Objective: To investigate hospital employees` perception on organisational health, and to examine the contribution of organisational health to hospital performance indicators. Methods: The explanatory study was conducted over six months in 7 teaching hospitals affiliated with Iran University of Medical Sciences. A sample of 320 hospital employees were chosen through a random, cluster, sampling strategy from four job categories: hospital support, nursing, paramedical and medical staff. The predesigned Parsons` model was adapted to develop the study questionnaire, aiming at measuring the organizational health, while self-designed checklists were used to measure performance indicators of the relevant hospitals. SPSS 18.0 software was used for statistical analysis. Results: Of the total 320 questionnaires distributed, 20(6.25%) had to be discarded. The study population, as such, was 300(93.75%). Of then 216(72%) were males and the largest group (n=111; 37%) was in the 30-39 age group. According to the respondents` perception, all hospitals were assumed healthy. Although two dimensions of organisational health institutional integrity and initiating structure were closely linked to some hospital performance indicators (p