Performance improvement of a hospital or any organization cannot be achieved without having a winning strategy and an improvement of a sustainable competitive advantage. I look at patients` and staff satisfaction as a source of a competitive advantage that has to be maintained and improved constantly. Results of satisfaction surveys allow comparing the performance of a hospital to other hospitals and to seek an improvement in a hospital performance which is dependant on the ability of leaders to motivate and retain health care professionals that are responsible for satisfying the needs of patients.In my thesis I tried to prove that patients` satisfaction stems from a job satisfaction of health care personnel. There is a direct correlation between how staff feels and patients feel.The goal of my thesis was to prove that building a competitive advantage through staff and patients` satisfaction in a hospital can not be done without effective leadership, proper motivation and retention strategies in nursing and a constructive organizational culture. Because of the current issues in nursing or dissatisfaction with a nursing job I have chosen to propose retention strategies in nursing using motivational theories and information from research findings that I have found on the internet. Hospitals compete for health care professionals and retention strategies in nursing could become a source of a competitive advantage of a hospital. Patients `satisfaction with a hospital is dependant on health care professionals and their competence that is why I like to say:Health care professionals are the primary source of a competitive advantage of hospitals because of their skills and capabilities.I have discussed various leadership styles in order to find out which leadership style is the most effective in satisfying the needs of employees and patients. Transformational leadership is to be considered the most effective style within a job satisfaction among employees which has a positive impact on patients´ satisfaction as well according to the research conducted by Dr. J. Dunham Taylor from ETSU College of Nursing.A constructive organizational culture is another source of a competitive advantage that increases employees´ and patients´ satisfaction. I have analysed the cases of hospitals that transformed their organizational cultures to caring cultures and avoided not only a bankruptcy but became exceptional examples and leading hospitals in satisfying the needs of their patients´ and employees´ within a health care industry.In order to compete and to improve its performance a hospital needs to create and sustain its competitive advantages which derive from core competencies of a hospital.In the end I would like to underline that emotional intelligence determines effective leadership because the primary job of a leader is emotional. It is a job of a leader to inspire, to keep employees motivated and committed and to implement a wining organizational culture that drives performance.