Stewarding resources entails raising, mobilizing, and allocating them ethically, fairly and
efficiently to deliver high-quality, affordable, and appropriate services that improve public
health. Good stewards ensure proper resource utilization, advocate for maximizing health
outcomes, and use evidence-based decision-making. Hospital board members are responsible for
1. Defining resource requirements,
2. Sourcing them from diverse channels, and
3. Overseeing their prudent utilization by managers, clinicians, and staff.

Continuous governance enhancement involves a dynamic commitment to improving governance

practices through strategies such as
 Governance orientation and training,
 Regular governance assessments, and the development and monitoring of improvement
plans

Systems and Processes for Effective Leadership, Management and Governance

A. Healthcare Kaizen
Kaizen can be defined as a set of principles and specific practices for continuous improvement.
At a high level, kaizen is a process that, ideally engage everybody in identifying problems or
opportunities for improvement and then involves them in identifying, testing and evaluating
improvements in a scientific and iterative way. Kaizen is rigorous without being bureaucratic.
Kaizen is built upon the improvement cycle of PDSA or Plan, Do, Study and Adjust (sometimes
called PDCA or Plan, Do, Check and Act). In Kaizen PDSA cycle, employees, co-workers and
managers:
 Plan: Identify a problem or opportunity, understand the current situation and cause of the
problem and brainstorm various actions that can be taken.
 Do: Perform a small test of change aimed at making a quantitative or qualitative
improvement in a system.
 Study: Honestly evaluate the effectiveness of the action and use if created any unanticipated
results or any side effects.
 Adjust: based on the evaluation, one can choose to adopt the change or adjust it in some way,
or the change might be abandoned altogether. With kaizen, participants can go back to the
plan stage, to try again, without shame.
The following are key principles of kaizen:
 Continually improve.
 No idea is too small.
 Identify report and solve individual problems.
 Focus change on common sense, low-cost and low-risk improvements, and not major
innovations.
 Collect, verify and analyze data to enact change.
 Problems in the process are a major source of quality defects.
 Decreasing variability in the process is vital to improving quality.
 Identify and decrease non-value-added steps.
 Every interaction is between a customer and a supplier
 Empower the worker to enact change
 All ideas are addressed and responded to in some way.
 Decrease waste.
 Address the workplace with good housekeeping discipline.
B. Scientific Method of Problem Solving
See the Ethiopian Hospitals Clinical Audit Guide and Tools and the High Impact Leadership
Training Participant Manual for Frontline and mid-level leaders for the Scientific Method of
Problem-Solving approach that integrates the strategic function of leadership, involving goal and
objective setting with the subsequent organizational action required to achieve the set objectives.
Governing Board
A well-functioning Governing Board, that includes representatives from the hospital’s
community, can have a significant impact on the quality and efficiency of the hospital service
and its daily performance.
The establishment of a Governing Board builds in two essential characteristics for good
hospitals:
 Autonomy to do what is necessary to provide good care and
 Accountability to those served for the results of that care.
Governing Boards must be committed to creating and maintaining a strong bond between the
hospital and the community it serves and maintaining a good working relationship with higher
government authorities.
Responsibilities of the Governing Board
The following sections set out the basic principles related to the establishment, responsibilities
and operating mechanisms of Governing Boards. More detailed information on the specific
powers and duties of Governing Boards within each region and Federal hospitals are described in
the Health Service Delivery and Administration Proclamations, Regulations and Directives of
each Region and Guidelines for Management of Federal hospitals.

The roles and responsibilities of the board include:

A) Determine the organization’s mission, vision and values

It is the Governing Board's responsibility to create and regularly review a statement of vision that
articulates the organization’s goals and values, but should be in line with the stated mission.
 Mission statement can be defined as ‘purpose, reason for being’ or simply ‘who we are
and what we do’.
 A Vision statement can be defined as ‘an image of the future we seek to create’.
B) Establish corporate policies
 The Governing Board should ensure that corporate policies (such as policies for staff
recruitment and retention, for income generation and expenditure, for quality assurance
etc.) are available to govern the operations of the facility.
C) Ensure effective organizational planning
 Governing Boards must actively participate in an overall organizational planning process
including examining and approving the strategic and annual plans of the hospital, and
ensuring that such plans are in accordance with the mission, vision and values of the
hospital and aligned with local, regional and national health sector priorities and targets.
D) Direct and supervise the overall activities of the hospital
 Governing Boards must monitor progress towards the goals and targets of the strategic
and annual plans.
E) Provide proper financial oversight
Providing proper financial oversight involves the following key responsibilities for the
Governing Board:
 Review and Approval of Annual Budget and proper financial controls to monitor its
utilization and ensure that the hospital operates within its budgetary constraints.
 Compliance with Financial Regulations: This entails ensuring compliance with Federal or
Regional financial rules and regulations regarding revenue retention and utilization.
 Oversight of Financial Audits: The Governing Board must oversee both internal and
external financial audits as required by legislation.
F) Ensure adequate resources
 The Governing Board must identify what constitutes adequate resources for the hospital
and ensure the effective means to access these resources.
 The Board and management committee must devise strategies and the means to improve
revenues and diversify the source.
o Such mechanisms could include fee revision, outsourcing of activities or the
establishment of private wings in accordance with the Regional financial rules
and regulations.
G) Oversee Implementation of Health Financing reforms
To effectively oversee the implementation of health financing reforms, the Governing Board and
Management Committee must ensure the proper execution of reforms aimed at enhancing the
sustained provision of quality health services, promoting equity in access, ensuring financial
protection, and establishing efficient and sustainable financing within the hospital/sector.
Key responsibilities include:
 Overseeing the proper implementation of health financing reforms, reimbursement of
expenses, resources management, maximizing retained revenue and allocation of
resources.
H) Oversee quality management activities
The Governing Board must ensure:
 Hospital services are provided to the highest possible standard.
 Systems are in place for monitoring and evaluating the quality and outcome of patient
care, customer services and use of resources.
 Appropriate mechanisms and activities to minimize risk, to identify and correct problems,
and to identify opportunities to improve patient care and services.
I) Oversee the implementation of national level hospital initiatives
 The Governing Board must closely monitor the implementation of national level hospital
initiatives.
 Incorporate these initiatives into the hospital’s annual plan, and monitor their
implementation through regular reports and observation visits.
J) Set strategies to balance the public private partnership
 It is the responsibility of the Governing Board to ensure that the public hospital should
leverage technical capabilities available only in the private hospitals, and that the private
hospitals should not engage themselves in practices that compromise the quality of
services in public hospitals.
 The Governing Board should oversee the outsourcing of clinical and non-clinical services
to the private vendors.
K) Select the Chief Executive Officer
 Governing Boards must ensure that the most qualified individual is appointed to the
position of Chief Executive Officer (CEO), following the processes set out in Federal or
Regional Directives.
L) Support, monitor, and assess the performance of the CEO
 The Governing Board should ensure that the performance of the CEO is assessed at least
biannually by the Board or appointing authority.
 Should the CEO fail to meet the expectations of the Governing Board, his/her
employment should be terminated, following the processes described by Federal or
Regional Directives.
M) Provide orientation for new Board members and ensure ongoing education for
existing members
 All Governing Boards should participate in ongoing education to assist members to carry
out their role in the hospital.
 For newly appointed board members, there should be a planned orientation program that
ensures members understand their responsibilities.
N) Review effectiveness of its own performance (Conduct Leadership audit)
The Governing Board should periodically and comprehensively evaluate its own performance,
taking into consideration areas such as:
 Regularity of and attendance at Board meetings
 Knowledge, skills and awareness of Board members on hospital operations, finance, on
key issues affecting the hospital and any national, regional and local health priorities
 Approval of the strategic and annual plans by set deadline
 The relationship between the Governing Board, CEO and hospital Senior Management
Team
 The relationship between the hospital and communities served by the hospital
 Engagement with the wider stakeholders such as woreda, zonal and regional health
departments and any local health partnerships
O) Ensure legal and ethical integrity and maintain accountability
 The Governing Board is responsible for ensuring adherence to legal standards and ethical
norms.
 It ensures that activities of the hospital are carried out with transparency and
accountability and that all required reports are submitted to higher authorities (e.g., RHB,
BOFED, FMOH, and MOFED) in accordance with government requirements.
P) Ensure community involvement in hospital service planning and delivery
 The Governing Board should ensure that mechanisms are established to enhance the
involvement of patients and the public in the planning, services delivery, and monitoring
phases.
o The governing board should establish hospital-community forums and conduct
them at least every quarter.
Q) Enhance the organization’s public standing
 The Governing Board should clearly advocate the hospital's mission, vision, values
accomplishments and goals to the public and garner support from the community.
Membership of Governing Board
A robust governing board engages in macro-level management rather than micromanagement,
and it consists of members who:
 Act on behalf of the community as a whole;
 Are interested and committed to serve as a board member;
  Have a variety of expertise as a collective whole, including finance, administration,
public health, government bureaucracy, legal and marketing;
 Maintain high ethical principles, integrity and competence;
 Deliver results while using resources wisely;
 Are hospital leaders;
 Commit the time required for meetings, dialogue, etc;
 Subscribe to the principles of accountability for themselves and others;
 Prioritize the benefits of the hospital rather than personal benefits;
 Are participatory in planning, decision-making, and activities; and
 Declare any conflicts of interest and excuse themselves from any decisions that have
immediate benefit for themselves, their families or their business interests.
A) Appointment of Board Members
The rights, roles and responsibilities, tenure of the board members, rules and procedures, for the
appointment of Governing Board members are described within Federal and Regional
Proclamations, Regulations and Directives. Usually, Boards are comprised of between 5 to 7
members, or as specified in Federal and Regional Directives. Governing Board members should
be residents of the area where the hospital is established. Additional factors to be taken into
consideration when appointing board members include:
 Due consideration to gender and professional mix,
 Community representation, and
 Professional efficiency, time and experience that will enable the Board member to
contribute to the improvement of the health sector.
B) Tenure of Board membership
The tenure of service of Board members should be between 3-5 years, and Board members may
serve a maximum of two terms, as determined by Federal and Regional Directives. The specifics
should be outlined in the TOR of specific Hospital’s governing board.
C) Revocation of Board membership
The membership of any Board member should be revoked when:
a) The Board member has no interest to continue membership. In such circumstances the Board
member should give one to two months advance notice (as determined by Federal and Regional
Directives) in writing to the Board Chairperson and RHB Head or Minister of Health;
b) The Board member changes residence address or leaves the office he/she represented;

c) In the case of people’s or employees’ representative if the Board member loses the faith of
his/her constituency and a request is made by the constituency to replace him/her; or

d) The Board member has failed to fulfill the duties of his/her membership. This includes
considerations such as:
i. Repeated absence from Board meetings without sufficient reason

ii. Proven corruption such as earning benefits in the health facility other than the legally
permitted benefits or other corrupt practice

iii. Repeated failure to follow up on actions agreed by the Board

iv. Breach of confidentiality

 In such cases, the Board should reach consensus that membership should be revoked and
should make this recommendation to the RHB Head or Minister for Health who will
reach a final decision on the matter.
 If a Board member leaves office during his/her period of tenure the remaining Board
members should select one or more possible replacements and nominate the candidate(s)
to the RHB or FMOH or the appointing authority to make the final appointment.
D) Duties and responsibilities of Board members
Board members have a duty to:
a) Attend ordinary and extraordinary meetings, respecting the time;

b) Accept and implement a decision passed by the majority;

c) Prepare for each meeting by reading agendas, minutes of the previous meeting and other
documents distributed for consideration;

d) Follow up on any actions agreed by the Board in a timely manner; and

e) Maintain confidentiality on all matters discussed by the Board.

E) Board accountability
 Board members have individual and joint responsibility for the decisions they pass and
are responsible individually and jointly for any damage caused to the hospital due to their
failure to accomplish the duty entrusted to them.
  In the event a Board member solely opposes a decision or an agenda for discussion,
he/she may explain the reason for his/her unique opposition and make it noted on the
minutes. He/she shall not be responsible for any damage occurred due to this decision or
agenda item.
 Governing Boards are accountable to their respective HB, ZHO/Sub-City HO, or WorHo.
or to the FMOH and should meet all expectations places on the Board.
F) Allowance for Board members
 Reimbursement of expenses for Board members and allowances for Board duties should
be provided as established by Federal and Regional Directives.
Officers of the Governing Board
The Governing Board should appoint three to five Officers, who form the Executive Committee
of the Board.
Officers of the Board include:
a) The Chairperson

b) The Vice-Chairperson

c) The Secretary
Roles of the Chairperson of a Governing Board
The Governing Board should be led by a chairperson, who is appointed by the RHB or FMOH or
appropriate appointing authority from among the Board members. The main responsibilities of
the Chairperson are to:
A) Preside over the Board
 The Chairperson should chair Board meetings and direct the overall functioning of the
Board.
 The Chairperson should take the lead in clarifying the goals of the Governing Board.
B) Convene and facilitate board meetings and set meeting agendas
 The Chairperson must:
 Ensure regular and extraordinary Board meetings take place in compliance with the
periods prescribed in Federal or Regional Directives.
 Ensure meetings are conducted in a professional manner and are constructive for both the
hospital and the individual Governing Board members.
  Oversee the development of a well thought out agenda and supporting materials in
collaboration with the CEO.
 Be expected to ensure that all members arrive fully prepared to participate in Governing
Board meetings.
 Possess the skills to clarify, summarize, and guide Governing Board members toward
decisions, while also allocating time at the end of the meeting for feedback on its
effectiveness.
C) Manage Governing Board structure
 The Chairperson should create, in collaboration with the CEO, a structure that supports
the mission and work of the Governing Board.
o Where appropriate he/she should establish standing committees to undertake
specific functions of the Board.
In addition to the above, an effective Chairperson will:
1. Understand the organization:
The Chairperson must have an expert understanding of the hospital’s history, mission, current
role, finances, program and services, and staff. He/she must also be knowledgeable of any
external forces that affect the hospital’s inner workings, making certain to execute any health
policies as required by the appropriate government body.
2. Know his/her own responsibilities and authority as Chairperson
By understanding his/her own responsibilities, the Chairperson serves as a model for other
Governing Board members to follow. The Chairperson’s real authority and influence rests in
how he/she develops and manages relationships with the rest of the Governing Board and staff.
3. Create a safe environment for decision making
The Chairperson should take the lead in establishing the tone for shared decision making by
inviting participation, encouraging varying points of view and promoting an open and honest
exchange of ideas about issues.

4. Build a working culture

The Chairperson should encourage a participatory working culture that focuses on collective
responsibility and accomplishment.
5. Cultivate future leadership and develop succession Plan
It is essential that the Chairperson is capable of cultivating and nurturing Governing Board
members who have expertise and personal qualities that the hospital needs. He/she must be able
to prepare Governing Board members and hospital senior management for future leadership,
which requires encouraging periodic self-assessment and preparing succession plan in order to
highlight Governing Board members’ strengths and leadership possibilities.
6. Communicate with the Governing Board through an effective information system
Providing information about hospital operations is an essential responsibility of the Governing
Board Chairperson and CEO. Materials for Governing Board and committee meetings should be
distributed in advance of the meeting to allow time for review by members. Establishing a
reliable system to distribute information at other times is also important, for regular, interim
updates and in the event of unexpected matters that demand Governing Board attention.

7. Maintain a productive relationship with the CEO and the appropriate government
body:
Maintaining productive relationships with both the CEO of the hospital, plus the appropriate
government body, are extremely important. It requires clarity of roles, trust, honesty and frequent
communication.
Roles of the Vice Chairperson of the Governing Board
 The Vice Chairperson is appointed from among Board members and acts on behalf of the
Chairperson in the Chairperson’s absence.
Roles of the Secretary of the Governing Board
The Secretary of the Governing Board is appointed from among Board members. This position
could be filled by the hospital CEO. The Secretary is responsible for taking minutes of Board
meetings. Minutes should be reviewed and approved by the Chairperson before distribution to
Board members.
Procedures of Board meetings
The main purpose of Board meetings is to ensure effective governance of the hospital. This
includes developing, deliberating and approving strategic and annual plans, monitoring
implementation, discussing and approving corporate policies and addressing any legal and
ethical issues that arise. Board meetings are also an opportunity to provide structured education
sessions for Board members on emerging issues concerning the hospital and/or the community it
serves.
(NB: General guidance/etiquette to ensure that any type of committee or meetings function
effectively are presented in Appendix D.)
A) Frequency of Board meetings
It is recommended that during the first year of establishment the Governing Board meets once
every month to become familiar with its own responsibilities, with the hospital and the health
sector in general. Thereafter the Board should develop a schedule whereby the Board meets no
less than the frequency set out in Federal or Regional Directives. Extra-ordinary meetings may
be convened should a matter of particular importance arise. Such meetings will be convened
upon the decision of the Chairperson, or if called for by a minimum of one-third of Board
members.
B) Agenda items
The agenda should be set jointly by the Board Chairperson and Hospital CEO. All Board
members should be invited to nominate agenda items for consideration by the Chairperson and
CEO. The agenda and any documents for discussion at the meeting should be distributed to
Board members at least one week in advance of the meeting.
The following should be regular standing items on each and every agenda of the Board:
a) Approval of previous meeting minutes;
b) Committee reports;
c) CEO’s report – providing an overview of hospital operations, discussion of pressing
issues and immediate concerns;
d) Old business – issues unresolved from last meeting;
e) New business – any issues Governing Board members want to raise; and
f) Next steps – plans for taking action on decisions reached by the Board, with the
assignment of follow up responsibilities to individuals as appropriate.

C) Decision making
Decisions by the Board should be made by majority vote. In the case of a tie the Chairperson has
the deciding vote. Voting may only take place when a full quorum of Board members is present.
A vote passed by less than a full quorum is invalid. The criteria for a full quorum vary from
Region to Region (from 50% + 1 of Board members to 2/3rd of Board members) and are
described in Federal and Regional Directives. The CEO is an ex officio Board member and
hence has no vote on the Governing Board.
Governing Board standing committees
The Governing Board should assign standing committees to carry out specific functions of the
Board and report on their activities to the full Board. As a minimum the following standing
committees should be established:
a) Executive committee
b) Finance committee
c) Audit committee

Other standing committees may be established on a temporary or permanent basis as the need
arises (for example a CEO selection committee, strategic planning committee, quality assurance
committee or a committee to address an emerging clinical matter).
When selecting members for each committee the following principles should be followed:
a) Committee members should be selected from the current Board members
b) Selection should be transparent and fair, without favoritism of any kind
c) The Governing Board Chairperson should be a member of all committees
d) Each committee should have its own chairperson who will preside over the actions of the
committee
e) Hospital staff, representatives of appropriate external bodies (e.g. MOF or Woreda Health
Office) or prominent members of the community with an active interest in the hospital
and appropriate professional expertise (e.g. an accountant for the Finance committee)
may be appointed as non-voting members to support the functions of the committee
A) Executive Committee
The Executive Committee should be chaired by the Governing Board Chairperson and should be
comprised of Officers of the Board and all key Governing Board committee chairpersons. The
Committee acts on behalf of the full Governing Board in their absence and is responsible for
reporting to the full Governing Board on such actions.
B) Finance Committee
The Finance Committee oversees the hospital’s financial planning and ongoing financial
operations to ensure the viability of the hospital. This includes monitoring that adequate funds
are available for the organization’s financial plan, safeguarding hospital assets, and ensuring that
the hospital has adequate fiscal policies. Moreover, the Finance Committee must anticipate
financial problems by reviewing hospital financial information provided at regular intervals. The
Finance Committee should be comprised of selected Governing Board members, the hospital
Finance Head and possibly representatives from the Regional or Woreda Bureaus of Finance and
Economic Development and business leaders from the local community. Other than those
individuals who are members of the hospital Governing Board, all finance committee members
have no voting rights.
C) Audit Committee
The Audit Committee should make sure that all required financial audits are conducted and that
reports are presented to appropriate bodies. The committee should be chaired by the Treasurer of
the Governing Board and comprised of selected Governing Board members, the hospital internal
auditor, the Finance Head and possibly representatives from the Regional or Woreda Bureaus of
Finance and Economic Development or a respected local accountant with knowledge of
bookkeeping and auditing. Other than those individuals who are members of the hospital
Governing Board, all audit committee members have no voting rights.
Chief Executive Officer
Selection and Appointment of the CEO
Each hospital should be managed by a CEO who is appointed by the Governing Board or
appointing authority following the processes set out in Federal or Regional Directives. A
qualified CEO should have a diverse set of leadership and management skills, as well as
considerable healthcare/hospital experience as either a clinician or management professional.
He/she must be capable of working with diverse groups, such as the Governing Board, various
community groups, government officials and hospital staff, patients and families. He/she should
be able to think strategically to provide vision and direction to the hospital with special attention
to professional development. An individual with an entrepreneurial spirit and who is fiscally
responsible will be valuable to the organization. He/she should be a results-oriented leader with
an eye for understanding how to improve the quality of patient care.
Roles and responsibilities of CEO
The CEO is the highest-ranking management officer in the hospital and as such, directs and
administers the activities of the Hospital in accordance with instructions and plans developed by
the Governing Board. The CEO must ensure that decisions of the Governing Board are
implemented effectively and efficiently throughout the hospital and must ensure the efficient
planning and utilization of all hospital resources in order to achieve the organization’s goals.
This entails the management of human resources, supplies, revenues, and physical and capital
assets based on detailed plans developed for all aspects of the hospital’s operations. CEO
responsibilities should be described in a job description developed by the board that clarifies the
expectations of performance and boundaries of his/her responsibilities. Areas of responsibility
include:
A) Governing Board development, communication and relationships
The CEO collaborates closely with the Governing Board and any Standing Committees, assisting
them by providing relevant information to enable effective and efficient performance of their
functions. Serving as the Governing Board's secretary, the CEO promptly communicates any
issues or risks impacting the hospital. Furthermore, the CEO works with the Board to organize or
facilitate trainings for Governing Board members to ensure they possess the necessary skills for
their roles.
B) Planning, monitoring and evaluation of hospital operations
The CEO is responsible for preparing hospital strategic and annual plans and presenting them to
the Board and relevant higher authorities for approval. It is the CEO's duty to effectively
implement these plans and achieve the outlined strategic goals, including all hospital
improvement initiatives. Additionally, the CEO must provide the Board with regular
performance and financial reports, indicating progress towards the objectives of the strategic and
annual plans, with specific emphasis on any areas of concern. Furthermore, the CEO ensures
timely submission of any required reports to higher authorities, such as Woreda, Zonal, or
Regional Health & Finance Departments.
C) Budgeting

The CEO should prepare and submit the budget of the hospital to the Board for approval. After
approval the CEO should maintain the hospital budget within the agreed upon parameters,
effecting payments in accordance with the approved budget and plans. In partnership with the
Governing Board, the CEO is also responsible for designing various mechanisms to increase
hospital revenue such as:
  Revenue collection and utilization procedures
 Outsourcing non clinical services to improve the overall quality of care,
 Establishing, organizing, and controlling private wing health services
 Community contributions, donations of any kind.

The CEO should ensure that financial audits are performed in accordance with government
requirements and submitted to the Board for approval, and subsequently to the appropriate higher
authority in a timely manner.
The CEO should ensure that any recommendations made by internal or external financial audits
are acted upon appropriately.
D) Development of hospital management committee and other structures
Each hospital must maintain an organization chart delineating hospital functions and personnel,
including reporting structures. Developed by the CEO and senior management, this chart
requires approval from the Governing Board. A proficient CEO identifies capable staff members
to share workload responsibilities and delegate specific powers and duties to hospital employees
as necessary. The CEO is accountable for establishing an effective Senior Management Team to
oversee daily hospital operations and may establish additional committees as needed. Ensuring
each committee has clearly defined membership and responsibilities, and ensuring their
functional efficacy, falls under the CEO's responsibility
E) Personnel management and development
The CEO should strive to empower and advance the professional capacity of hospital staff and
ensure:
 The recruitment and retention of a qualified workforce that enables the hospital to
discharge its activities.
 An Employee Manual and incentive schemes are developed and submitted to the Board,
and should implement these upon approval.

F) Quality of care
 The CEO should establish mechanisms to measure the quality of care and establish
programs to continuously strive for improved levels of quality.
 The CEO should ensure that patients’ rights are respected by all staff.
G) Regulations compliance
  The CEO should oversee compliance with all relevant regulations from government
bodies.
o Such regulations may include safety regulations, employment regulations, and
finance and audit regulations among others.
H) Management of hospital buildings, campuses and physical assets
 The CEO should establish and meet goals for the maintenance and improvement of
hospital buildings and campuses and all physical assets including medical equipment and
vehicles.
I) Public Relations: community, governmental and professional audiences
 The CEO is the chief spokesperson for the hospital’s various audiences and should
represent the hospital in its dealings with third parties.
 The CEO should strive to enhance the reputation of the hospital by strengthening
relationships with the community, government and professional audiences.
J) Professional development
 The CEO should keep current with emerging issues and technologies and ensure that staff
members are also kept current in these areas through training, access to resources, and
related opportunities.
K) Strengthen and improve good governance practice of the hospital
 The CEO should identify major public concerns and challenges of the staff and strive to
solve through developing a ‘quick wins’ plan.
L) Leadership
 The CEO is responsible for establishing and enhancing leadership presence throughout
the hospital and fostering leadership practices across all levels of management.
o This is achieved by properly planning and executing high impact leadership
program at the hospital level and inspiring the hospital's vision and serving as a
role model in all aspects of leadership.
Accountability and evaluation of the CEO
The CEO is accountable to the Hospital Governing Board, and is the only staff member under
the direct supervision of the Board. Evaluations of the CEOs performance should be conducted
at least every six month by the Board and/or appointing authority. Evaluation criteria should be
based on the job description of the CEO. Annual performance expectations should be spelled out
at the beginning of each year in discussion between the Governing Board Chairperson, or
appropriate member of the appointing authority, and the CEO.
If the Governing Board is concerned about the CEO’s performance at any time it should use the
evaluation criteria to address these concerns. The discussion can lead to goals for performance
improvement in the future. If these concerns have been addressed in the past and no
improvements have been made, the discussion may ultimately lead to the termination of
employment of the CEO following the process described by Federal or Regional Directives.
Relationship between CEO and Governing Board
The CEO and the Governing Board Chairperson must effectively manage their relationship to
ensure optimal hospital operations. While the CEO bears primary responsibility for maintaining
a professional, courteous, and informative relationship, defining the organization's leadership, the
Chairperson's role is temporary, given their defined terms of service as an appointed volunteer.
The CEO, as the hired professional, plays a crucial role in continuity during Chairperson
Successions, working alongside successive Chairs to uphold organizational stability.
With the Governing Board as the ultimate authority overseeing the hospital, the CEO serves at
their pleasure and that of the Chairperson. Attending to the Chairperson's needs and directives is
the CEO's duty, and fostering a constructive relationship relies on mutual understanding of each
other's strengths, weaknesses, management/governance styles, and respective responsibilities.
The CEO must garner support from the Chairperson on matters vital to the hospital and its
community, enabling collaborative design of strategies endorsed by the Governing Board for
implementation within the hospital.

Section 4 Implementation Guidance

4.1. The hospital has a functional governing board mandated to provide strategic leadership
The Hospital Board provides strategic direction for ensuring quality and equitable healthcare
within its jurisdiction, guided by the Health Service Delivery and Administration legal
frameworks established by the Ministry of Health (MOH), Ministry of Education (MOE), and
relevant regional or City Administrations. With oversight of the hospital's overall functioning,
the Hospital Board actively engages the local community to foster a sense of ownership among
community members and hospital staff. This engagement facilitates decentralized decision-
making, allowing public hospitals to address concerns promptly. Moreover, the establishment of
the Hospital Board prioritizes gender balance and professional diversity. At least half of the
Board members, or a minimum of two members, should be women, and members from various
sectors must be selected based on the hospital's specific needs and contextual factors.
Additionally, the Hospital Board should have by-laws detailing operational procedures and a
code of conduct for Board members. These guidelines ensure effective discharge of the Board's
powers and duties
4.2. The hospital has functional management committee that runs the overall activities of the
hospital
The Hospital Management Committee (HMC) is an integral part of hospital governance,
established to advise and support the hospital CEO/D in making decisions on pertinent hospital
issues. While the Hospital Governing Board provides strategic guidance, the HMC is responsible
for overseeing day-to-day activities.
The HMC formulates strategic and operational plans based on directives from the hospital board,
incorporating SWOT analysis to drive fundamental improvements in healthcare provision. It is
crucial for the HMC to coordinate and manage hospital operations efficiently to achieve
organizational objectives.
Additionally, the HMC conducts periodic assessments to explore innovative approaches for
enhancing health services and achieving hospital objectives. Regular monitoring of plan
implementations enables the HMC to identify successes and areas for improvement, facilitating
timely adjustments for enhanced plan implementation
The roles and responsibilities of the HMC include:

 Prepare strategic and annual plan including the budget approved by GB

 Advice and support the hospital CEO/CED
 Support lower structures of the hospital during planning
 Regular performance evaluation
 Regular management meeting

Department based Sub-Quality Improvement taskforce

Achieving the objective of providing quality health services requires collaborative efforts from
health facilities, particularly hospitals, and various departments within them. To ensure
adherence to national and global health service standards, the hospital board and management
committee must prioritize the establishment of modern data generation, management, and
utilization systems. Additionally, adequate attention should be given to continuous capacity
development of hospital staff to facilitate necessary quality improvements. This includes not
only formal trainings but also fostering skills and knowledge transfer among senior and junior
staff through in-house mentoring and coaching initiatives.
Role and responsibility of department-based Sub Quality Improvement taskforce
 Prepare service area based annual plan
 Conduct clinical audit
 Conduct Regular performance evaluation, identify gaps, prepare quality improvement
plan and actions

4.3. The hospital increases resource generation and utilization

The scarcity of resources poses a significant challenge to the provision of quality health services
in hospitals, leading to limitations in the supply of essential items such as drugs, medical
supplies, and equipment, primarily due to financial constraints. It is the responsibility of the
Hospital Board (HB) and Management Committee (MC) to provide effective leadership aimed at
continuously augmenting hospital resources to enhance healthcare quality.
One approach to address financial resource constraints is by increasing revenue retention and
utilization within hospitals. According to the Health Service Delivery and Administration
(HSDA) legal framework of the Ministry of Health (MOH), regional governments, and City
Administrations, Revenue Retention and Utilization (RRU) is designated as a budgetary addition
to the hospital's treasury allocation. It is crucial to ensure that RRU does not replace or reduce
the government-allocated treasury budget; rather, it should supplement it in accordance with
government financial regulations.
Therefore, it is imperative that the HB and MC prioritize the continuous augmentation and
efficient utilization of retained revenue. The focus should not only be on increasing the absolute
amount of retained revenue but also on allocating a higher proportion towards activities that
significantly enhance healthcare quality, such as improving the availability of drugs, medical
supplies, and equipment.
Furthermore, the HB and MC should engage partners and stakeholders, including the local
community, to increase hospital resources. To achieve this, they need to devise mechanisms,
develop plans, and implement strategies to generate additional financial and non-financial
resources from partners and the broader local community.
4.4. The hospital establishes accountability mechanisms
The Hospital Board and Management Committee bear responsibility for decision-making, crucial
for ensuring efficient resource allocation and overall hospital operations. To uphold
accountability, the hospital must establish an accountability mechanism, assessed through:
 Adherence to hospital rules and regulations.
  Allocation of adequate budget by the Governing Board (GB) and Management
Committee (MC) to enhance quality of care through resource-efficient utilization.
 Review and corrective action based on external audit findings by the GB and MC.
 Periodic self-evaluation by the GB and MC, followed by corrective actions as necessary

4.5. The hospital has mechanisms and practices to improve the quality of healthcare
Ensuring quality healthcare remains the primary objective of our health system. While
significant progress has been made in recent years, there remains a need to further enhance the
delivery of quality health services. Quality challenges are particularly prominent in hospitals,
with clinical quality governance identified as a key challenge during the Health Sector
Transformation Plan Implementation (HSTPI) and beyond. The Hospital Board (HB) and
Management Committee (MC) play vital roles in addressing this challenge by fostering
continuous improvement in healthcare quality. To achieve this, the HB and MC are expected to:
 Include quality issues as a standing agenda item and monitor progress against the
approved quality strategy/plan of the hospital using quality outcome measures.
 Regularly review major outcome measures:
o BOR/IPD Admission
o Referral Rate
o Satisfaction Rate
o Surgical Volume
o OPD Visits/OPD Per Capita and
o Mortality Rate.
 Consider additional quality outcome measures based on the hospital's specific
contexts and needs

4.6. The hospital accords adequate attention for implementation of projects and initiatives
Various reforms and initiatives have been implemented to enhance the accessibility, equity,
quality, and sustainability of the health system. These include the Health Insurance (HI)
Program, Health Care Financing reforms, and the Motivated, Competent, and Compassionate
(MCC) health workforce initiative. Additionally, hospitals independently undertake projects such
as new construction, expansion, renovations of existing infrastructure, and the adoption of new
technologies.
Health Care Financing
The Health Care Financing Reform, also known as the first-generation health care financing
reform, is a major initiative within the health sector aimed at achieving multiple objectives.
These include generating sustained additional resources for health, enhancing the utilization of
available resources, improving equity in healthcare provision, and fostering community
ownership of public health facilities through local community engagement in decision-making
processes. Implemented across all public health facilities over several years, this reform has
yielded significant improvements.
It remains a key strategic objective of the Health Sector Medium-Term Development and
Investment Plan (HSDIP), requiring continued attention from the Hospital Board (HB) and
Management Committee (MC). The HB and MC are tasked with providing clear directives and
making timely decisions related to generating additional resources, improving the utilization of
these resources for quality improvement activities, and enhancing other components of the
Health Care Financing reform.
Health Insurance
Health Insurance (HI) represents the second generation of health financing reform in Ethiopia,
aimed at improving access to health services and protecting households and individuals from
catastrophic health expenditure. Its main objectives include reducing or eliminating payment for
health services at the point of service, increasing health service utilization, and improving health
outcomes. Founded on the principle of solidarity, HI ensures that the healthy support the ill, and
the better-offs support the indigents. Effective implementation of HI enhances health service
utilization and safeguards households and individuals from financial hardship, ultimately
contributing to the country's vision of achieving Universal Health Coverage (UHC) by 2035.
The Hospital Board (HB) and Management Committee (MC) play crucial roles in providing
leadership and guidance for the successful implementation of HI, particularly by enhancing the
quality of health services. These reforms and programs necessitate specific attention from the HB
and MC to ensure their proper implementation. Without adequate attention, the quality of these
reforms may be compromised, resources could be misused, and desired objectives may not be
achieved. Therefore, the HB and MC should establish mechanisms to objectively review the
implementation status, identify gaps, and take timely corrective actions.
Furthermore, the HB and MC are expected to closely monitor recommendations and feedback
provided by regulatory bodies, and prepare work plans to improve implementation based on
these recommendations. This proactive approach will ensure the effective and efficient
implementation of HI and other related reforms and programs within the hospital setting
4.7. The hospital has a regular capacity building program for governing board members
and managers (Implemented through High Impact leadership program for Health)
Capacity building for board members, management, and health leaders at all levels is essential to
achieve hospital objectives effectively. Board members must understand health strategies,
reforms, and initiatives aimed at providing equitable, high-quality healthcare without financial
hardship. They should comprehend the hospital's mission, values, strengths, and limitations to
transform service delivery effectively.
Similarly, Management Committee (MC) members and leaders need a mutual understanding of
health policies, strategies, standards, laws, and initiatives to fulfill their roles. Formulating
evidence-based long-term and operational plans requires improved implementation capacity at
all levels.
The MC should assess training needs, allocate budget in consultation with the board, and conduct
capacity-building activities. These activities may include training in various centers, CPDs,
online courses, and collaboration with stakeholders like professional societies and the Ministry
of Health.
Furthermore, hospitals can enhance their implementation capacity through networking and
sharing experiences with best-performing hospitals via platforms such as the Ethiopian Hospitals
Alliance for Quality (EHAQ
4.8. The board and the management committee provide guidance and promote good ethical
practice
Measuring performance and appraisal system
Creating conducive working environment and implementing mechanisms to motivate the health
workforce are crucial for achieving hospital objectives. The Hospital Board (HB) and
Management Committee (MC) continuously strive to improve working conditions and safety,
objectively assess staff performance, and recognize top performers while providing support to
those who need improvement. To achieve this, the HB and MC must establish clear plans for
objectively assessing overall hospital performance, including individual staff performance.
Hospital leadership is responsible for setting transparent and objective criteria for recognizing
top performers and regularly evaluating service areas' overall performance. This includes
objectively assessing staff performance, recognizing top performers, and providing support for
staff who require improvement on an ongoing basis.
4.9. The hospital has created a link between the hospital and its catchment health centers.
Hospitals and health centers play vital roles in providing healthcare services to individuals and
communities. While hospitals offer specialized and advanced medical care, health centers
provide primary care services that are accessible and affordable for underserved communities.
Strengthening the link between hospitals and catchment health centers improves the quality of
health services by fostering synergy, enhancing resource utilization, and improving health
outcomes.

Collaboration between these facilities ensures patients receive comprehensive, coordinated care
addressing both immediate medical needs and long-term health goals. Moreover, this
collaboration improves community health outcomes by addressing social determinants of health,
promoting preventative care, and enhancing patient care coordination and management.
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