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Financial performance of hospitals: A critical obligation of corporate governance dimensions
Author(s) -
Afriyie Stephen O.,
Kong Yusheng,
Lartey Peter Y.,
Kaodui Li,
Bediako Isaac A.,
Wu Wenhao,
Kyeremateng Peter H.
Publication year - 2020
Publication title -
the international journal of health planning and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.672
H-Index - 41
eISSN - 1099-1751
pISSN - 0749-6753
DOI - 10.1002/hpm.3049
Subject(s) - corporate governance , accounting , business , officer , profit margin , finance , moderation , return on assets , financial statement , financial ratio , actuarial science , stock exchange , psychology , audit , social psychology , political science , law
Summary Background This paper aims to investigate the effects of corporate governance mechanisms on the financial performance of hospitals. The statement, “good corporate governance” has been incorporated in the health care sector over the last decade, as an element to improve financial performance. Methods The researchers relied on both primary and secondary data in the study. For the primary data, the authors used structured and nonstructured questionnaires to obtain data from 125 hospitals. The secondary data used emanated from board meetings, financial statements and relevant reports of the selected hospitals from 2010 to 2017. However, the data was then sorted out to get the required information on Chief Executive Officer (CEO) presence, board relationship, governance dynamics, gender diversity and financial performance. Results On the basis of empirical evidence provided in this study, the results show that the Independent Directors (INDPDR) variable has a positive effect on Return on Assets and Net Profit Margin and also a high statistically significant value of 0.000 for both performance measures. This is an indication that the variable, INDPDR, is highly capable of improving hospital financial performance. From our studies, Board Size and CEO Duality exhibited a negative relationship with the financial performance measures. Conclusions Every hospital needs money to maintain a standard health facility and to sustain in operation. However, the inclusion of board of directors improves hospital financial management and enhances performance. Corporate governance mechanisms influence the behavior of health systems in ways that are associated with financial performance.