Enhancing board oversight on quality of hospital care: an agency theory perspective

Abstract

Background: Community hospitals in the United States are almost all governed by a governing board that is legally accountable for the quality of care provided. Increasing pressures for better quality and safety are prompting boards to strengthen their oversight function on quality.

Purpose: In this study, we aimed to provide an update to prior research by exploring the role and practices of governing boards in quality oversight through the lens of agency theory and comparing hospital quality performance in relation to the adoption of those practices.

Methodology: Data on board practices from a survey conducted by The Governance Institute in 2007 were merged with data on hospital quality drawn from two federal sources that measured processes of care and mortality. The study sample includes 445 public and private not-for-profit hospitals. We used factor analysis to explore the underlying dimensions of board practices. We further compared hospital quality performance by the adoption of each individual board practice.

Findings: Consistent with the agency theory, the 13 board practices included in the survey appear to center around enhancing accountability of the board, management, and the medical staff. Reviewing the hospital's quality performance on a regular basis was the most common practice. A number of board practices, not examined in prior research, showed significant association with better performance on process of care and/or risk-adjusted mortality: requiring major new clinical programs to meet quality-related criteria, setting some quality goals at the "theoretical ideal" level, requiring both the board and the medical staff to be as involved as management in setting the agenda for discussion on quality, and requiring the hospital to report its quality/safety performance to the general public.

Practice implications: Hospital governing boards should examine their current practices and consider adopting those that would enhance the accountability of the board itself, management, and the medical staff.