Measuring organizational performance in the hospital industry: an exploratory comparison of objective and subjective methods

Abstract

One of the major challenges facing health services management researchers is the measurement of various aspects of organizational performance. This challenge is exacerbated by a reluctance of many healthcare organizations to share data with researchers because of a fear of competitor access to these data. Even where objective, reliable and valid measures of organizational performance are available, typically they are available only in aggregate form, rather than for individual organizations. In response to these constraints, researchers have used subjective measures of performance often based on the perception of key executives. This research compares the subjective perceptions of hospital executives to the objective financial performance data of 60 hospitals. While the correlations between the subjective and objective measures vary, return of assets (ROA) and operating margin are the most valid subjective financial measures of hospital performance. Implications for future research are discussed.