Katharina Janke, Carol Propper* and Raffaella Sadum published in may 2019 a working paper where they investigate whether top managers affect the performance of large public sector organizations. The study examined CEOs of English public hospitals, which are large, complex organizations with multi-million turnover. They studied the impact of individual CEOs on a wide set of measures of hospital performance, intermediate operational outcomes and inputs.
Findings: "There is little evidence that individual CEOs have an impact on a large set of measures of hospital performance".
There are some possible explanations for their findings.
- The first is public sector-specific. The public sector nature of the NHS wich distort the effort of ther NHS CEOs to pursuit of political targets rather than performance-enhacing policies. The NHS is central in political discourse in the UK. Its importance means that politicians are very concerned about NHS performance, particularly negative performance, and are also keen to be seen to be doing something, which is generally manifest in a desire to implement new policies. The lack of persistent CEO effects is consistent with a scenario in which top managers simply chase political goals, rather than policies that might actually improve hospital performance. In this context, the rational response of a NHS CEO is not necessarily to improve the long-term performance of the hospital but, instead, to minimizethe amount of bad news that ends up on the Secretary of State’s desk.
- A second explanation is that hospitals are large complex organizations, in which highly trained (and hard to monitor) individuals run separate but interconnected production processes. Management at the very top of such organizations may find it difficult to engage in coordination and getting a large number of actors, who traditionally have not worked together, to work cooperatively. The organizational inertia of a large hospital is too strong for a single manager – even if this person is the CEO – to be able to impact performance within the short time period in which they are in office, and consistently across organizations. This situation, of course, is not specific to public sector hospitals. But it may have more of an effect in hospitals, public or private, where there are many dimensions of performance (clinical, access, financial) that can be pursued and can in the short run conflict. This inertia may also be exacerbated by the often much longer contract durations of clinical staff relative to CEOs.
- The short tenure of CEOS (around 3.5 years) in the NHS may dampen their ability to systematically impress their mark in the organization they lead. A leading NHS manager recently argued that it takes five years for a CEO to make a difference but the average time in post is much shorter than that.
- The management capabilities of middle managers inhospitals are systematically associated with better outcomes. The authors suggest that rather than seeking to rapidly change hospital performance through the appointment of a cadre of “superheads”, strategies for improvement should instead focus on nurturing and sustaining the skills of middle managers.
Paper: CEOs-NHS working paper (2019, pdf)
*Carol Propper will be next friday the 14th in the plenary session of the XXIX Jornadas de Economía de la Salud presenting this study
photo: Anna de Jaume Plensa, Monestir de Montserrat 2019 Jordi Soldevila