Hospitals and health systems continue to modify their executive compensation and recruitment strategies to stay competitive.
Along with studying peer compensation data, some systems have updated sign-on and special retention awards, while others have prioritized retaining and promoting top talent.
In conversations with Becker's, two health systems outlined their approaches to executive compensation and recruitment.
Sizing up demand
Researchers have argued that there is no perfect CEO personality, and that leaders of hospitals and health systems possess an array of qualities and strengths, ranging from softer skills such as honesty and openness to financial and technical knowledge. The expertise required to manage in today's healthcare environment continues to evolve, creating a demand for experienced and capable leaders.
According to SullivanCotter's May 2024 Executive Compensation Pulse Survey of 130 large health systems, 87% of respondents are increasing executive recruitment efforts or undertaking the same level of recruitment compared to 2023.
"Compensation must be competitive enough to recruit external candidates and to retain existing high-performing leaders who may be attractive to competitors," the Chicago-based firm told Becker's.
Eighty-seven percent of survey respondents reported using special tools to attract and retain executive level talent. These include sign-on/relocation (54%) and/or special retention awards (53%). Additionally, 33% reported an increased focus on professional development with the aim of increasing internal promotions and succession. About 20% to 25% of participants reported using off-cycle pay adjustments or special incentives to recognize and reward talent.
SullivanCotter noted there also has been a focus on differentiating and providing more competitive pay for select roles that are critical to attract and retain (such as strategy, operations, finance, population health/quality), and that some systems are recruiting outside of healthcare for some positions (such as digital, information security and marketing roles).
Tapping into peer data
Mike Wukitsch, PhD, who joined Fort Myers, Fla.-based Lee Health as chief people officer in 2018, noted that his organization reviews peer data thoroughly.
This annual process involves a third-party firm that uses its proprietary database, along with other published surveys, to assess every executive position and ensure benchmarking, Dr. Wukitsch said. From there, compensation may be adjusted based on the role's responsibilities or additional features.
After gathering and examining the data, an internal compensation committee — which includes the CEO, COO, CFO, head of compliance, legal representation and Dr. Wukitsch — reviews the data to determine the organization's positioning.
Renton, Wash.-based Providence also values data in "keeping a beat on the market" and understanding where their talent sits today, Nick Sena-Hopkins, head of executive services and compensation, told Becker's.
Performance- and risk-based pay
"What's changed the most is that total compensation has certainly become a bigger factor in the healthcare space, which is base pay and incentive pay, and incentive pay more and more performanced-based. I'd say that one of the biggest changes is the expectation to stay competitive," Dr. Wukitsch said.
Various components of executive compensation packages at Providence have remained consistent the past few years, Mr. Sena-Hopkins said.
Providence has had a steady total rewards package for the past six or seven years that balances fixed components and pay at risk, he said.
"Over time, as we've gotten larger, we've added more and more risk-based pay, which has been a big shift for healthcare," Mr. Sena-Hopkins said, adding that a decade ago, leaders were not as comfortable connecting pay with performance.
Relocation, bonuses and PTO
When it comes to relocation, Lee Health has a standard amount it allotts, which can be adjusted based on need.
"We try to work with our executives so we're providing what they need to have a successful move and reduce some of the strain of relocation," Dr. Wukitsch said.
Lee Health also provides sign-on bonuses, particularly if the executive is giving up bonuses or other compensation they received at their previous organization.
In addition to working with the third-party consultant, Lee Health receives input from candidates themselves and the search firms with which it works. He acknowledged the balance needed to stay competitive while also retaining the people already at the organization.
"You don't want [people already at the organization] to feel as if others are getting things they aren't necessarily getting," Dr. Wukitsch said. "But you also need to attract people, particularly to make up for potential losses of income in other places for incoming candidates."
Additionally, Lee Health uses executive coaches as a recruitment tool when an individual is interested, as well as professional memberships.
Another perk is "unlimited" PTO for the most senior-level executives at Lee Health.
"The plus is they take the time [off] they need, knowing that these jobs are very challenging. That does provide flexibility. At the same time, then you're not accruing, and you're not getting into sometimes what constitutes time off," Dr. Wukitsch said.
He said the "unlimited" PTO, along with the work flexibility Lee Health offers to individuals relocating and the sign-on bonuses, has been effective.
Competing with top organizations
While Providence focuses on staying competitive with health systems of its size — the system includes 51 hospitals, 1,000 clinics and 34,000 physicians — it is not realistic to compete with large companies such as Amazon and Microsoft, he said.
"We're not going to be able to compete with the big tech players who can give away equity and ownership of companies," Mr. Sena-Hopkins said. "At the end of the day, the majority of our leaders come here for our mission."
Providence also places emphasis on internal recruitment and promotions. "That's really our biggest pipeline," Mr. Sena-Hopkins said.
'We're all accountable'
"In general, compensation has not been a major problem for us," Dr. Wutkitsch said. "We are a safety-net hospital system, and the people who come here know it's a community-based, safety-net public hospital system, that thoughtfulness, public scrutiny come with it. So we need to stay competitive and at the same time recognize we have a fiduciary responsibility to our community. And I think the people who come here recognize that, and they come here for the opportunity, the community, the growth we're experiencing, and the fact that our pay and our practices are competitive. And that we're open to discussions. We recognize that situations are different."
Lee Health, which has 49 executives at the vice president level or above, uses its operating scorecard as its incentive structure, which includes elements such as financial and quality metrics.
"This year, we're looking very good," he said. "We're achieving a number of our goals. And it really helps when your incentive plan pays out because your goals were thoughtful, were stretch targets, yet achievable."
For organizations looking to reshape their own compensation practices, he recommended tying incentive plans to key goals or metrics, then making sure the targets are challenging yet achievable. He suggested there be someone specific to take ownership of each goal, with the senior team being in the loop on all of them.
"We're all accountable for the success of the organization, and I think that's a real key on the incentive side," he said.