ACHE Board of Governors Exam 2026/2027 | 500
Verified Q&A with Rationales | American College
of Healthcare Executives Prep | 7 Core Domains |
FACHE | Graded A+
Domain 1: Governance and Organizational Structure (Questions 1–15)
1. The CEO wants to launch a new, high-risk capital project, but the Chief Medical
Officer opposes it. Based on the principles of Governance and Organizational
Structure, who holds the ultimate fiduciary responsibility to approve or deny this
project?
A. The Chief Executive Officer
B. The Medical Staff Executive Committee
C. The Board of Directors
D. The Chief Financial Officer
Correct Answer: C. The Board of Directors
Rationale: The Board of Directors holds the ultimate fiduciary duty to the community and the
organization. They are legally accountable for the organization's mission, strategic direction,
,and financial viability. The CEO manages day-to-day operations as an agent of the Board
but does not hold ultimate fiduciary accountability.
2. In the context of governance, what is the ultimate responsibility of the healthcare
organization's governing board regarding the mission statement?
A. Delegating final approval to the chief executive officer
B. Ensuring the mission statement is developed and maintained
C. Assigning mission oversight to the medical staff executive committee
D. Permitting the marketing department to revise the mission annually
Correct Answer: B. Ensuring the mission statement is developed and maintained
Rationale: The governing board holds ultimate responsibility for the mission statement
because it defines the organization's fundamental purpose and direction. While the CEO
and medical staff contribute to the development and implementation of the mission, the
board retains final authority and accountability for its establishment and periodic review.
3. An essential function of the governing board is to:
A. Approve the mission, vision, and long-range plan
B. Focus on strategic planning
C. Prepare the operating plan
D. Review the performance of departmental managers
Correct Answer: A. Approve the mission, vision, and long-range plan
Rationale: The governing board's essential function is to approve the mission, vision, and
long-range plan. While boards are involved in strategic planning, the specific approval of
these foundational documents is a core fiduciary responsibility. Preparing the operating plan
is a management function, and reviewing departmental managers is typically delegated to
executive leadership.
,4. Which of the following is NOT one of the fiduciary duties of a governing board
member?
A. Duty of loyalty
B. Duty of care
C. Duty of obedience
D. Duty of profitability
Correct Answer: D. Duty of profitability
Rationale: The three fiduciary duties of board members are: duty of loyalty (acting in the
organization's best interest), duty of care (making informed decisions), and duty of
obedience (complying with laws and regulations). Duty of profitability is not a fiduciary duty;
boards are responsible for mission fulfillment and financial sustainability, not profit
maximization for its own sake.
5. The key to enhancing board effectiveness is:
A. Getting the right people to serve on the board
B. Supporting and selecting the right CEO
C. Orientating and training the CEO
D. Organizing the board's work
Correct Answer: D. Organizing the board's work
Rationale: While selecting the right people and supporting the CEO are important, the key to
enhancing board effectiveness is organizing the board's work. This includes establishing
clear structures, processes, and committee assignments that enable the board to fulfill its
governance responsibilities efficiently and effectively.
6. Members of the medical staff are eligible for full membership on the governing
board in the same manner as other individuals:
A. When not legally prohibited
, B. When they do not actively practice in the organization
C. When they are not full-time employees
D. If they are not foreign nationals
Correct Answer: A. When not legally prohibited
Rationale: Medical staff members are eligible for governing board membership when not
legally prohibited. There is no blanket prohibition against physicians serving on boards, and
such membership can provide valuable clinical perspective. Legal restrictions, such as
those related to antitrust or conflict-of-interest laws, determine eligibility.
7. The Chief Executive Officer:
A. Is a member of the board
B. Represents the board internally and externally
C. Is not a member of the board
D. Has a contract with the board
Correct Answer: B. Represents the board internally and externally
Rationale: The CEO represents the board internally and externally. While the CEO may or
may not be a voting board member depending on organizational bylaws, their primary role is
to serve as the chief executive agent of the board, implementing policy and representing the
organization to internal and external stakeholders.
8. The bylaws of a healthcare organization should include which of the following
regarding governance?
A. Financial management practices
B. Marketing strategies
C. Composition of the governing board, committees, and officers
D. Stockholder interests
Verified Q&A with Rationales | American College
of Healthcare Executives Prep | 7 Core Domains |
FACHE | Graded A+
Domain 1: Governance and Organizational Structure (Questions 1–15)
1. The CEO wants to launch a new, high-risk capital project, but the Chief Medical
Officer opposes it. Based on the principles of Governance and Organizational
Structure, who holds the ultimate fiduciary responsibility to approve or deny this
project?
A. The Chief Executive Officer
B. The Medical Staff Executive Committee
C. The Board of Directors
D. The Chief Financial Officer
Correct Answer: C. The Board of Directors
Rationale: The Board of Directors holds the ultimate fiduciary duty to the community and the
organization. They are legally accountable for the organization's mission, strategic direction,
,and financial viability. The CEO manages day-to-day operations as an agent of the Board
but does not hold ultimate fiduciary accountability.
2. In the context of governance, what is the ultimate responsibility of the healthcare
organization's governing board regarding the mission statement?
A. Delegating final approval to the chief executive officer
B. Ensuring the mission statement is developed and maintained
C. Assigning mission oversight to the medical staff executive committee
D. Permitting the marketing department to revise the mission annually
Correct Answer: B. Ensuring the mission statement is developed and maintained
Rationale: The governing board holds ultimate responsibility for the mission statement
because it defines the organization's fundamental purpose and direction. While the CEO
and medical staff contribute to the development and implementation of the mission, the
board retains final authority and accountability for its establishment and periodic review.
3. An essential function of the governing board is to:
A. Approve the mission, vision, and long-range plan
B. Focus on strategic planning
C. Prepare the operating plan
D. Review the performance of departmental managers
Correct Answer: A. Approve the mission, vision, and long-range plan
Rationale: The governing board's essential function is to approve the mission, vision, and
long-range plan. While boards are involved in strategic planning, the specific approval of
these foundational documents is a core fiduciary responsibility. Preparing the operating plan
is a management function, and reviewing departmental managers is typically delegated to
executive leadership.
,4. Which of the following is NOT one of the fiduciary duties of a governing board
member?
A. Duty of loyalty
B. Duty of care
C. Duty of obedience
D. Duty of profitability
Correct Answer: D. Duty of profitability
Rationale: The three fiduciary duties of board members are: duty of loyalty (acting in the
organization's best interest), duty of care (making informed decisions), and duty of
obedience (complying with laws and regulations). Duty of profitability is not a fiduciary duty;
boards are responsible for mission fulfillment and financial sustainability, not profit
maximization for its own sake.
5. The key to enhancing board effectiveness is:
A. Getting the right people to serve on the board
B. Supporting and selecting the right CEO
C. Orientating and training the CEO
D. Organizing the board's work
Correct Answer: D. Organizing the board's work
Rationale: While selecting the right people and supporting the CEO are important, the key to
enhancing board effectiveness is organizing the board's work. This includes establishing
clear structures, processes, and committee assignments that enable the board to fulfill its
governance responsibilities efficiently and effectively.
6. Members of the medical staff are eligible for full membership on the governing
board in the same manner as other individuals:
A. When not legally prohibited
, B. When they do not actively practice in the organization
C. When they are not full-time employees
D. If they are not foreign nationals
Correct Answer: A. When not legally prohibited
Rationale: Medical staff members are eligible for governing board membership when not
legally prohibited. There is no blanket prohibition against physicians serving on boards, and
such membership can provide valuable clinical perspective. Legal restrictions, such as
those related to antitrust or conflict-of-interest laws, determine eligibility.
7. The Chief Executive Officer:
A. Is a member of the board
B. Represents the board internally and externally
C. Is not a member of the board
D. Has a contract with the board
Correct Answer: B. Represents the board internally and externally
Rationale: The CEO represents the board internally and externally. While the CEO may or
may not be a voting board member depending on organizational bylaws, their primary role is
to serve as the chief executive agent of the board, implementing policy and representing the
organization to internal and external stakeholders.
8. The bylaws of a healthcare organization should include which of the following
regarding governance?
A. Financial management practices
B. Marketing strategies
C. Composition of the governing board, committees, and officers
D. Stockholder interests
