The Impact of Hospital and Health System Leadership Development Practices on Bond Ratings

Shifts in healthcare policy, patient consumerism, and organizational consolidation are driving the need for hospitals and health systems to adapt if they are to achieve sustainability. Prior research has suggested that businesses with strong leadership development practices also demonstrate greater financial success and competitive performance. However, few studies have examined the impact of leadership development on organization-level outcomes, generally, or in the healthcare industry, specifically.Our goal in this study was to examine the association between organizational leadership development practices and external perceptions of creditworthiness in the form of bond ratings. Data were drawn from the 2014 and 2016 distributions of the National Center for Healthcare Leadership's National Health Leadership Survey; organizational credit ratings were obtained from Moody's Investors Service and S&P Global Solutions. Spearman's rho correlations and polynomial ranked regressions were used to determine the significance of the relationships between leadership development practices and bond ratings. Results provide preliminary evidence of associations between investing in leadership development and organizational creditworthiness. They also suggest, however, that the most financially successful health systems may de-emphasize certain kinds of leadership development practices relative to their peers. We discuss implications of these findings for organizational leaders investing in human capital as well as healthcare executives evaluating the development potential of prospective employers.