Governing board structure, business strategy, and performance of acute care hospitals: a contingency perspective

Contingency theory suggests that for a hospital governing board to be effective in taking on a more active role in strategic management, the board needs to be structured to complement the overall strategy of the organization. A survey study was conducted to examine the strategies of acute care hospitals as related to the structural characteristics of their governing boards. After controlling for organizational size and system membership, results indicated a significant relationship between the governing board structure of 109 acute care hospitals and their overall business strategy. Strategy also accounted for more of the variance in board structure than either organization size or system membership. Finally, the greater the match between board structure and hospital strategy, the stronger the hospitals' financial performance.