The impact of new public management on efficiency: an analisys of Madrid's hospitals

Abstract

Madrid has emerged at the vanguard of public healthcare reform in the European Union. Despite the fact that the introduction of New Public Management (NPM) into Madrid hospitals has gone further than elsewhere in the EU – sparking controversy — little scholarship has been done to test whether NPM actually led to technical efficiency. This paper is one of the first attempts to do so. We deploy a bootstrapped Data Envelopment Analysis to compare efficiency scores in traditionally managed hospitals and those operating with new management formulas. We do not find evidence that NPM hospitals are more efficient than traditionally managed ones. Moreover, our results suggest that what actually matters may be the management itself, not the management model.