Kathy Noland and Christine Ricci of B.E. Smith share their insight on four trends affecting compensation of hospital executives.
1. Increased transparency. Increased transparency is becoming standard practice in many hospitals, according to Kathy Noland, vice president of board and CEO services at B.E. Smith. The healthcare industry is following the example of other industries by releasing more information on executive compensation to the public. "It's becoming more clear to people where compensation is coming from," Ms. Noland says. "Boards want to be true to their clients and customers, and to do that, they have to release what the heads of their hospitals are being paid."
2. Executive packages have fewer perks. Today, executives are compensated with a base salary that is consistent across healthcare organizations. Instead of receiving memberships to country clubs or other indefinable privileges, executives receive a combination of salary and bonus that can be tracked and monitored more easily. In addition, hospitals are collaborating with their peers and national healthcare organizations to ensure that each executive position has an accepted base salary.
3. Executive performance is tracked and rewarded. In order to compensate their employees properly, hospital boards are making sure to carefully track executive efforts and calculate bonuses based on individual performance. Hospitals will "pay for performance" by measuring quality outcome, workforce recruitment, community service, financial outcomes, growth, safety measures and other industry standards. Hospitals can improve their relationships with clients and customers by "being very open about performance indicators," Ms. Noland says.
4. Relocation and severance packages are on the increase. Due to the economy, Ms. Noland and Ms. Ricci, B.E. Smith vice president of public relations, say organizations are expanding their relocation packages. Because executives may find it more difficult to sell their homes before moving for a new job, hospitals are providing more temporary housing and more generous relocation packages. In addition, severance packages are becoming more common so that incoming executives feel that they have financial security even if they lose their jobs.
Contact Rachel Fields at rachel@beckersasc.com.
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