Performance Effects of Physicians’ Involvement in Hospital Strategic Decisions

In recent years, many hospitals have moved to a professional management model from one of physician dominance. One result has been that physicians in some hospitals are alienated from the strategic processes of the hospital. Extant literature suggests that both physician involvement in strategic processes and investment in capability-building programs are associated with improved performance. The literature also suggests that there is an interaction between physician involvement and capability-building investments that is positively associated with performance. We explore these notions empirically using data from a sample of hospitals to evaluate the extent to which physician involvement in strategic decision making and investments in operational capabilities are associated with hospital performance. Results indicate that such proactive involvement of physicians in strategic decision making significantly affects hospital performance. In addition, investments in capability building related to employee development also affect hospital performance.