The impact of management on hospital performance

Abstract There is a prevailing popular belief that expenditure on management by health‐care providers is wasteful, diverts resources from patient care, and distracts medical and nursing staff from getting on with their jobs. There is little existing evidence to support either this narrative or counter‐claims. We explore the relationship between management and public sector hospital performance using a fixed effects empirical econometric specification on a panel data set consisting of all 129 non‐specialist acute National Health Service (NHS) hospitals in England for the financial years 2012/13 to 2018/19. Measures of managerial input and quality of management practice are constructed from NHS Electronic Staff Records and NHS Staff Survey data. Hospital accounts and Hospital Episode Statistics data are used to construct five measures of financial performance and of timely and high‐quality care. We find no evidence of association either between quantity of management and management quality or directly between quantity of management and any of our measures of hospital performance. However, there is some evidence that higher‐quality management is associated with better performance. NHS managers have limited discretion in performing their managerial functions, being tightly circumscribed by official guidance, targets, and other factors outside their control. Given these constraints, our findings are unsurprising.