Healthcare executives consider many factors when deciding which hospital, health system or organization to join, not least of which is compensation.
Becker's Hospital Review has gathered 20 facts and statistics on healthcare executive compensation for you to know. Further detail on surveys cited, such as respondent pool size and time of survey, is provided at the end.
Compensation-Strategy Alignment
1. Forty percent of survey respondents said their executive compensation packages are either slightly or seriously misaligned with their organization's strategies, according to the 2014 Executive Compensation Survey report by HealthLeaders Media Intelligence.
2. Fifty-three percent of respondents believe their executive compensation packages are "pretty well aligned." A mere 7 percent of respondents think their organization's executive compensation packages are aligned well with their organization's strategies.
3. As far as aligning compensation and strategies go, 31 percent of respondents said change is needed while 17 percent believe change is not necessary.
4. Survey respondents indicated that incentives are weighted slightly toward team goals (55 percent) as opposed to individual goals (45 percent).
5. More health systems (41 percent) than hospitals (31 percent) or physician organizations (24 percent) have made or intend to make group or team incentives for executive compensation packages.
Executive Incentives
6. Operating margins serve as a basis for 60 percent of respondents' current team incentive payments, followed by clinical performance targets (59 percent) and staff engagement or satisfaction targets (51 percent), according to the 2014 Executive Compensation Survey report by HealthLeaders Media Intelligence.
7. In 2014, 12 percent of health systems reported having no annual incentive payout for C-suite executives, up from 4.5 percent of health systems in 2004, according to the 2014 Manager and Executive Compensation in Hospitals and Health Systems Survey from Sullivan, Cotter and Associates.
8. Sullivan, Cotter and Associates also found health systems offered the following median target award opportunities to their executives in 2014:
CEO — 35 percent (up from 31 percent in 2004)
COO — 30 percent (up from 25 percent)
CFO — 28 percent (up from 24 percent)
SVP — 25 percent (up from 23 percent)
VP — 20 percent (up from 19 percent)
9. Hospitals offered their executives the following median target award opportunities, according to the Sullivan, Cotter and Associates survey:
CEO — 30 percent (up from 28 percent)
COO — 25 percent (up from 22 percent)
CFO — 25 percent (up from 22 percent)
SVP — 20 percent (down from 24 percent)
VP — 17 percent (down from 19 percent)
10. Among health systems with more than $3 billion in net revenue, 57 percent had long-term incentive plans in place in 2014, up from last year, according to the survey.
Base Salary Increases
11. Sullivan, Cotter and Associates survey found that although average base salaries increased across the board for many C-suite positions, CEOs at independent hospitals saw the largest average base salary increase (6.4 percent) between 2013 and 2014.
12. The average base salary increases between 2013 and 2014 for executives of health systems are as follows:
CEO — 2.6 percent
COO — 2.9 percent
CFO — 3.5 percent
CMO — 2.5 percent
13. At independent hospitals, base salaries increased by the following percentages:
CEO — 6.4 percent
COO — 4.5 percent
CFO — 2.1 percent
CMO — 4.9 percent
14. At system-owned hospitals, base salaries increased by the following percentages:
CEO — 1.7 percent
COO — 1.7 percent
CFO — 2.5 percent
CMO — 1.7 percent
15. The 2014 Hay Group Healthcare Compensation Study found that overall, in the integrated healthcare nonprofit sector, same incumbent base salary increases were slightly smaller between 2013 and 2014 (2.5 percent) compared to 2012 and 2013 (2.8 percent).
Total Cash Compensation
16. Sullivan, Cotter and Associates found the total cash compensation levels for hospital executives decreased an average of 0.4 percent in 2014.
17. Compensation levels for health system executives increased by 0.9 percent in 2014 as a result of lower average payouts under annual incentive plans.
18. Total direct compensation (including base salary, short-term payouts and the expected value of long-term incentives) rose by 7 percent in 2013 for CFOs to a median of $3.13 million, according to an analysis conducted by Mercer.
Industry Comparisons
19. In 2013, healthcare CEOs were paid more than executives in any other industries including the financial, industrial goods, basic materials, consumer goods, technology, services and utilities industries. The median pay for healthcare CEOs was $12.3 million last year, up 13 percent from 2012, according to an analysis by the Associated Press and pay research firm Equilar.
20. On average, compensation for female healthcare executives was considerably lower, by an average of 35 percent, than for men in similar positions, according to a study by the Diversified Search Healthcare Practice and the Women's Leadership Center and Kennesaw (Ga.) State University.
Statistics are based on the following:
Executive compensation strategy alignment and incentive payments statistics are from the 2014 Executive Compensation Survey report, "Reforming Executive Compensation to Accelerate Change," by HealthLeaders Media Intelligence. The survey was conducted in August among 454 respondents, including the HealthLeaders Media Council and select members of the HealthLeaders Media audience, 48 percent of which were senior leaders.
Annual incentive payout, target award opportunities, long-term incentive plans, average base salary increases and total cash compensation statistics are from Sullivan, Cotter and Associates' " 2014 Manager and Executive Compensation in Hospitals and Health Systems Survey." The report is based on responses from 517 organizations covering over 98,000 health care providers and 240 specialties and positions.
Information on the same incumbent base salary increases in the integrated healthcare nonprofit sector came from Hay Group's " 2014 Hay Group Healthcare Compensation Study." The report is based on responses from Hay Group surveyed 128 integrated healthcare systems and subsystems and 1,099 independent hospitals.
The statistic on the pay gap between male and female executives is based on a study conducted by the Diversified Search Healthcare Practice and the Women's Leadership Center and Kennesaw (Ga.) State University called, "Healthcare Leadership and Gender." The study examined the career experiences of C-suite leaders, vice president and directors at health systems hospitals, medical centers and other healthcare facilities. Study participants included 157 female and 125 male leaders.