The Role of Medical Professionals in Top Management Teams of Healthcare Organisations: An Economic Model

The appropriate role of medical professionals in a hospital’s top management team is a controversial issue. Clearly, the medical director plays an important part in balancing medical and financial performance. It is perceived wisdom among medics that the medical director’s position should be strong and on an equal footing with the commercial director. Clinicians believe that relegating their representative to a subordinate role would entail financial considerations taking precedence in decision making, leading to cost-cutting and consequent detrimental effects on medical performance. We challenge this view, presenting arguments in favour of detailing the medical director a subordinate role. Using a simple game theory framework, we demonstrate that placing the medical director in a subordinate position may in fact lead to increased resources and superior medical performance, because medical and financial performance are strategic complementarities. We present empirical evidence to support the predictions of our model.