Considering their importance for the healthcare sector, there is still a dearth of research on the influence of management characteristics on the performance of publicly owned hospitals. On the one hand, public choice theory... [ view full abstract ]
Considering their importance for the healthcare sector, there is still a dearth of research on the influence of management characteristics on the performance of publicly owned hospitals. On the one hand, public choice theory depicts public sector managers as professional bureaucrats who cannot be trusted due to their self-serving behaviours and perceived biases in terms of staffing positions and career progressions (Aucoin 1990). On the other hand, managerialism (linked to the emergence of the NPM movement) supports the primacy of managerial principles over bureaucracy and, therefore, advocates the benefits of empowering public sector managers (Hood 1991). This study investigates the opposite predictions of these two schools of thoughts: the former assumes that as rent-seeking bureaucrats, public sector managers will have, on the whole, a negative influence on hospital performance, whereas the latter predicts a positive influence of greater managerial development and freedom from bureaucratic constraints.
To test these two hypotheses, we use data from the English National Health Service (NHS) acute care sector. Specifically, merging publicly available information with a proprietary database on hospital management, we have created a longitudinal database (2007-12) for around 150 hospital trusts. The management characteristics of hospital trusts are proxied through the ratio of the total number of managers to staff employed, the average level of management pay, and the average level of management stability. As measures of performance, the study employs the hospital-level infection rate, the Reference Cost Index, and the quality of the care provided according to hospital patients. We include as controls the level of clinical personnel stability, foundation trust status, teaching status, specialist status, the log size of the hospital, the average patient age, year dummies, and location dummies.
The analysis applies Arellano-Bover/Blundell-Bond dynamic system generalised method of moments (GMM) panel estimator. GMM controls for persistency in trust performance, weak exogeneity of explanatory variables, time-varying unobserved effects as well as heteroscedasticity and errors autocorrelation within trusts. We first investigate the isolated impact of the three proxies for management characteristics, we then look at three-way interactions between them, and lastly we examine whether these moderated relationships are quadratic or not.
The preliminary results of the analysis show that the manager-to-staff ratio is negatively significant on infection rate and positively significant on patient experience. It is, however, not significant on the Reference Cost Index. Furthermore, the 3-way interaction tests suggest that the effect of manager-to-staff ratio on the Reference Cost Index and on patient experience depends on the levels of management pay and management stability, in particular for high levels of pay and stability there is a greater influence on performance outcomes. We also find evidence of a non-linear relationship between manager-to-staff ratio and infection rate and patient experience (but not for the Reference Cost Index), in the sense that the positive effect of having a (relative) higher number of managers at high levels of management pay and management stability progressively diminishes when the manager-to-staff ratio is already comparatively high.
The implications of the findings for theory and practice are consequently explored.
