Executive employment agreements used to be few and far between in hospitals and health systems, but they have grown in usage, at least for CEOs, according to "Governance for Health Care Providers: The Call to Leadership," a healthcare book written by Kenneth Ackerman.
As of 2006, roughly 80 percent of freestanding hospital CEOs had employment agreements or contracts. Twenty-eight percent of health system CEOs had contracts.
Here are five basic features of today's hospital executive employment agreements, summarized from Mr. Ackerman's book.
1. Contract term. Most hospital CEO contract terms are for three to four years and include provisions for renewal.
2. Title. Although it sounds straightforward, the executive's official title, reporting relationships, duties, responsibilities and overall authority are mapped out.
3. Initial compensation. This includes base salary, incentives, standard and supplemental benefits and perquisites. Usually, there are also provisions for a salary review every year.
4. Termination definitions. Conditions for termination and the severance benefits paid upon termination are musts. The termination type — such as death, disability, termination without cause, termination for cause and others — are also essential.
5. Non-compete clauses. "A requirement not to compete with the organization [after resignation], along with a definition of what constitutes competition," must be outlined, Mr. Ackerman wrote.
As of 2006, roughly 80 percent of freestanding hospital CEOs had employment agreements or contracts. Twenty-eight percent of health system CEOs had contracts.
Here are five basic features of today's hospital executive employment agreements, summarized from Mr. Ackerman's book.
1. Contract term. Most hospital CEO contract terms are for three to four years and include provisions for renewal.
2. Title. Although it sounds straightforward, the executive's official title, reporting relationships, duties, responsibilities and overall authority are mapped out.
3. Initial compensation. This includes base salary, incentives, standard and supplemental benefits and perquisites. Usually, there are also provisions for a salary review every year.
4. Termination definitions. Conditions for termination and the severance benefits paid upon termination are musts. The termination type — such as death, disability, termination without cause, termination for cause and others — are also essential.
5. Non-compete clauses. "A requirement not to compete with the organization [after resignation], along with a definition of what constitutes competition," must be outlined, Mr. Ackerman wrote.
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