The main aim of this study is to examine the effects of Total Quality Management (TQM) practices (leadership of management, decision making, continuous improvement, customer focus, employee involvement, process management and relations with suppliers) on the financial and operational performance of hospitals in service industry. The data of the study were collected by the questionnaire prepared in the light of published studies and the suggestions of medical and administrative staff. Medical and administrative staff were chosen as target participants that reflect perspectives of hospitals. 1069 questionnaires were answered in 6 private and 26 public hospitals in the Marmara region in Turkey. The results claim that “customer focus” affects both operational performance as well as the financial performance of hospitals more than other TQM practices. While “process management” and “customer focus” explain the variance of financial performance significantly. “Process management” does not explain variance of operational performance.
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