Chapter 20: Board Composition

In this chapter:

• Authority
• Requirements
• Demonstrating Compliance
• Related Considerations

Authority

Section 330(k)(3)(H) of the PHS Act; and 42 CFR 51c.304 and 42 CFR 56.304

Requirements^{1, 2}

• The health center’s governing board must consist of at least 9 and no more than 25 members.³
• The majority [at least 51%] of the health center board members must be patients⁴ served by the health center. These health center patient board members must, as a group, represent the individuals who are served by the health center in terms of demographic factors, such as race, ethnicity, and gender.
• Non-patient health center board members must be representative of the community served by the health center and must be selected for their expertise in relevant subject areas, such as community affairs, local government, finance and banking, legal affairs, trade unions, and other commercial and industrial concerns, or social service agencies within the community.
• Of the non-patient health center board members, no more than one-half may derive more than 10% of their annual income from the health care industry.⁵
• A health center board member may not be an employee of the center, or spouse or child, parent, brother or sister by blood or marriage of such an employee.⁶ The project director [Chief Executive Officer (CEO)] may be a non-voting, ex-officio member of the board.
• The health center bylaws or other internal governing rules must prescribe the process for selection and removal of all governing board members. This selection process must ensure that the governing board is representative of the health center patient population. The selection process in the bylaws or other rules is subject to approval by HRSA.
• In cases where a health center receives an award/designation under section 330(g), 330(h) and/or 330(i) and does not receive an award/designation under section 330(e), the health center may request approval from HRSA for a waiver of the patient majority board composition governance requirement by showing good cause.

Demonstrating Compliance

A health center would demonstrate compliance with these requirements by fulfilling all of the following:

1. The health center has bylaws or other relevant documents that specify the process for ongoing selection and removal of board members. This board member selection and removal process does not permit any other entity, committee or individual (other than the board) to select either the board chair or the majority of health center board members,⁷ including a majority of the non-patient board members.⁸
2. The health center has bylaws or other relevant documents that require the board to be composed as follows:
   • Board size is at least 9 and no more than 25 members,⁹ with either a specific number or a range of board members prescribed;
   • At least 51% of board members are patients served by the health center. For the purposes of board composition, a patient is an individual who has received at least one service in the past 24 months that generated a health center visit, where both the service and the site where the service was received are within the HRSA-approved scope of project;
   • Patient members of the board, as a group, represent the individuals who are served by the health center in terms of demographic factors, such as race, ethnicity, and gender;
   • Non-patient members are representative of the community served by the health center or the health center’s service area;
   • Non-patient members are selected to provide relevant expertise and skills such as:
     • Community affairs;
     • Local government;
     • Finance and banking;
     • Legal affairs;
     • Trade unions and other commercial and industrial concerns; and
     • Social services;
   • No more than one-half of non-patient board members derive more than 10% of their annual income from the health care industry; and
   • Health center employees,^{10, 11} and immediate family members (i.e., spouses, children, parents, or siblings through blood, adoption, or marriage) of employees may not be health center board members.
3. The health center has documentation that the board is composed of:
   • At least 9 and no more than 25 members;
   • A patient¹² majority (at least 51%);
   • Patient board members, as a group, represent the individuals who are served by the health center in terms of demographic factors, such as race, ethnicity, and gender, consistent with the demographics reported in the health center’s Uniform Data System (UDS) report;¹³
   • Representative(s) from or for each of the special population(s)¹⁴ for those health centers that receive any award/designation under one or more of the special populations section 330 subparts, 330(g), (h), and/or (i); and
   • As applicable, non-patient board members:
     • Who are representative of the community in which the health center is located, either by living or working in the community, or by having a demonstrable connection to the community;
     • With relevant skills and expertise in areas such as community affairs, local government, finance and banking, legal affairs, trade unions, other commercial and industrial concerns, or social services within the community; and
     • Of whom no more than 50% earn more than 10% of their annual income from the health care industry.¹⁵
4. The health center verifies periodically (for example, annually or during the selection or renewal of board member terms) that the governing board does not include members who are current employees of the health center, or immediate family members of current health center employees (i.e., spouses, children, parents, or siblings through blood, adoption, or marriage).
5. In cases where a health center receives an award/designation under section 330(g), 330(h) and/or 330(i), does not receive an award/designation under section 330(e), and requests a waiver of the patient majority board composition requirements, the health center presents to HRSA for review and approval:
   • “Good cause” that justifies the need for the waiver by documenting:
     • The unique characteristics of the population (homeless, migratory or seasonal agricultural worker, and/or public housing patient population) or service area that create an undue hardship in recruiting a patient majority; and
     • Its attempt(s) to recruit a majority of special population board members within the past three years; and
   • Strategies that will ensure patient participation and input in the direction and ongoing governance of the organization by addressing the following elements:
     • Collection and documentation of input from the special population(s);
     • Communication of special population input directly to the health center governing board; and
     • Incorporation of special population input into key areas, including but not limited to: selecting health center services;¹⁶ setting hours of operation of health center sites;¹⁷ defining budget priorities;¹⁸ evaluating the organization’s progress in meeting goals, including patient satisfaction;¹⁹ and assessing the effectiveness of the sliding fee discount program.²⁰
6. For health centers with approved waivers, the health center has board minutes or other documentation that demonstrates how special population patient input is utilized in making governing board decisions in key areas, including but not limited to: selecting health center services; setting hours of operation of health center sites; defining budget priorities; evaluating the organization’s progress in meeting goals, including patient satisfaction; and assessing the effectiveness of the sliding fee discount program.

Related Considerations

The following points describe areas where health centers have discretion with respect to decision-making or that may be useful for health centers to consider when implementing these requirements:

• Within the range of 9 to 25 board members, the health center determines the appropriate board size for its organization.
• In addition to race, ethnicity, and gender, the health center determines other relevant demographic or geographic factors to consider when selecting patient or non-patient board members.
• In cases where language or literacy may present a barrier to board members’ evaluation of written materials, the health center determines how to make accommodations to ensure the meaningful participation of such board members.
• The health center board determines whether to include non-voting, ex-officio members including, for example, the Project Director/CEO, other health center staff members, or community members on the board, consistent with what is permitted under other applicable laws.
• The health center determines within its policies how to define “health care industry” for purposes of board composition and how to determine the percentage of annual income of each non-patient board member derived from the health care industry.
• For health centers with a HRSA-approved waiver, the health center board determines which strategies²¹ to use for receiving input from the special population and ensuring the special population’s participation in the direction and ongoing governance of the health center.

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Footnotes

^1. The governing board of a health center operated by Indian tribes, tribal groups, or Indian organizations under the Indian Self-Determination Act or Urban Indian Organizations under the Indian Health Care Improvement Act is exempt from the specific board composition requirements discussed in this document. Section 330(k)(3)(H) of the PHS Act.

^2. For public agencies that elect to have a co-applicant, these board composition requirements apply to the co-applicant board.

^3. 42 CFR 51c.304(a) and 42 CFR 56.304(a) permit that the requirement regarding board size may be waived by the Secretary for good cause shown. HRSA will not grant such waivers except where the health center has demonstrated to HRSA an inability to meet the requirement.

^4. Patient board members are also often referred to as “user” or “consumer” board members. However, for the purposes of this chapter, only the term “patient” or “non-patient” board member will be used for ease of reference.

^5. Per the regulations in 42 CFR 56.304, for health centers awarded/designated solely under section 330(g) of the PHS Act, no more than two-thirds of the non-patient board members may derive more than 10% of their annual income from the health care industry.

^6. While no board member may be an employee of the health center, 42 CFR 51c.107 permits the health center to use Federal award funds to reimburse board members for these limited purposes: 1) reasonable expenses actually incurred by reason of their participation in board activities (e.g., transportation to board meetings, childcare during board meetings); or 2) wages lost by reason of participation in the activities of such board members if the member is from a family with an annual family income less than $10,000 or if the member is a single person with an annual income less than $7,000. For section 330(g)-only awarded/designated health centers, 42 CFR 56.108 permits the use of grant funds for certain limited reimbursement of board members as follows: 1) for reasonable expenses actually incurred by reason of their participation in board activities (e.g., transportation to board meetings, childcare during board meetings); 2) for wages lost by reason of participation in the activities of such board members. Health centers may wish to consult with their legal counsel and auditor on applicable state law regarding reimbursement restrictions for non-profit board members and implications for IRS tax-exempt status.

^7. An outside entity may only remove a board member who has been selected by that entity as an organizational representative to the governing board.

^8. For example, if the health center has an agreement with another organization, the agreement does not permit that organization to select either the chair or a majority of the health center board.

^9. For the purposes of the Health Center Program, the term “board member” refers only to voting members of the board.

¹⁰ For the purposes of health center board composition, an employee of the health center would include an individual who would be considered a “common-law employee” or “statutory employee” according to the Internal Revenue Service criteria, as well as an individual who would be considered an employee for state or local law purposes.

^11. In the case of public agencies with co-applicant boards, this includes employees or immediate family members of both the co-applicant organization and the public agency component (for example, department, division, or sub- agency) in which the Health Center Program project is located.

^12. A legal guardian of a patient who is a dependent child or adult, a person who has legal authority to make health care decisions on behalf of a patient, or a legal sponsor of an immigrant patient may also be considered a patient of the health center for purposes of board representation. Students who are health center patients may participate as board members subject to state laws applicable to such non-profit board members.

^13. For health centers that have not yet made a Uniform Data System (UDS) report, this would be assessed based on demographic data included in the health center’s application.

^14. Representation could include advocates for the health center’s section 330 (g), (h), or (i) patient population (for example, those who have personally experienced being a member of, have expertise about, or work closely with the current special population). Such advocate board members would count as “patient” board members only if they meet the patient definition set forth in this chapter.

^15. For example, in a 9 member board with 5 patient board members, there could be 4 non-patient board members. In this case, no more than 2 non-patient board members could earn more than 10% of their income from the health care industry.

¹⁶ See Chapter 4: Required and Additional Health Services for more information on providing services within the HRSA-approved scope of project.

^17. See Chapter 6: Accessible Locations and Hours of Operation for more information on health center service sites and hours of operation.

^18. See Chapter 17: Budget for more information on the Health Center Program project budget.

^19. See Chapter 19: Board Authority for more information on the health center board’s required authorities.

^20. See Chapter 9: Sliding Fee Discount Program for more information on requirements for health center sliding fee discount programs.

^21. For example, a health center could utilize an advisory council of special population representatives, could conduct regular focus groups with the special population, or could have one or more patients from the special population serving on the board.