Despite recent focus on health systems strengthening, few studies report large-scale efforts to improve hospital management capacity in low-income countries, a central component of improving health care delivery. We sought to assess the contributions of a systems-based approach, the Ethiopian Hospital Management Initiative (EHMI), which established hospital chief executive officers (CEOs) trained through a Masters of Healthcare and Hospital Administration (MHA) degree programme in Ethiopia. We conducted a pre-post study of 24 hospitals that are managed by CEOs in the MHA programme. We measured changes in hospital functioning based on adherence to a set of 86 hospital performance standards across 12 management domains published in the Standards for Hospital Management in Ethiopia. We found that adherence to hospital performance standards increased significantly during the one-year follow-up (27% compared with 51% of standards met at baseline and follow-up, respectively; P-value < 0.001); overall improvement was driven by improvement in seven of the 12 management domains. The EHMI is an example of health systems strengthening with focus on building hospital management capacity. Early evidence suggests that the establishment of hospital CEOs and MHA training to equip them with management skills may promote scalable improvements in health facility functioning.