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Board characteristics, governance objectives, and hospital performance

An empirical analysis of German hospitals

Thiel, Andrea; Winter, Vera; Büchner, Vera Antonia

doi: 10.1097/HMR.0000000000000153

Background: There is a growing need for hospital supervisory boards to support hospital management in different areas, including (financial) monitoring, resource provision, stakeholder relationships, and strategic decision-making. Little is currently known about how boards’ emphases on these various governance objectives contribute to performance.

Purpose: Using a dominant logics perspective, this article aims to detect the governance logics that hospital boards emphasize, to determine whether there are distinct clusters of hospitals with the same sets of emphases, and to show how cluster membership relates to board characteristics and financial performance.

Methodology: Using factor analysis, we identify latent classes of governance objectives and use hierarchical cluster analysis to detect distinct clusters with varying emphasis on the classes. We then use multinomial regression to explore the associations between cluster membership and board characteristics (size, gender diversity, and occupational diversity) and examine the associations between clusters and financial performance using OLS regression.

Results: Classes of objectives reflecting three governance theories—agency theory, stewardship theory, and stakeholder theory—can be distinguished, and hospitals can be divided into four clusters based on their board’s relative emphasis on the classes. Cluster membership is significantly associated with board characteristics. There is also a significant association between cluster membership and hospital financial performance, with two of three groups performing significantly better than the reference group.

Conclusion: High performance in hospitals can be the result of governance logics, which, compared to simple board characteristics, are associated with better financial outcomes.

Practice implications: Hospitals can influence the emphasis placed on different governance objectives and enhance organizational success by creating boards that are small enough to be effective yet diverse enough to profit from a wide variety of expertise and experience.

Andrea Thiel, MA, is Research Fellow, Department of Health Care Management, Hamburg Center for Health Economics, University of Hamburg, Germany.

Vera Winter, MA, PhD, is Associate Professor, Department of Political Science and Public Management, University of Southern Denmark, Odense. E-mail:

Vera Antonia Büchner, MA (Int.), PhD, is Researcher, Department of Health Care Management, Hamburg Center for Health Economics, University of Hamburg, Germany.

This study was supported by a research grant from the German Federal Ministry of Education and Research (BMBF) in Germany (Grant 01FL10055). The sponsor had no role in the study design, collection and analysis of data, the writing of the report, or the submission of the paper for publication.

The authors have disclosed that they have no significant relationship with, or financial interest in, any commercial companies pertaining to this article.

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