Healthcare Executive Pay Boom

An article in Modern Healthcare has a great title that you will love.  It’s called Healthcare Executive Pay Boom Driven By Performance Bonuses. Remember, this is a business magazine made for the people who run the healthcare industry.  That’s not you, if you are a doctor, because we idiotically gave that away years ago.  Anyway, there is excitement in the air for the hospital administrators as they start raking in the cash.  Here are some highlights from the piece:

• Executives in many of the top-paying positions saw large pay bumps in 2015, driven in part by bonus packages triggered by improved quality and financial performance. The average compensation for CEOs at the 270 systems that participated in Modern Healthcare’s latest survey of executive compensation surged to $1.2 million in 2015, an 8.2% increase over the previous year.
• According to Modern Healthcare’s 35th annual Executive Compensation Survey, total cash compensation for all titles increased 6.3% in 2015
• An increase in complexity of the challenges facing top leaders at the system level has led to increased compensation.
• With hospitals consolidating and under intense pressure to improve quality amid declining reimbursement, more systems are embracing performance-based pay for top executives. Pay is now even being linked to successful population health management, Hastings said.

Let’s stop right there. Increase complexity of challenges?  Which ones?  Oh, that’s right, new colors for the hospital like cobalt blue.  How has your pay been over the past year? Are you making a 6% to 8% increase? Probably not.  By the way, when they say performance-for-pay for top executives, they really mean how well their doctors are making their numbers look good.  So the metaphor that comes to mind is the slaves rowing the Roman galley boat here.  The faster they go, the more money they make the hospital administrators.  Now you know why your boss at the hospital is so enthralled with quality metrics.

Now some more treats from the article:

• Belt-tightening and cost control at the nation’s hospitals hasn’t extended to the executive ranks, where pay increases for most titles posted healthy gains in 2015, driven largely by hefty pay-for-performance increases.
• The quickly evolving pay-for-performance strategy used by many boards is driving pay packages higher. Board consultants usually recommend a similar peer group for comparison purposes, pick a set of financial and quality indicators for making non-base compensation awards, and then determine whether they want their organization to be in the middle, top or back of the pack. To compete, many consultants recommend boards err toward higher incentives.
• The incentive packages developed for top officials often filter down through the entire organization. “We have a long history of linking executive and physician leadership rewards to our organization’s performance based on multiple indicators,” said Kathy Oswald, senior vice president and chief human resources officer at the Henry Ford Health System, Detroit. “These include measures related to quality, safety, patient satisfaction and employee and physician engagement, as well as the financial performance of the organization.”

To sum this section up, the belt-tightening and cost control doesn’t effect hospital administrators. But you knew that.  And I love that many consultants recommend boards err toward higher incentives.  When is the last time your hospital employer erred on your side?  Lastly, the third bullet point again proves my slave rowing the boat theory.

Remember folks, these are unproven quality metrics imposed on you by your hospital administrators so that they can make more money!  It’s time for a revolution!  Do not play this game anymore.  If you do then you are part of the problem.  The least you can do is spread this blog entry via Twitter, Facebook, LinkedIN or even email.  Knowledge is power.  Action, however, gets shit done.