Abstract
We study whether, and how, managers can increase government productivity in the context of public health provision. Using novel data from public hospitals in Chile, we document that top managers (CEOs) account for a significant amount of variation in hospital mortality. Using a difference-in-differences design, we show how the introduction of a competitive selection system for recruiting public hospital CEOs reduced hospital mortality by approximately 7%. The effect is not explained by a change in patient composition and is robust to several alternative explanations. Instead, we provide suggestive evidence that the reform led to more efficient use of medical resources and improved personnel practices. We then show that the policy changed the pool of CEOs by displacing doctors with no management training in favor of CEOs who had studied management. The mortality effects were largely driven by hospitals in which the new CEO had managerial qualifications.