Organizational and market factors associated with leadership development programs in hospitals: a national study.
Subject: Hospitals (Management)
Hospitals (United States)
Competitive advantage (Analysis)
Leadership (Analysis)
Authors: Kim, Tae Hyun
Thompson, Jon M.
Pub Date: 03/01/2012
Publication: Name: Journal of Healthcare Management Publisher: American College of Healthcare Executives Audience: Trade Format: Magazine/Journal Subject: Business; Health care industry Copyright: COPYRIGHT 2012 American College of Healthcare Executives ISSN: 1096-9012
Issue: Date: March-April, 2012 Source Volume: 57 Source Issue: 2
Topic: Event Code: 200 Management dynamics Computer Subject: Company business management
Product: Product Code: 8060000 Hospitals NAICS Code: 622 Hospitals SIC Code: 8062 General medical & surgical hospitals; 8063 Psychiatric hospitals; 8069 Specialty hospitals exc. psychiatric
Geographic: Geographic Scope: United States Geographic Code: 1USA United States
Accession Number: 285087586
Full Text: EXECUTIVE SUMMARY

Effective leadership in hospitals is widely recognized as the key to organizational performance. Clinical, financial, and operational performance is increasingly being linked to the leadership practices of hospital managers. Moreover, effective leadership has been described as a means to achieve competitive advantage. Recent environmental forces, including reimbursement changes and increased competition, have prompted many hospitals to focus on building leadership competencies to successfully address these challenges.

Using the resource dependence theory as our conceptual framework, we present results from a national study of hospitals examining the association of organizational and market factors with the provision of leadership development program activities, including the presence of a leadership development program, a diversity plan, a program for succession planning, and career development resources. The data are taken from the American Hospital Association's (AHA) 2008 Survey of Hospitals, the Area Resource File, and the Centers for Medicare & Medicaid Services.

The results of multilevel logistic regressions of each leadership development program activity on organizational and market factors indicate that hospital size, system and network affiliation, and accreditation are significantly and positively associated with all leadership development program activities. The market factors significantly associated with all leadership development activities include a positive odds ratio for metropolitan statistical area location and a negative odds ratio for the percentage of the hospital's service area population that is female and minority. For-profit hospitals are less likely to provide leadership development program activities. Additional findings are presented, and the implications for hospital management are discussed.

INTRODUCTION

Effective leadership in hospitals is widely recognized as the key to organizational performance (Squazzo 2009). Clinical, financial, and operational performance is increasingly being linked to the leadership practices of hospital managers. Moreover, effective leadership has been described as a means to achieve competitive advantage (Day 2000). However, a variety of environmental forces, such as declining reimbursements, heightened competition among hospitals and hospital systems, informational and medical technological development, and staff turnover and shortages, have recently combined to create significant challenges for hospital leaders.

Given these environmental challenges, hospitals are increasingly creating programs to develop the best leadership for their organizations. Following McMearney (2008), leadership development programs are viewed as educational interventions and skill-building activities designed to address and improve the leadership capabilities of individuals. They also include self-reflection components to help managers understand their leadership styles and decision making and how others are influenced (Sukin 2009). These programs are being developed to ensure that hospitals have leaders at all levels of the organization who possess the necessary skills, competencies, and understanding to move the organization to high levels of achievement. In addition, such programs contribute to the stability of organizational culture and help organizations work through succession planning to overcome turnover and retirements (Squazzo 2009; McAlearney 2008).

Although there is a growing body of literature on the frequency of leadership development programs in hospitals, few empirical studies have examined the factors associated with the availability of these programs. The purpose of this study is to identify the organizational and market factors that are associated with the offering of leadership development programs in community acute care hospitals in the United States. We specifically address the following two research questions:

1. What market characteristics, such as environmental munificence, environmental uncertainty, and environmental complexity, are related to the offering of leadership development programs by hospitals?

2. What organizational factors, such as ownership, size, and system affiliation, are associated with the offering of leadership development programs by hospitals?

We analyzed information on more than 3,000 hospitals as reported in the American Hospital Association (AHA) 2008 Survey of Hospitals regarding the existence of leadership and career development activities and analyzed a number of market factors. A growing body of literature has examined the relationship of organizational and external factors to hospital activities, such as provision of uncompensated care (Hsieh, Clement, and Bazzoli 2010) and adoption of electronic medical records (EMR) systems (Kazley and Ozcan 2007). Our study builds upon this type of research and utilizes a conceptual framework that recognizes the importance of internal and external factors on the offering of leadership development programs in hospitals.

BACKGROUND AND PRIOR LITERATURE

As previously described, leadership development programs in hospitals are focused on enhancing leadership knowledge, skills, and practices to increase leader effectiveness and on providing stability in staffing and organizational succession planning. In general, organizations follow one of two general approaches to accomplish these goals. In the first approach style, hospitals embrace informal methods of leadership development where senior and midlevel managers are encouraged to mentor and encourage managers and supervisors who can assume increasingly responsible positions within the organization. Mentoring activities may include personal coaching, career counseling and sponsoring, and job enlargement with developmental assignments and special projects in order to cultivate the leadership skills to move up within the organization (Garman 2010; Landry and Bewley 2010).

The second option for hospitals is to take the formal approach. This may include training and structured leadership development for advancement within the organization. In this approach, all the hospital's managers and supervisors complete structured, periodic training on a variety of topics and issues that build leadership competencies. Leadership training may include personal skills--such as communications, building effective teams, and building employee engagement--or content-specific skills that will assist the organization in raising its overall level of performance. This latter category, for example, may include training in quality improvement, reengineering, Lean processes, financial analysis, revenue cycle, and maximizing the patient experience. These formal efforts vary considerably in terms of purpose, scope, and content and may be offered by the hospital itself, by the health system of which it is a part, or through consulting or human resource firms under contract to the hospital. Competency-based learning occurs in various formats, media, and locations. Mentoring may also be formal, in which organizations provide a structured approach to match aspiring leaders with senior or midlevel executives to assist in their learning and growth (Garman 2010). Additional formal efforts include specific structured activities that target future leader roles and succession planning within a hospital. The emphasis here is on developing talented individuals who have demonstrated leadership knowledge and skills but who need additional training, experiences, projects, and development to reach full potential.

Published studies related to leadership development in healthcare organizations are helpful to understand the prevalence of these programs, their benefits, and descriptions of some of their characteristics. McAlearney (2005) surveyed healthcare executives and CEOs to identify leadership development and mentoring practices; fewer than one-quarter of the CEO respondents reported participating in formal mentoring programs as a protege, and none of the executive respondents reported such participation. Furthermore, McAlearney (2008) surveyed healthcare organizations to identify the existence of leadership development programs and their specific contribution to improving quality and efficiency in health. McAlearney suggests that leadership development programs increase the caliber and quality of the healthcare workforce, improve efficiency in the organization's education and development activities, and reduce turnover and related expenses.

The nature of leadership development programs has been explored in the literature. Garman (2010) notes that effective leadership development requires two essential features. First, leaders gain from assignments or practices where specific competencies can be developed through delineated experiences, such as projects or expanded responsibilities. Second, the development of management competencies is facilitated through 360-degree feedback from others, including supervisors, peers, and subordinates. McHugh and colleagues (2010) found that high-performing healthcare organizations had comprehensive leadership development programs, and they actively identified and planned for future leadership needs by using talent assessments to find employees with potential for promotion, creating career development plans for their direct reports, and providing support for high-potential future leaders by offering mentoring programs, stretch assignments, and job rotations.

Lastly, McAlearney (2010) studied the prevalence of leadership development programs in US health systems and found that approximately half of health systems have formal programs. She reported that these programs are viewed positively by executives in terms of furthering systems' strategic goals, helping with succession planning, and providing for local development opportunities. However, her study focused exclusively on executive leadership programs and did not provide an overall assessment of hospital-based programs that include supervisors, as well as mid-and senior-level management. Also, her study did not address all hospitals, only those that are part of health systems.

We were unable to find any prior studies that examined the correlates of leadership development programs in acute care community hospitals. Therefore, this study is intended to fill the information gap by focusing on the context of leadership development programs.

CONCEPTUAL FRAMEWORK AND HYPOTHESES

The presence of leadership development programs in hospitals reflects administrative action taken to increase organizational leadership competencies that will, in turn, improve organizational performance. The offering of leadership development programs can be viewed in terms of the resource dependence theory (RDT). As developed by Pfeffer and Salancik (1978), this theoretical framework states that an organization is dependent on external resources that are critical to its success. However, the environment creates a significant source of uncertainty regarding the availability of these resources, and organizations must be proactive in their efforts to manage these resources and reduce the level of uncertainty in their environment (Proenca, Rosko, and Zinn 2003). RDT is based on the open system perspective: understanding the actions of an organization must be based on an understanding of its context, including both internal and external factors (Scott and Davis 2007). Thus, administrators sense their environments and make necessary decisions to adapt their organizations given constraints and opportunities.

RDT suggests that a hospital would create a leadership development program in order to reduce uncertainty regarding current and future organizational leadership skills. Such programs can be used to identify leadership competency and succession needs and to address those needs through formal training, development, and mentorship. In addition, leadership development programs are used to ensure that appropriate leadership talent is available to the hospital in the future by appealing to potential employees, thus serving as a recruitment tool.

Dess and Beard (1984) defined three key dimensions of the environment that have been used in application of RDT: uncertainty or turbulence, munificence, and complexity. Environmental uncertainty is the lack of predictability given changes or turbulence in the environment. Uncertainty causes concerns for administrative leaders and raises fears that the organization's operations will be adversely affected. Therefore, organizations located in environments of greater uncertainty are more likely to take action to ensure the predictability of resources than organizations in areas of less uncertainty (Kazley and Ozcan 2007). Hospitals located in markets with high managed care penetration experience high uncertainty as health plans reduce payments in favor of cost-effective care (Proenca, Rosko, and Zinn 2000). Also, reimbursement changes under Medicare create increased uncertainty for those hospitals that are highly dependent on Medicare (Hsieh, Clement, and Bazzoli 2010; Thompson and McCue 2004). Therefore, we hypothesize:

H1: Hospitals located in markets with high Medicare managed care penetration are more likely to offer leadership development programs.

Environmental munificence refers to the level of abundance of critical resources for an organization and reflects the extent to which the environment can support the provision of hospital services and activities. Environments with stable or growing resources enable the organization to secure needed resources to accomplish its goals. Environments that are characterized by favorable population characteristics such as high income and population growth provide hospitals with a rich resource opportunity compared with environments that are more constraining. Wealthy environments may reduce the level of contractual adjustments for private payers and be associated with a higher proportion of the insured population (Kazley and Ozcan 2007). This, in turn, would provide revenues to facilitate the offering of leadership development programs. Moreover, large population areas such as metropolitan statistical areas (MSAs) enable local hospitals to experience greater inputs. Therefore, we hypothesize:

H2: Hospitals located in markets with higher per capita income are more likely to offer a leadership development program.

H3: Hospitals located in MSAs are more likely to offer a leadership development program.

Environmental complexity refers to the number and types of organizations existing in a focal organization's environment and the nature of any existing interorganizational relationships. Organizations compete with other organizations for needed inputs, and this competition for resources intensifies as the number of similar organizations in a market increases. Hospitals compete for labor and managerial talent, and they must view their human resources as a strategic asset that can create a competitive advantage (Becker, Huselid, and Ulrich 2001). Markets that have a large number of hospitals are characterized as more complex, as more hospitals compete to fill staff and managerial roles due to staff shortages and pending retirements (Burt 2005). Greater competition in the market likely serves as an impetus for hospitals to create and offer a leadership development program as a means of developing and attracting talent. Therefore, we hypothesize:

H4: Hospitals located in more complex environments characterized by higher levels of competition are more likely to offer a leadership development program.

A number of organizational characteristics are thought to be related to the offering of leadership development programs. For example, hospital size is widely accepted as a measure of resource capacity (Jensen and Morrisey 1986). Size is also associated with power, and larger hospitals may be better able to manage their dependencies, secure needed inputs, and efficiently manage their operations, freeing up resources for leadership development. Smaller hospitals, conversely, may lack the resources to cover the cost of leadership development programs. Therefore, we hypothesize:

H5: Larger hospitals are more likely to offer leadership development programs.

In prior studies, hospital ownership was found to be related to administrative decision making (Kim, McCue, and Thompson 2009; McCue, Thompson, and Dodd-McCue 2000/2001). Forprofit and not-for-profit hospitals differ significantly with regard to their mission. For-profit hospitals seek to return wealth to shareholders. Not-for-profit hospitals seek to serve the broader community and, as a result, have higher levels of charity and uncompensated care. This will probably affect the availability of resources to fund leadership development activities. In addition, for-profit hospitals may recognize the benefits of leadership development activities as a way to improve performance, particularly financial performance. Therefore, we hypothesize:

H6: For-profit hospitals are more likely to offer leadership development programs.

Hospitals that are part of systems or networks gain some advantages that are unavailable to freestanding hospitals. Hospital systems serve as vehicles for diffusing practices that benefit the system and individual hospitals (Westphal, Gulati, and Shortell 1997). These practices include shared knowledge and coordination of services across facilities to promote economies of scale, reduce duplication, and make system hospitals more efficient than nonsystem hospitals (Rosco et al. 2007). As a result of being efficient, system hospitals are likely to have more financial resources to devote to leadership development activities. Therefore, we hypothesize:

H7: The likelihood of offering leadership development programs is higher in system-affiliated hospitals than in non-system-affiliated hospitals.

In addition, population characteristics of a hospital's market area serve as important measures of community demand. The proportion of women and minorities in the market may engender expansion of opportunities for these groups in local hospitals. To promote diversity in leadership and managerial positions, hospitals may draw upon local talent from these groups in order to reflect the nature of the community. Hospitals need to develop policies and practices aimed at recruiting, retaining, and managing a diverse workforce and need to meet the demands of a more diverse patient population by employing diversity management practices (Weech-Maldonado et al. 2002). Accordingly, hospitals may target members of these groups for leadership development. Therefore, we hypothesize:

H8: Hospitals serving markets with higher proportions of women and minorities are more likely to provide leadership development programs than hospitals serving markets with lower proportions of these groups.

Beyond the factors discussed, a number of other organizational factors are believed to affect the offering of leadership development programs. For example, profitable hospitals may have more resources to provide leadership development programs and may ensure leadership stability through these programs (Harrison, Tortes, and Kukalis 1988). Joint Commission accreditation is an indicator of quality of care. To achieve accreditation under The Joint Commission, leaders across the organization must effectively address quality, patient safety, and patient satisfaction. Leadership development programs may be one way that hospitals can ensure the leadership skills to maintain accreditation. Teaching hospitals are complex facilities and have the combined mission of education, patient care services, and clinical research (Institute of Medicine 2004). Achieving this mission is challenged by several factors, including high costs relative to other hospitals, growing uncompensated care patient loads, and competition from community hospitals (Dobson et al. 2002). To address these challenges, teaching hospitals need to focus on building leadership capacity in their organizations (Institute of Medicine 2004). Therefore, it is expected that teaching hospitals would establish leadership development programs.

METHODS

This study used a cross-sectional design with a sample of nonfederal, short-term general hospitals (n = 3,007) in the United States in 2008. Information regarding a hospital having or planning to have a leadership development program, a diversity plan, a program for succession planning, and a program of career development resources was derived from the AHA 2008 Survey of Hospitals. AHA data also provided other measures of internal organizational factors. Data describing market characteristics were derived from the Area Resource File (ARF) and data describing profitability and Medicare Advantage penetration rates were from the Centers for Medicare & Medicaid Services (CMS). Since some of the sample hospitals are located in the same market, and thus share similar values for those market variables, we used multilevel logistic regressions for each of the leadership development program activities as defined as the dependent variables. We then used two additional techniques, Poisson regression and ordinary least squares (OLS) regression, for further data analysis with the dependent variable as the total number of available leadership development program activities (e.g., 0 to 4).

VARIABLES AND MEASURES

Exhibit 1 shows the variables used in this study, how they were measured, their mean and standard deviation, and their data source.

Dependent Variables

The AHA survey reports information from hospitals indicating whether they offer the following four leadership development program activities:

(1) a leadership development program; (2) a diversity plan; (3) a program for succession planning; and (4) career development resources (AHA 2010). The AHA describes a leadership development program as "a program that is designed to increase the leadership skills of manager-level personnel for eventual placement in a more senior-level position. This program focuses on two classes of personnel. First is the mid-careerist [who] has been working in a hospital setting for 7 to 12 years and is interested in advancement. The other focal category for a leadership development program is increasing the number of minorities at the senior executive level. This would include all positions above department director, including administrator, associate administrator, and the various levels of vice president."

The second leadership development program activity is having a diversity plan, which is "a set of goals and objectives that are linked to the organization's strategic plan to promote the elimination of disparities and identify strategies to ensure that the ethnic and racial composition of the workforce and leadership better reflects the composition of the community being served." The third leadership development program activity is the offering of succession planning, which is "the deliberate use of mentoring, coaching, and grooming of individuals inside the organization [who] have been identified as having the potential to advance when vacancies occur at the senior executive level." Finally, offering career development resources includes "tools, training programs, financial aid, executive coaching, and other resources that can be used to prepare individuals to compete for advancement opportunities in an organization." Each of these four leadership development program activities was measured as a binary variable (i.e., 1 = yes; 0 = no).

Independent Variables

The resource dependence constructs of environmental munificence, environmental complexity, and environmental uncertainty were measured as follows. Environmental munificence was measured as the per capita income in a hospital's market (county), as provided by the ARF, as well as the MSA location. Environmental complexity was measured as the number of acute care hospitals operating in the local market (county), as identified by the ARK Environmental uncertainty was defined and measured as the Medicare Advantage penetration rate in a hospital's local market (county), as provided by CMS.

To measure hospital profitability, we used the total margin ratio, as reported by CMS. This is a commonly used measure of financial performance. Total margin is the ratio of net income to total revenue and thus provides information on the level of profitability at a hospital (Cleverley, Song, and Cleverley 2010, 119). This ratio has been used in recent empirical studies in healthcare (Li, Ward, and Schneider 2009; Menachemi et al. 2007). The percentages of the minority and female populations in a hospital's market were reported by ARK The remaining independent variables used in the study were contained in the AHA database and included system affiliation, network affiliation, bed size, for-profit ownership, Joint Commission accreditation, and teaching hospital affiliation (Council of Teaching Hospitals member).

RESULTS

The descriptive statistics in Exhibit 1 show that the proportion of hospitals that had each of the individual leadership development program activities was less than 50 percent and ranged from 37.1 percent for having a diversity plan to 49.3 percent for offering career development resources, which indicates that the lack of diversity plans in the hospital industry is a particular issue. The average number of available leadership development program activities was 1.8, less than half of the four possible leadership development program activities. The finding was consistent with that of McAlearney (2010) but was somewhat higher than that reported by Squazzo (2009).

Exhibit 2 shows the results of logistic regressions of each leadership development program activity on organizational and market factors. The results lend support to the importance of external factors such as environmental uncertainty, environmental munificence, and environmental complexity in the offering of leadership development program activities. The Medicare Advantage penetration rate, as a measure of environmental uncertainty, was significant for diversity plan and succession planning, with odds ratios slightly higher than 1. This suggests that the influence of managed care was positively associated with the two leadership development program activities and is consistent with our hypothesis (H1). The positive relationship of managed care penetration and the availability of a diversity plan was an interesting finding. However, the magnitude of its influence observed in the odds ratio (1.01) was rather small. In terms of environmental complexity, the number of hospitals in the same market showed a statistically significant odds ratio only for the leadership development program. This finding is not consistent with the hypothesized direction. The odds ratio of less than 1 suggests that market competition was negatively associated with a leadership development program. Per capita income, however, as a measure of environmental munificence, exhibited an odds ratio greater than 1 and is consistent with our hypothesis (H2). This finding indicates that the community's wealth was positively associated with three of the leadership development program activities. Our other measure of environmental munificence, MSA location, was significant for all four leadership development program activities. Hospitals in MSAs were more likely than those in non-MSAs to have a variety of leadership development program activities available.

In addition, the percentages of women and minority populations in the market also exhibited statistically significant odds ratios, but they were less than 1. This indicates that hospitals operating in areas with higher proportions of female residents and racial and ethnic minorities are less likely to engage in leadership development program activities.

Among the organizational factors, larger hospital size was associated with a greater likelihood of having various leadership development program activities. Both system and network affiliation were statistically significant for all four programs, indicating that hospitals that are part of a multihospital system or network are more likely to have these programs than freestanding hospitals. For-profit ownership, however, showed an odds ratio of less than 1 and was statistically significant in three of the four leadership activities (it was not significant in succession planning). This suggests that for-profit hospitals are less likely to invest in leadership development program activities.

Another variable, Joint Commission accreditation, was also positively associated with leadership development program activities. Compared to hospitals that were not accredited by The Joint Commission, accredited facilities were more than two times more likely to have leadership development programs. However, teaching status was statistically significant only for having a diversity plan. Somewhat surprisingly, profitability measured by total margin was significant only for the provision of a leadership development program.

As noted in Exhibit 3, the results of both Poisson and OLS regressions were consistent overall and similar to the results of the multiple logistic regressions for each leadership development program activity. The number of available programs was positively associated with system and network affiliation and bed size. The negative coefficient of for-profit ownership suggests that, compared with not-for-profit counterparts, for-profit hospitals have fewer leadership development programs. Joint Commission accreditation was positively associated with the number of programs. MSA location also exhibited a positive coefficient, indicating that hospitals in MSAs have a greater number of leadership development program activities. The percentages of female and minority populations in a hospital's market were negatively associated with the number of leadership development programs.

DISCUSSION AND IMPLICATIONS

The objective of this study was to identify organizational and market factors that are associated with the provision of leadership development program activities in hospitals. The study findings suggest that large and system-affiliated facilities generally have more resources to engage in these activities than do smaller, non-system-affiliated hospitals. Conversely, this finding suggests that few leadership development opportunities exist for professionals working in small and freestanding hospitals. Leatt and Porter (2003) argue that career advancement in the small or freestanding hospital historically meant moving to another organization because there was little incentive for the hospital to invest in the young professional who would move on and accept promotions at larger hospitals or healthcare systems. Our findings regarding hospital size and system affiliation suggest that the trend may have continued.

Our findings also suggest that hospital provision of leadership development programs is influenced not only by the degree of interconnectedness but also by the nature of external linkages. While both system and network membership are positively related to hospital provision of leadership development, the odds ratios and coefficients for system membership are greater than those for network membership. This supports the conclusion of Goes and Park (1997) that not all interorganizational linkages have the same effect on hospital behavior. These differential effects merit further study.

Our finding regarding the significant and positive relationship of total profit margin to the availability of a leadership development program suggests that higher profitability for a hospital will enhance the ability to invest in leadership development. Given that the positive outcomes of leadership development activities have already been addressed generally in the literature (McHugh et al. 2010; McAlearney 2008), our finding also merits additional research that specifically addresses the value of leadership development in improving the financial performance of hospitals.

In addition, the study results have notable implications for leadership development program activities in hospitals with different ownership. For-profit hospitals are less likely to offer these programs than their not-for-profit peers. This finding may reflect that for-profit hospitals have explicit profit objectives and investment rationales that may make it difficult to allocate resources for leadership development (Walston et al. 2010). Not-for-profit hospitals, on the other hand, are predisposed by their mission and values to engage in such activities that benefit the community and invest their excess revenues in replacing and updating equipment and compensating employees (Cleverley 2008). Our findings suggest that not-for-profit hospitals see leadership development as an important investment in employees that may be part of an initiative to further employee engagement.

The lack of leadership development activities in non-Joint Commission-accredited hospitals may be linked to employee dissatisfaction and turnover, thereby negatively influencing performance. Given the importance of leadership in hospital patient safety and quality improvement, senior management in nonaccredited hospitals should give consideration to establishing leadership development program activities. The finding that MSA hospitals are far more likely than rural hospitals to have leadership programs is not surprising. However, it also raises the concern that rural hospitals are often unable or unwilling to support leadership development, despite the investment in such development being essential for the long-term success of rural hospitals. Distance and web-based education may be necessary to supplement what may be available on site for rural facilities (Hill 2007).

Contrary to our hypothesis (H8), higher percentages of women and minorities in a hospital's market are negatively associated with the availability of leadership development program activities. This may be because of the possibility that, in markets with large minority populations, fewer resources are available to support leadership development activities. This finding underscores the need for healthcare organizations to try to develop leadership development programs to better serve their populations. Hospitals may need to encourage a culture of inclusiveness in the workforce, become more sensitive to the diversity that exists in their patient population, and make it a priority to ensure that cultural diversity exists in their employee population, from executive-level leaders to frontline staff.

This research makes the following important contributions. It adds to our understanding of the hospital provision of leadership development programs, an emerging topic of interest in the field of healthcare management. The study findings show that leadership development program activities for a hospital vary by market characteristics, including the number of hospitals, the population's per capita income, MSA location, and the Medicare managed care penetration rate. In addition, the findings indicate that hospital leadership development program activities vary by organizational characteristics, such as the hospital's ownership status, interorganizational linkages, and size. These findings are of interest to policymakers, hospital stakeholders, hospital management, and others who would like hospitals to play a greater role in leadership development. The results suggest a need for policies and incentives that promote a long-term focus on leadership development, particularly among small, freestanding, rural, and non-Joint Commission-accredited hospitals. Moreover, knowledge of factors associated with leadership development programs is important for policymakers, senior managers, and executives who are trying to influence the hospital provision of leadership development programs. Finally, a better understanding of these factors will help healthcare management students or those in their early career stages select organizations for management positions that may provide better opportunities for their future careers. As a result, the provision of leadership development programs may offer hospitals a favorable advantage in talent recruitment and retention.

Three limitations of our research should be noted. First, we were unable to describe the types of leadership development programs reported by the participating hospitals, as these are not addressed in the AHA database. This common limitation of the AHA data prevents a full description of services provided (Moseley, Shin, and Ginn 2011). Other researchers have noted that leadership development programs vary in terms of their specific purpose, scope, and content (Garman 2010). Second, the data used do not indicate the length of time that the leadership development programs have been in existence. Finally, as this study was cross-sectional in nature, we were unable to determine any longitudinal changes in the study hospitals' leadership development program activities.

For more information on the concepts in this article, please contact Dr. Kim at thkim@yuhs.ac.

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PRACTITIONER APPLICATION

Gary J. Herbek, FACHE, chief operating officer, Civista Medical Center, La Plata, Maryland

This timely and informative article studies the extent to which leadership development programs are present in hospitals and what factors influence them. Using a national data set for hospitals, the authors use regression analyses to make such determinations and attempt to predict the implications of the relative presence of such programs on hospitals.

Over the course of my career, I have witnessed a significant increase in the number and types of leadership development programs in hospitals. I believe that other seasoned hospital executives would agree. As Kim and Thompson point out, such programs can offer healthcare organizations strategic advantages that exhibit themselves in a variety of ways, including (1) aiding in executive and mid-level management recruitment and retention, (2) strategically building high-performing organizations through enhanced leadership, and (3) ensuring that the leadership team is reflective of the community it serves and desires to serve.

The study raises some interesting questions about the presence of leadership development in healthcare organizations that merit further consideration. In our nation's rural and critical access hospitals, where effective leadership is essential to keep these important community resources operational, there is less likelihood that leadership development programs exist. This is understandable on one hand, as resources for such programs are often scarce. In more urban areas, it appears that cultural diversity programs are not prevalent to the extent the authors expected, and the unresolved question is why that remains the case. As the growing national trend among hospitals is to become formally associated with larger systems, it is gratifying to hear from the authors that leadership development programs are more prevalent in systems, and especially so in not-for-profit organizations.

The authors raise the issue of whether there is a predictive linkage between the presence of leadership development programs and organizational profitability. As a practicing healthcare executive, I would be surprised to learn that there is a direct causal relationship between the two. I believe rather that further research will find that the presence of greater discretionary organizational resources allows for the continued expansion of leadership development programs.

The findings of this study certainly add to the available evidence on the offering of leadership development programs in hospitals and raise important questions regarding those hospitals providing such programs and those that do not. Hospital leaders' perceptions concerning such programs' value and the availability of discretionary resources to support them are two important factors that likely drive the decision to offer programs. Due to the expected retirements of many senior executives and mid-level managers in hospitals and health systems in the near future, leadership development will become even more important as our healthcare environment becomes increasingly complex and the pressures on hospitals grow. Going forward, hospital executives' desire to learn more about the attributes and benefits of successful leadership development programs will be instrumental in their decisions regarding these initiatives and should spur additional research into this important topic.

Tae Hyun Kim, PhD, assistant professor, Graduate School of Public Health and Institute of Health Services Research, Yonsei University, Seoul, Korea; and Jon M. Thompson, PhD, professor and director, Health Services Administration Program, James Madison University, Harrisonburg, Virginia
EXHIBIT 1
Variables, Measures, and Descriptive Statistics

Variables                  Measures          Mean     s.d.    Source

Dependent Variables

Leadership           Does your hospital       0.481    0.500    AHA
development          have a leadership
program              development program?
                     1 = yes; 0 = no

Diversity plan       Does your hospital       0.371    0.483    AHA
                     have a diversity
                     strategy or plan? 1
                     = yes; 0 = no

Succession           Does your hospital       0.433    0.496    AHA
planning             engage in leadership
                     succession planning?
                     1 = yes; 0 = no

Career development   Does your hospital       0.493    0.500    AHA
resources            provide career
                     development
                     resources to
                     administrators? 1 =
                     yes; 0 = no

Total no. of         Sum of (leadership       1.778    1.785    AHA
leadership           development program,
development          diversity plan,
activities           succession planning,
                     career development
                     resources)

Independent
Variables

Environmental
Uncertainty

Medicare Advantage   Medicare Advantage      17.267   13.594    CMS
penetration rate     penetration rate in
                     the market

Environmental
Munificence

Per capita income    Per capita income in  30670.29  10706.3    ARF
MSA                  the market 1,            0.445    0.497    AHA
                     located in
                     Metropolitan
                     Statistical Area; 0,
                     otherwise

Environmental
Complexity

No. of hospitals     Number of hospitals     14.002   7.0862    ARF
                     in the market

Organizational
Characteristics

System               1, system-               0.543    0.503    AHA
                     affiliated; 0, free-
                     standing

Bed size             Number of staffed      175.434  193.055    AHA
                     beds

For-profit           1, for-profit; 0,        0.125    0.330    AHA
                     otherwise

Network              1, member of             0.377    0.489    AHA
                     network; 0,
                     otherwise

Joint Commission     1, Joint Commission      0.634    0.486    AHA
                     accredited; 0,
                     otherwise

COTH                 1, member of Council     0.069    0.263    AHA
                     of Teaching
                     Hospitals; 0,
                     otherwise

Total margin (%)     Net income / total       0.608    4.358    CMS
                     revenue

Market
Characteristics

Pop. female          (Number of female        0.503    0.021    ARF
                     population / Total
                     population) x 100

Pop. minority        (Number of minority      0.271    0.218    ARF
                     population / Total
                     population) x 100

EXHIBIT 2
Results of Multilevel Logistic Regressions for Leadership Development
Program Activities

                                  Dependent Variables

                               (1)           (2)           (3)
                           Leadership     Diversity    Succession
                          Dev. Program       Plan       Planning

Independent Variables

Environmental
Uncertainty

Medicare Advantage          1.003         1.012 ***      1.008 **
penetration rate           (0.00533)      (0.00449)     (0.00401)

Environmental
Munificence

Per capita income           1.267 ***      1.094         1.112 *
                           (0.116)        (0.0746)      (0.0713)
MSA                         1.757 ***      1.651 ***     1.646 ***
                           (0.248)        (0.208)       (0.193)

Environmental
Complexity

No. of hospitals            0.995 *        1.002         0.998
                           (0.00306)      (0.00326)     (0.00207)
Organizational
Characteristics

System                      3.456 ***      2.707 ***     2.027 ***
                           (0.433)        (0.270)       (0.189)
Bed size                    1.574 ***      1.364 ***     1.225 ***
                           (0.119)        (0.0657)      (0.0558)
For-profit                  0.537 ***      0.613 ***     0.885
                           (0.101)        (0.0936)      (0.136)
Network                     1.505 ***      1.190 *       1.368 ***
                           (0.182)        (0.116)       (0.132)
Joint Commission            2.537 ***      2.219 ***     2.183 ***
                           (0.378)        (0.263)       (0.254)
COTH                        0.857          2.040 *       0.788
                           (0.380)        (0.664)       (0.204)
Total margin                1.037 ***      1.013         1.016
                           (0.0131)       (0.0106)      (0.0104)

Market Characteristics
Pop. female                 0.00852 ***    0.273 **      0.0985 **
                           (0.0284)       (0.809)       (0.275)

Pop. minority               0.417 **       0.737         0.379 ***
                           (0.144)        (0.226)       (0.106)
Constant                   31.08 **        2.687        13.24 *
                          (52.66)         (4.029)      (18.74)
Number of observations     3,007         3,007         3,007
Pseudo R-squared            0.2190          0.1976       0.1311

                          Dependent
                          Variables

                              (4)
                            Career
                          Development
                           Resources

Independent Variables

Environmental
Uncertainty

Medicare Advantage          0.999
penetration rate           (0.00469)

Environmental
Munificence

Per capita income           1.234
                           (0.104)
MSA                         1.554 ***
                           (0.205)

Environmental
Complexity

No. of hospitals            0.998
                           (0.00272)
Organizational
Characteristics

System                      2.552 ***
                           (0.289)
Bed size                    1.317 ***
                           (0.0829)
For-profit                  0.588
                           (0.101)
Network                     1.411
                           (0.161)
Joint Commission            1.799
                           (0.248)
COTH                        1.721
                           (0.782)
Total margin                1.012
                           (0.0121)

Market Characteristics
Pop. female                 0.0271
                           (0.086)

Pop. minority               0.445
                           (0.138)
Constant                   42.38 **
                          (68.27)
Number of observations     3,007
Pseudo R-squared            0.1382

Standard errors in parentheses

*** p <0.01, ** p < 0.05, * p < 0.1

EXHIBIT 3
Results of Poisson and OLS Regression for the Total Number
of Leadership Development Program Activities

                             Dependent Variable:

                           Total Number of Leadership
                              Program Activities

                               (1)           (2)
                             Poisson         OLS
                            Regression    Regression
Independent Variables

Environmental
Uncertainty

Medicare Advantage          0.000845       0.00282 *
penetration rate           (0.000868)     (0.00161)

Environmental
Munificence

Per capita income           0.0187         0.0651
                           (0.0127)       (0.0225)
MSA                         0.194 ***      0.461 ***
                           (0.0340)       (0.0692)

Environmental
Complexity

No. of hospitals            0.000241       0.000296
                           (0.000449)     (0.000824)

Organizational
Characteristics

System                      0.198 ***      0.575 ***
                           (0.0230)       (0.0459)
Bed size                    0.0223 ***     0.0833
                           (0.00685)      (0.0122)
For-profit                 -0.0921 **     -0.277
                           (0.0359)       (0.0744)
Network                     0.0503 **      0.159
                           (0.0223)       (0.0419)
Joint Commission            0.247 ***      0.659 ***
                           (0.0303)       (0.0629)
COTH                       -0.00724       -0.0130
                           (0.0462)       (0.0639)

Total margin                0.003          0.009
                           (0.002)        (0.005)
Market Characteristics

Pop. female                -1.795 **      -4.821
                           (0.730)        (1.541)

% Pop. minority            -0.215 ***     -0.555
                           (0.0721)       (0.141)
Constant                    1.444 ***      3.921
                           (0.369)        (0.778)
No. of observations         3,007          3,007
Pseudo R-squared /          0.0487         0.2828
 Adjusted R-squared

Standard errors in parentheses

*** p <0.01, ** p <0.05, * p <0.1
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