This article appears in the November 2012 issue of HealthLeaders magazine.
Across the C-suite, salaries and total cash compensation continue to rise, though changes to incentive structures may be influencing the size of the increase.
INTEGRATED Healthcare Strategies' 2012 National Healthcare Leadership Compensation Survey reports that though the use of annual incentives for executives remains very common, with approximately 80% of all hospitals and systems providing this type of plan for executives, the use of long-term incentives is slowly increasing, explains Kevin Talbot, executive vice president and practice leader at Integrated Healthcare Strategies.
He notes that an IHS study indicates from 2001 to 2011 hospitals and health systems began slowly adding more long-term incentives into the executive compensation model. IHS' data also indicates the most common performance category for annual incentives remains financial (generally, operating margin) though clinical quality and patient satisfaction are also in the incentive mix.
For not-for-profit CEOs nationwide the median total cash compensation (base plus incentives) increased 3% to 6.7% over last year, and these organizations' senior leadership teams gained similar pay increases, according to IHS' survey and the Sullivan, Cotter and Associates, Inc. report, 2012 Survey of Manager and Executive Compensation in Hospitals and Health Systems.
Health system CEOs' median base salaries increased to $717,500 (2012) from $650,000 (2011), while independent hospital CEOs' median base salaries rose to $506,100 from $472,000 during that period, according to IHS. Comparatively, Sullivan, Cotter and Associates shows the base pay for system CEOs nationwide increased while the TCC declined slightly—base pay increased to $334,700 from $325,000, while TCC decreased to $411,100 from $412,100 from 2012 to 2011, respectively. Unlike their health system counterparts, independent hospital CEOs' base pay and TCC climbed between 2011 and 2012—base pay went up to $530,000 from $504,000 (a 4.9% gain) and TCC jumped 4.3% to $600,000 from $574,000.