Corporate governance in Czech hospitals after the transformation

•We examine changes in the transformation of legal form, the ownership structure and especially the structure of supervisory boards.•It appears that the efficiency of management (in hospitals) is influenced primarily by the ownership form.•Operating subsidies have substantial impact on the economic outcomes of the hospitals.

BackgroundThis contribution is a response to the current issue of corporate governance in hospitals in the Czech Republic, which draw a significant portion of funds from public health insurance. This not only has a significant impact on the economic efficiency of hospitals, but ultimately affects the whole system of healthcare provision in the Czech Republic. Therefore, the effectiveness of the corporate governance of hospitals might affect the fiscal stability of the health system and, indirectly, health policy for the whole country.ObjectivesThe main objective of this paper is to evaluate the success of the transformation in connection with the performance of corporate governance in hospitals in the Czech Republic. Specifically, there was an examination of the management differences in various types of hospitals, which differed in their ownership structure and legal form.Methodology/ApproachA sample of 100 hospitals was investigated in 2009, i.e., immediately after the transformation had been completed, and then three years later in 2012.With regard to the different public support of individual hospitals, the operating subsidies were removed from the economic results of the corporations in the sample. The adjusted economic results were first of all examined in relationship to the type of hospital (according to owner and legal form), and then in relation to its size, the size of the supervisory board and the education level of the senior hospital manager. A multiple median regression was used for the evaluation.FindingsOne of the basic findings was the fact that the hospital's legal form had no influence on economic results. Successful management in the form of adjusted economic results is only associated with the private type of facility ownership. From the perspective of our concept of corporate governance other factors were under observation: the size of the hospital, the size of the supervisory board and the medical qualifications of the senior manager had no statistically verifiable influence on the efficiency of the hospital management, though we did record certain developments as a result of the transformation process. The economic results that were reported were significantly distorted by the operating subsidies from the founder.Practical ImplicationsThe results can be used immediately on several practical levels: on the macro level as part of the state's formulation of health policy, particularly in the optimization of the structure of healthcare providers, as well as for the completion of reforms in legal forms and hospital founders, and on the micro level as part of the effective administration and governance of hospitals through corporate governance regardless of the form of ownership.