Hospitals to Increase Focus on Executive Compensation

At the ACHE “Congress on Healthcare Leadership” this week, a key presentation discussed the issues surrounding increased scrutiny of executive compensation. The presenters, F. Kenneth Ackerman Jr. and David A. Bjork, chairman and senior vice president at Integrated Health Strategies, stressed the growing importance of establishing a compensation committee to improve governance. The speakers referred to a report (link below), issued by the Alliance for Advancing Nonprofit Health Care, which helps healthcare executives answer a simple question: “Among all of the 50–100 ‘best practices’ that permeate the literature, which are the ones that are likely to make the most difference in achieving excellence in governance?”

In the concise report, titled “Great Governance,” the authors provide recommendations on how to establish and improve compensation committees and other governance practices. Seven benchmarks are listed in the report, along with “key action steps” to consider when addressing the benchmarks.

Appendices in the report provide checklists to evaluate board meeting practices and other governance activities. It’s a great document that will help CEOs and other executives address hospital compensation plans. The proactive planning discussed in the report will also help executives respond to challenges from board members as well as from the media regarding executive compensation.

The bottom line is that it’s important to educate board members before questions arise—and by strengthening the compensation committee, the board will help protect the hospital, the CEO and the board itself.

You can access the “Great Governance” report at http://www.integratedhealthcarestrategies.com/documents/articles/378.pdf