Managers and Public Hospital Performance

Cristóbal Otero
PhD UC Berkeley 

Abstract: We study whether, and how, managers can increase government productivity in the context of public health provision. Using novel data from public hospitals in Chile, we document that top managers (CEOs) account for a significant amount of variation in hospital mortality. We then use a staggered difference-in-differences design, and show that a reform which introduced a competitive selection system for recruiting CEOs in public hospitals reduced hospital mortality by  approximately 8%. The effect is not explained by a change in patient composition

and is robust to several alternative explanations. The financial incentives included in the reform—performance pay and higher wages—do not explain our findings. Instead, we show that the policy changed the pool of CEOs by displacing older doctors with no management training in favor of younger CEOs who had studied management. The mortality effects were driven by hospitals in which the new CEOs had managerial qualifications. These CEOs improved operating room efficiency and reduced staff turnover.

Ver Video