THE RELATIONSHIP BETWEEN PHYSICIAN VERSUS NON-PHYSICIAN CEOS, TENURE, AND HOSPITAL OUTCOMES

It has been repeatedly demonstrated across industries that the demographic profiles of executives are highly correlated with organizational performance outcomes. Using Upper Echelons theory as a guide, this study seeks to apply this paradigm specifically to senior hospital administration. Despite theoretical support from Upper Echelons theory, prior empirical studies have been unsuccessful at consistently demonstrating a performance difference between hospitals with medical doctors (MDs) as chief executive officers (CEOs) and hospitals with non-MDs as CEOs. These studies have only tested for a main effect between MD versus non-MD and hospital clinical quality and financial outcomes without regard for tenure. The proposed model asserts that the time a CEO has been in their role, tenure, is a critical variable and has a different effect on the relationship between MD versus non-MD CEOs and hospital performance. The results of this study indicate an interaction between tenure and MD versus non-MD CEO status on hospital return on assets (ROA). However, no interaction was found for any of the clinical quality outcome variables. These study findings support the idea that while MD CEOs may initially garner less favorable ROAs than their non-MD CEO peers, they eventually meet and surpass non-MD CEOs after seven years of tenure. As such, hiring MDs as CEOs may represent a favorable long-term financial investment strategy for hospitals.