Hospital Board of Directors’ Composition and Financial Performance: Empirical Evidence from Taiwan

Abstract

The board of directors of a nonprofit proprietary hospital is responsible for supervising and managing major operational matters and reviewing operational results. This study investigates how hospital financial performance is influenced by director and supervisor characteristics among the board members of nonprofit proprietary hospitals in Taiwan. Data were obtained from the Division of Medical Services of the Ministry of Health and Welfare. A generalized linear model was used to evaluate 32 non-profit proprietary hospitals for the years 2006 to 2017, totaling 363 observations. The empirical results revealed a significant positive correlation between the proportion of directors with management qualifications and hospital financial performance. Moreover, the results represented that a higher proportion of board members with a medical background did not correspond to higher hospital financial performance. Although doctors accounted for the highest proportion of board members, indicating their key role in hospital management, the need for board members with management expertise cannot be ignored. Therefore, a balance between directors with management experience and medical knowledge on the board of directors is beneficial for hospital financial performance.

Financial Flexibility and Health Sector Firm Performance in ASEAN-5 Countries: Moderate Role of Directors with MD Degree

“…This can be interpreted that although the company's board of directors has directors with background knowledge related to the health sector, this knowledge has no effect on the company's financial performance. The expertise of a director with a doctor's title helps improve the quality of health services provided by the company [5]. The company's financial performance is positively influenced by directors who have management education or finance related because the knowledge possessed by these directors can help the board of directors make company decisions, solve managementrelated problems, and can pay close attention to the overall operational performance of the hospital [5].…”

“…Knowledge and experience in the core business are prerequisites for expert leadership, and in the context of a hospital, directors with diverse professional backgrounds might affect the financial success of the hospital [33]. Chen et al (2021) discovered that the proportion of hospital board members having a medical education background was strongly inversely connected to financial performance [5]. Directors with a management background typically know about financial planning, organizational management, or cost control skills, providing them with the financial information needed to solve difficulties and business decisions while monitoring overall operational performance [34].…”

“…Values and views gained from various occupations can shape the way people behave and make decisions [4]. The financial performance of hospitals managed by directors with economic or business experience was superior to those led by physicians [5]. The percentage of hospital board members with medical experience did not correlate with improved financial performance [6].…”

Professional qualifications of medical affairs pharmaceutical physicians and other internal stakeholders in the pharmaceutical industry

“…About twice as many professionals in this study had undergraduate degrees and twice as many had master's or PhD degrees as those in a previous study in a hospital context. 35 This may reflect the comparatively greater need for specialist knowledge in the pharmaceutical industry.…”

Working capital and liquidity to the profitability of manufacturing companies listed on the IDX in 2019-2022

“…Financial performance is a reflection of the economic situation of a bank, which is analyzed using financial analysis methods, which can automatically identify the good and bad financial conditions of a bank and describe the results of activities within a specific period (Melita & Wagiyo, 2020). Good economic performance can guarantee the operational continuity of company management in the future, and therefore, financial performance is a critical aspect of banking company management (K. C. Chen, Hsieh, & Hsiao, 2021). The bank's ability to create profits will depend on the power of the bank's management in managing existing assets and liabilities.…”