Effects of governing board characteristics on hospital strategy and performance

Hospital governing boards' role in influencing the actions and outcomes of their organizations has been the subject of much controversy over the past few decades. Prescriptions that boards become more like industry boards and involved in strategy making abound. This study examined board involvement in formulating strategy over the period of 1988 to 1991, and the influence of board characteristics on involvement, hospital strategic orientation, and performance.; On the basis of the upper echelon perspective, it was anticipated that differences in board characteristics would relate to board involvement in strategy formulation and differences in strategic orientation pursued by a hospital. Miles and Snow's (1978) strategic typology was used to assess hospital strategic orientation. Performance, as reflected in differences in cost containment and occupancy levels, was assessed in terms of board involvement in strategy formulation and strategic orientation.; A total of 44 hospital chief executive officers (CEOs) from a sample of 108 acute care community hospitals located in a southern state responded to a questionnaire assessing 1988 board member occupations and tenure, and participation in strategy formulation and hospital strategic orientation during the 1988 to 1991 time period. Measures of board tenure, tenure diversity, occupational diversity, corporate versus philanthropic board model, and proportions of physicians, business owner, and corporate and business executives were developed from survey results. The percentage change in costs per admission and per patient day and occupancy rates were calculated from 1988 to 1991 state planning agency data.; Results revealed little variability in board characteristics or involvement in strategy regardless of differences in hospital location, bed size, multihospital membership status, or strategic orientation. The majority of boards were involved in formulating strategy, particularly raising issues and selecting among strategic options. Only two boards met criteria associated with the corporate board model and only one of these two boards participated in strategy formulation. A higher proportion of executives on the board was significantly related to low occupational diversity and small board size. No significant difference in performance was found in relation to board involvement in strategy or different strategic types.