Hanna Glenn, University of Queensland - Does Hospital Leadership Matter? Evidence from Pay-for-Performance

Title:   Does Hospital Leadership Matter? Evidence from Pay-for-Performance

Abstract: Firm managers are often seen as key drivers of firm decisions, strategies, and performance. While extensive research links managerial characteristics to firm outcomes, less is known about how hospital executives influence responses to health care incentives. Health care policies in the US often focus on improving quality of care without increasing costs, yet it is unclear whether hospital leaders might contribute to this goal. Leveraging pay-for-performance incentives, I estimate the differential response to financial incentives on quality by different types of nonprofit hospital executives: those with and without a clinical training background. I find that hospitals without clinically trained executives respond more to the financial incentives than those with clinically trained executives. This can be explained by a model of hospital objectives in which clinical training affects hospital preferences towards patient welfare. These findings highlight the importance of considering leadership as an important factor in hospital decision making when adjusting incentives.

Presenter: Hanna Glenn, University of Queensland

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