Hospital Governance, Performance Objectives, and Organizational Form

Leslie Eldenburg, Benjamin E. Hermalin, Michael S. Weisbach, Marta Wosinska

NBER Working Paper No. 8201
Issued in April 2001
NBER Program(s):   CF   HC

This paper studies the governance of a sample of California hospitals. We document a number of empirical relations about hospital governance: The composition of the board of directors varies systematically across ownership types; poor performance and low levels of uncompensated care increase board turnover, with this sensitivity varying by organizational type. Poor performance, high administrative costs, and high uncompensated care lead to higher CEO turnover, with these effects again varying across different organizational types. Overall, these results are consistent with the view that boards of directors of hospitals of different organizational forms are substantially different, and that these boards make decisions to maximize different objective functions.

(265 K)

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Published: Eldenburg, Leslie, Benjamin E. Hermalin, Michael S. Weisbach, and Marta Wosinska. “Hospital Governance, Performance Objectives, and Organizational Form." Journal of Corporate Finance 10 (September 2004): 527-548.

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