Outside directors: stakeholder representation in investor-owned health care organizations.

The nature of investor-owned health care firms suggests that corporate boards may include representatives of "stakeholder" groups as well as representatives of stockholders and management. A sample of investor-owned firms was developed and examined. Physicians, financiers, attorneys, health care executives, and academics were well represented on the boards of directors in the sample. Small firms included more financial professionals on their boards than did larger firms, and HMOs included more physicians than did other firms, but these effects were not statistically significant. The greater the degree of representation of physicians, the greater was the return on assets of the firms in the sample.