This paper is devoted to develop scientifically-based model that is economically viable for forthcoming reforms of university hospitals in Latvia taking into account two major driving forces – national health policy and operational hospital management in the meaning of efficiency and quality concerns. The purpose of this article is to evaluate worldwide guidelines in a field of corporate governance of state ownedhospitals, provide Latvian university hospital governance model, taking into consideration regulation for state owned enterprises, its relevance for public hospitals, identifying primary areas of improvement and providing practical suggestions for further actions, paying due consideration to relationships between public-sector decision-making and hospital-level organizational behaviour.Common economic scientific quantitative and qualitative methods were used in the process of the re-search work including various methods of analysis to examine the elements of the problem and findings based on course of the research on relevant legislation, policy documents, OECD and WHO evaluation. Proposals for governance improvement and organizational forms are developed.