Directors Dialogue Unplugged: Eds & Meds Edition
February 13, 2026
Key Insights for Trustees & Senior Leadership
Why This Matters
Eds & Meds are anchor institutions and regional economic engines — yet many regions, including Philadelphia, are over-dependent on them leaving the economy more vulnerable to demographic, technological and policy changes. With converging headwinds across higher education and healthcare, sector sustainability now hinges on governance choices, regional collaboration, and early, courageous action.
The Landscape
- Over-reliance on Eds & Meds: In regions where other industries have declined, Eds & Meds are carrying disproportionate economic weight—creating both stability and fragility.
- Down, but not out: Philadelphia ranks last of 50 metro regions in economic mobility; however, improvement is possible. Charlotte, NC rose from 50th to 38th in the rankings in a decade, offering a roadmap for improvement.
- Funding vulnerability: Life sciences and research growth depend heavily on federal funding; policy shifts create real exposure.
- Thin margins & consolidation: Healthcare operates on near-zero margins; higher education faces demographic cliffs, cost pressures and closures.
- Talent & enrollment pressures: Immigration constraints and shrinking student pipelines intensify financial strain.
- AI paradox in healthcare: Technology promises efficiency but is currently driving costs up, raising strategic and governance questions from both sides of the aisle.
- Changing economic identity: Long known as an “Eds & Meds” city, Philadelphia’s mayor plans to take advantage of increased federal defense budgets to diversify economic drivers.
Governance Implications
- From stewardship to strategy: Nonprofit status doesn’t remove the need for financial discipline. No margin, no mission.
- Ask the hard question: What will we stop doing? Strategic exits and right-sizing — done early — preserve options and protect communities.
- Own the narrative on closures: Planned, early exits can be responsible leadership; waiting for crisis harms stakeholders.
- Operate with public-company rigor: When divisions fail, boards must act decisively and be guided by data, not legacy.
- Transparency as public accountability: Tax-exempt status carries a responsibility for meaningful transparency and accountability. IRS Form 990 was designed to support public oversight of nonprofits, but it lacks demographic information about the approximately 1,100 individuals who them.
- Diverse perspectives improve governance: Cognitive diversity (broadly defined across background, skills, lived experience and perspective) is a bellwether of good governance, not a compliance exercise.
- Governance is never “done”: Effective governance is a continually evolving process that must adapt as strategy, risk and community needs change.
- Regional resilience relies on collaboration: Move beyond competition toward collegial problem solving like shared services, joint workforce pipelines, payor-provider strategies and cross-sector partnerships with tradeable industries.
Be Future-Ready by Design
Priority board capabilities for the next 3–5 years:
- Strategic thinking & industry fluency
- Courage to challenge management constructively
- Collaboration & trust
- Willingness to right-size the business
- Time, passion, and engagement
Governance structures & cultures that enable change:
- Strategy-driven, skills-based composition (beyond donors/alumni)
- Clear expectations, performance metrics, and term limits for board members
- Ongoing board education on sector dynamics and regional economics
- A strong “golden triangle” (Board Chair, CEO, Nom/Gov Chair) to drive culture and change readiness
Questions for the Boardroom
- Five-year view: What must our institution look like to thrive in 5 years?
- Strategic exits: What activities or programs should we stop, resize, or exit — now?
- Collaboration: Where can we share costs or capabilities regionally?
- Board readiness: Do we have the skills, diversity of perspective, and culture to govern through consolidation, AI disruption, and funding volatility?
- Culture: Have we created a working board culture with clear performance expectations and robust performance evaluations or is board membership driven by philanthropic requirements?
- Transparency and trust: As tax-exempt entities, what information about our board and governance structure and practices should be more visible to the public?
- Early warning signals: What data should management share with the board regularly so we can act before mandated by a crisis?
- Regional responsibility: Do strong institutions have a regional responsibility to collaborate with more vulnerable peers to strengthen the ecosystem?
- Sustainability: How sticky are we? How many students returned as sophomores? How many patients have chosen your hospital for care more than once?
Bottom Line
An Eds & Meds–based economy can be sustainable only if boards lead proactively — designing the boardroom of the future, collaborating regionally, and making tough calls early. Governance is not a static structure; it is an ongoing discipline that must evolve with the institution and the community it serves. Institutions that act by design — not by crisis — will better serve their missions and communities.
Additional Resources
