The Links Between Governance, Organizational Monitoring and Alignment Capacity and Hospital ...

247 Pages·2011·5.22 MB·English

Do Boards Matter?
The Links Between Governance,
Organizational Monitoring and Alignment Capacity and
Hospital performance
By

A. Paula Neves

A thesis submitted in conformity with the requirements for the degree of
Doctor of Philosophy (PhD)

Department of Health Policy, Management and Evaluation
University of Toronto

© Copyright by A. Paula Neves 2012
Do Boards Matter?
The Links Between Governance, Organizational Monitoring and
Alignment Capacity and Hospital performance

A. Paula Neves

Doctor of Philosophy

Department of Health Policy, Management and Evaluation
University of Toronto

2012

Abstract
No systematic research has been undertaken in Canada on the relationship between hospital
performance, organizational monitoring capacity and board governance. This three-part
dissertation aims to fill that gap. The conceptual framework elaborated in a theoretical paper and
tested in two exploratory empirical studies proposes that boards reflect their institutions, with
high performers exhibiting greater capacity to harmonize accountability needs and align
governance decision-making and monitoring systems with external performance measurement
and reporting requirements. Top team (board and management) characteristics, and governance
practices, both proposed elements of “governance capacity,” are hypothesized to reflect and
reinforce “organizational monitoring and alignment capacity” thereby contributing directly and
indirectly to key aspects of hospital performance including quality of care, financial health and
patient satisfaction.

Using hierarchical regression analyses, six hypotheses were tested on a sample of 101 acute
hospital corporations that participated in the 2005, 2006 and 2007 Ontario Hospital Report
Research Collaborative. After controlling for hospital size, evidence of a statistically significant
relationship was detected between organizational monitoring and alignment capacity and quality
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performance, and between one element of governance capacity, governance practices, and
financial performance. A relationship was also detected between governance practices and top
team characteristics, including diversity, education and turnover.

These findings suggest that the relationship between hospital governance and performance is
tenuous and that some aspects of performance may be more amenable to governance influence
than others. In highly-regulated environments governance space is circumscribed and myriad
stakeholders have a stronger pulse on singular aspects of organizational performance than the
board. This study argues that the role of boards in environments of distributed governance is to
mine the „accountability web‟ for timely, multivariate intelligence on performance and use it to
drive alignment, integration and performance improvement. The contribution of this research,
its limitations, and implications for researchers, policymakers and hospital leaders are discussed.
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Acknowledgements

I would like to thank my advisor, Dr. Louise Lemieux-Charles, and my committee members, Dr.
G. Ross Baker and Dr. Rhonda Cockerill, for their patience and guidance.

Special thanks to Carey Levington for his assistance with data clean up and linkage, and to Brian
Hyndman and Julia Monakova for their helpful comments on earlier versions of this document.
Thanks also to the Hospital Report Research Collaborative, Ministry of Health and Long Term
Care, Joint Policy and Planning Committee, Canadian College of Health Services Executives,
Canada Revenue Agency, Ontario Hospital Association and the many hospitals that provided
data and background materials for this study.

This dissertation is dedicated to my parents, Armando and Estela Neves, who have shown me
the value of hard work and perseverance, and to John and my sister, Isabel, who continue to
show me that there is more to life than a dissertation.

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TABLE OF CONTENTS

List of Tables .................................................................................................................. viii
List of Figures .................................................................................................................. ix
List of Appendices ............................................................................................................ x

CHAPTER 1 Introduction ................................................................................................. 1
1.0 Overview ........................................................................................................................1
1.1 Theoretical Framework ..................................................................................................2
1.2 Model Summary and Hypotheses .................................................................................4
1.3 Key Concepts.................................................................................................................5
1.4 Data Sources ...............................................................................................................11
Board Governance Survey, Hospital Report Research Collaborative ..........................................................12
System Integration and Change Survey, Hospital Report Research Collaborative ..........................................13
NRC+Picker Canada Inpatient Patient Satisfaction Survey, Hospital Report Research Collabora ...................14
Public Sector Salary Disclosure Dataset, Ontario Ministry of Finance.......................................................15
Canadian College of Health Services Executives Professional Designation Database ......................................16
Charities Listings Dataset, Canada Revenue Agency ...........................................................................17
Ontario Hospital Bylaw Collection, Canada Revenue Agency and Ontario Hospitals ....................................18
Healthcare Indicator Tool (HIT), Ontario Ministry of Health and Long-Term Care ....................................20
Funding and Accountability Indicators, Ontario Joint Policy and Planning Committee ...................................20
1.5 Data Preparation ..........................................................................................................22
1.6 Final Data Set ..............................................................................................................23
1.7 Methods .......................................................................................................................25
1.8 Contribution of Study ...................................................................................................26

CHAPTER 2 Rethinking the Role of Hospital Boards in the Era of
Distributed Governance ................................................................................................. 40
2.0 Introduction ..................................................................................................................40
2.1 Theoretical Drivers of Governance Research .............................................................40
Agency Theory..........................................................................................................................42
Resource Dependence Theory .........................................................................................................43
Institutional Theory ...................................................................................................................44

Strategic Choice and Upper Echelons Perspectives................................................................................45
Stakeholder and Stewardship Theories .............................................................................................46
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2.2 Governance Research Findings and Limitations ........................................................49
2.3 Implications for the Study of Hospital Governance .....................................................52
2.4 Conclusion ...................................................................................................................57

CHAPTER 3 Governance Capacity: The Link between Governance
Practices and Top Team Characteristics ..................................................................... 77
3.0 Introduction ..................................................................................................................77
3.1 Literature Review .........................................................................................................78
3.2 Conceptual Model and Hypotheses ............................................................................85
3.3 Research Methods.......................................................................................................86
3.4 Results .........................................................................................................................92
3.5 Model Testing ............................................................................................................105
Relationship between Governance Practices and Board Characteristics......................................................105
Relationship between Governance Practices and Top Management Team Characteristics................................106
Relationship between Governance Capacity and Hospital Performance .....................................................107
3.6 Discussion ..................................................................................................................108
3.7 Conclusion .................................................................................................................112

CHAPTER 4 Linking Organizational Monitoring and Alignment Capacity and
Hospital Performance....................................................................................................138
4.0 Introduction ................................................................................................................138
4.1 Literature Review .......................................................................................................138
4.2 Conceptual Model and Hypotheses ..........................................................................140
4.3 Research Methods.....................................................................................................141
Hospital Performance ...............................................................................................................141
Organizational Monitoring and Alignment Capacity .........................................................................148
Governance Capacity ................................................................................................................150
4.4 Results .......................................................................................................................153
Organizational Monitoring & Alignment Capacity............................................................154
Hospital Performance ......................................................................................................159
Relationship between Organizational Monitoring & Alignment Capacity and Governance Practices.................165
Relationship between Organizational Monitoring and Alignment Capacity and Governance Capacity ...............165
Relationship between Organizational Monitoring and Alignment Capacity and Hospital Performance ..............166
4.6 Discussion ..................................................................................................................169
4.7 Conclusion .................................................................................................................170

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CHAPTER 5 Conclusion ................................................................................................190
5.0 Overview ....................................................................................................................190
5.1 Summary of Research Findings ................................................................................190
Research Question 1: Do Boards Matter to Hospital Performance? ........................................................190
Research Question 2: Do Existing Datasets Address Governance Research Needs? ....................................194
5.2 Limitations ..................................................................................................................195
5.3 Contribution................................................................................................................198
5.4 Implications and Directions for Future Research ......................................................200

Bibliography .................................................................................................................. 204

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List of Tables

1.1 Data Sources and Measures ...................................................................................11
1.2 Prototype Bylaw Contents (OHA and OMA, 2006) ...................................................19
2.1 Theoretical Drivers of Governance Research ..........................................................41
2.2 Theoretical Approaches to the Study of Organizational Performance.......................47
2.3 The Changing Logic of Organizations ......................................................................58
3.1 Governance Practices .............................................................................................89
3.2 Sample Hospital Characteristics (Study 1) ...............................................................92
3.3 Least Frequently Reported Governance Practices Reported by Ontario
Hospitals, 2005 .......................................................................................................94
3.4 Correlations Among Components of Governance Oversight Practices Measure ......97
3.5 Board Size and Elected and Ex Officio Members (Hospital Bylaws).........................98
3.6 Ontario Hospital Board Size, 1999/00-2007/08 ........................................................99
3.7 Women on Ontario Hospital Boards, 2002/04 ........................................................ 100
3.8 Hospital Top Team Characteristics ........................................................................ 103
4.1 Rationale for Proposed Measures of Hospital Performance ................................... 141
4.2 Operationalization of Total Margin and Current Ratio in Ontario Hospital Service
Accountability Agreements .................................................................................... 147
4.2.1 Governance Practices by Hospital Peer Group ...................................................... 175
4.2.2 Clinical Integration by Hospital Peer Group ........................................................... 176
4.2.3 Utilization Management Practices by Hospital Peer Group .................................... 176
4.2.4 Clinical Data Use by Hospital Peer Group ............................................................. 176
4.2.5 Protocol Use by Hospital Peer Group .................................................................... 177
4.2.6 Ontario Hospital Operational Efficiency, 2005-2007 ............................................... 178
4.2.7a Patient Satisfaction Scores, Hospital Report Measures, 2005/07 ........................... 179
4.2.7b Patient Satisfaction Scores, NRC+Picker Measures, 2005/07 ................................ 179
4.2.8 Unplanned Readmissions to Any Ontario Hospital for Selected CMGs, 2005/07.... 180
4.3 Governance Practices ........................................................................................... 150
4.4 Data and Sources.................................................................................................. 152
4.5 Sample Hospital Characteristics (Study 2) ............................................................. 153
4.6 Correlations among Organizational Capacity Components .................................... 158
4.7 Pearson Product Moment Correlations, Hospital Report Patient Satisfaction
Measures .............................................................................................................. 160
4.8 Patient Satisfaction Peer Group Mean Ranks ........................................................ 161
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List of Figures

1.1 Model Summary and Hypotheses ..............................................................................4
1.2 Overview of Measures .............................................................................................21
2.1 Competing Values Governance Framework ............................................................49
2.2 Theoretical Framework Linking Hospital Governance and Performance ..................52
2.3 Contingency/Multiple Perspectives on Performance: The Hospital
Accountability Web ..................................................................................................54
3.1 Conceptual Model: Governance Capacity and Performance ....................................86
3.2 Governance Oversight Practices by Ontario Hospital Peer Group ...........................97
4.1 Conceptual Model: Organizational Monitoring and Alignment Capacity..................141
4.2 Relationship between Hospital Quality and Accountability Performance ................163
4.5 Model Testing........................................................................................................164
4.3 Relationship between Organizational Capacity and Peer Group Performance .......167
4.4 Relationship between Organizational Capacity and Financial Accountability
Performance..........................................................................................................168
5.1 Summary of Research Findings.............................................................................191

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List of Appendices

1.1 Board Governance Survey, Hospital Report Research Collaborative .......................28
1.2 Selected Questions, System Integration and Change Survey, Hospital Report
Research Collaborative ...........................................................................................33
a. Governance Capacity Measure ...........................................................................33
b. Organizational Capacity Measure ........................................................................35
1.3 Ontario Hospital Alliances........................................................................................38
2.1 Summary of Selected Empirical Studies of Hospital, Non-Profit and
Corporate Governance ............................................................................................60
2.2 Selected Governance Reviews, Codes and Guidelines: US, UK and Canada..........68
2.3 Operational Reviews and Governance Facilitator and Supervisor
Appointments, Ontario, Canada: 1997-2008 ............................................................70
2.4 Sample Approaches to Performance Measurement in Hospital and Non-Profit
Governance Studies ................................................................................................75
3.1 Highlights of Recent Governance Reports and Regulatory Initiatives: US, UK
and Canada...........................................................................................................115
3.2 Key Recommendations from Canadian Healthcare Accreditation Reports,
2002-2008 .............................................................................................................122
3.3 Highlights from Operational Reviews of Ontario Hospitals, 1997-2008...................123
3.4 Operationalization of Board and Top Team Variables in Hospital/Governance
Studies: Examples.................................................................................................125
3.5 Most Frequently Reported Governance Practices Reported by Ontario
Hospitals, 2005 .....................................................................................................128
3.6 Relationship between Governance Practices and Board Characteristics ...............129
3.7 Relationship between Governance Practices and Top Management Team
Characteristics ......................................................................................................132
3.8 Relationship between Governance Practices and Hospital Performance ...............135
4.1 Dimensions of Organizational Alignment Capacity Captured in Hospital
Report System Integration and Change Survey, 2006 ...........................................173
4.2 Descriptive Statistics: Governance Practices and Organizational Monitoring
and Alignment Capacity.........................................................................................175
4.3 Relationship between Governance Oversight Practices and Organizational
Capacity Detailed Results......................................................................................181
4.4 Relationship between Governance Capacity and Organizational Capacity
Detailed Results ....................................................................................................184
4.5 Relationship between Performance and Organizational Capacity Detailed
Results ..................................................................................................................187
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