BACKGROUND: The U.S. national standards for culturally and linguistically appropriate services (CLAS) in health care provide guidelines on policies and practices aimed at developing culturally competent systems of care. The Cultural Competency Assessment Tool for Hospitals (CCATH) was developed as an organizational tool to assess adherence to the CLAS standards. PURPOSES: First, we describe the development of the CCATH and estimate the reliability and validity of the CCATH measures. Second, we discuss the managerial implications of the CCATH as an organizational tool to assess cultural competency. METHODOLOGY/APPROACH: We pilot tested an initial draft of the CCATH, revised it based on a focus group and cognitive interviews, and then administered it in a field test with a sample of California hospitals. The reliability and validity of the CCATH were evaluated using factor analysis, analysis of variance, and Cronbach's alphas. FINDINGS: Exploratory and confirmatory factor analyses identified 12 CCATH composites: leadership and strategic planning, data collection on inpatient population, data collection on service area, performance management systems and quality improvement, human resources practices, diversity training, community representation, availability of interpreter services, interpreter services policies, quality of interpreter services, translation of written materials, and clinical cultural competency practices. All the CCATH scales had internal consistency reliability of.65 or above, and the reliability was.70 or above for 9 of the 12 scales. Analysis of variance results showed that not-for-profit hospitals have higher CCATH scores than for-profit hospitals in five CCATH scales and higher CCATH scores than government hospitals in two CCATH scales. PRACTICE IMPLICATIONS: The CCATH showed adequate psychometric properties. Managers and policy makers can use the CCATH as a tool to evaluate hospital performance in cultural competency and identify and target improvements in hospital policies and practices that undergird the provision of CLAS. Copyright © 2012 Wolters Kluwer Health | Lippincott Williams & Wilkins.