An Intersection of Oversight: Hospital Governance and Performance Before and After the Affordable Care Act

• In Event: Issues in Not-For-Profit Hospitals

Abstract

In this study, I examine whether governance characteristics affect hospital performance, with a specific look into how these relationships are impacted by the not-for-profit (NFP) hospital regulations found in the Patient Protection and Affordable Care Act of 2010 (ACA). The legislation stipulates that NFP hospitals must comply with new billing and collections regulations that are intended to hold such hospitals more accountable for behaving charitably. To address the research question, I examine the relationship between board composition and social performance in California hospitals before and after the implementation of the ACA, and I introduce new measures of social performance that stem from the legislation’s NFP regulations. I find that large boards of directors have a negative association with social performance in both non- and for-profit hospitals across the full sample period (2002–2015). I also find that when directorships on large NFP boards are held by a higher proportion of executives, there is a positive association with social performance in the post-ACA time period that was not present in the pre-ACA time period (or in for-profit hospitals during either time period). Finally, I find evidence of positive effects on financial performance in NFP hospitals that have a large board coupled with higher levels of social performance.

Author

• Julie Mercado, University of Alabama