New York, NY – Eliminating waste and improving government efficiency has been a key focus of the White House during President Donald Trump’s second term. Over the last year, Elon Musk’s Department of Government Efficiency (DOGE) cut more than 29,000 jobs, slashed billion-dollar contracts, and canceled thousands of grants. As debates continue over whether these massive scalebacks achieved their goal, strong new evidence from Chile offers a different approach to improving efficiency in the public sector: hiring CEOs with formal management training. The new Columbia Business School study found that when public hospitals in Chile replaced CEOs who had medical-only degrees with leaders who had postgraduate management degrees, mortality rates in those hospitals fell by 8%.
The study, Managers and Public Hospital Performance, by Cristóbal Otero, Assistant Professor of Business at Columbia Business School, and University of Chile professor Pablo Muñoz, examined a large-scale reform of Chile’s public sector that introduced competitive recruitment and pay for public hospital CEOs starting in 2003. At the start of the policy, 99% of hospital CEOs were doctors, but by 2019, that number was only around 50% — and many CEOs still held both medical and management degrees. The researchers created and analyzed a dataset using detailed information on CEO careers and education obtained through Portal Transparencia (Chile’s FOIA counterpart) and archival work; hospital workforce records on wages and hospital turnover; patient data on 16.5 million inpatient discharges from all Chilean public hospitals; and national death registry records, including in-hospital and post-discharge deaths. Overall, they find that managers themselves play an important role in hospital performance. When a high-talent CEO arrived in public hospitals, the mortality rate fell, but when one departed, the rate increased. The researchers found other positive effects of the policy, including lower doctor turnover rates and more doctors pursuing management degrees – in fact, the share of doctor CEOs with postgraduate management training increased by 15% between 2004 and 2019.
“Rather than relying on across-the-board cuts, our findings point to leadership quality as a powerful lever for improving government performance,” said Professor Otero. “With governments accounting for roughly 30 percent of global GDP, policymakers looking to improve efficiency should focus on who leads public institutions—especially in high-stakes sectors like healthcare, where management decisions directly affect outcomes.”
