In a session at the 4th Annual Becker's Hospital Review Annual Meeting, James E. Rohan, vice president and managing director at Sullivan, Cotter and Associates, shared three things to know about hospital and health system CEO and CFO compensation.
Mr. Rohan began by explaining the skills required by hospital and health system CEOs and CFOs today are much different from those of the past. "We are transforming healthcare, and it may require a whole new set of skills," he said.
Shortage of proven executives
Finding executives with these new skill sets is sometimes difficult. For example, the average age of a CEO is 58, and 187 CEOs left their organizations in 2011. "There is increased competition for proven executives," he said. "There is a limited supply of executives that can run $3 billion health care systems."
System-owned hospital executive pay moderating
The average salary for a freestanding hospital CEO in 2009 was $617,000, which rose to $685,000 in 2012. Hospital CEOs that are part of a system experienced more moderate growth. The CEO of a system-owned hospital made 395,000 in 2009, which rose to $409,200 in 2012, an annual percentage increase of just 1 percent.
CFOs of standalone hospitals received $350,000 in 2009, which rose to $385,1000 in 2012. CFOs of system-owned facilities received $240,000 in 2009, which rose to $250,900 in 2012. The slowed growth in system-owned CFO and CEO compensation may be due to the increasing centralization of operations, which leads to reduced responsibilities for individual facility executives.
Perquisites disappearing
Mr. Rohan also said perquisites are disappearing, and are only given if there is a "compelling business need." For example, a country club membership could be a business need if the CEO routinely golfs with physicians he or she is trying to recruit to the system.
Mr. Rohan began by explaining the skills required by hospital and health system CEOs and CFOs today are much different from those of the past. "We are transforming healthcare, and it may require a whole new set of skills," he said.
Shortage of proven executives
Finding executives with these new skill sets is sometimes difficult. For example, the average age of a CEO is 58, and 187 CEOs left their organizations in 2011. "There is increased competition for proven executives," he said. "There is a limited supply of executives that can run $3 billion health care systems."
System-owned hospital executive pay moderating
The average salary for a freestanding hospital CEO in 2009 was $617,000, which rose to $685,000 in 2012. Hospital CEOs that are part of a system experienced more moderate growth. The CEO of a system-owned hospital made 395,000 in 2009, which rose to $409,200 in 2012, an annual percentage increase of just 1 percent.
CFOs of standalone hospitals received $350,000 in 2009, which rose to $385,1000 in 2012. CFOs of system-owned facilities received $240,000 in 2009, which rose to $250,900 in 2012. The slowed growth in system-owned CFO and CEO compensation may be due to the increasing centralization of operations, which leads to reduced responsibilities for individual facility executives.
Perquisites disappearing
Mr. Rohan also said perquisites are disappearing, and are only given if there is a "compelling business need." For example, a country club membership could be a business need if the CEO routinely golfs with physicians he or she is trying to recruit to the system.