Compensation Strategies in the Healthcare Industry

Compensation comprises everything from salaries to bonuses to stock options and it’s a subject with many perspectives in the healthcare industry. An Executive Compensation Survey in 2014 sought those divided opinions from over 400 respondents and the results were quite revealing. The survey results were published by HealthLeaders Media Intelligence in a report titled “Reforming Executive Compensation to Accelerate Change.”

A total of only 18 percent of those surveyed said no enhancements were necessary in their executive compensation structure and a mere 7 percent said that their organization’s executive compensation was aligned ideally with their organization’s strategies. In contrast, 82 percent admitted that either minor or even major enhancements were needed. Ultimately, in order to meet the needs of the healthcare industry today, more than a third of those surveyed said that changes are needed in executive compensation strategies.

Nearly a third of respondents said that, while changes were needed, there was no plan yet in their compensation strategy to address evolving patient care objectives in the industry. Additionally, a sizable minority of those surveyed said that they did not expect their organization to modify their team incentives in preparation for the shift from free-for-service to value-based purchasing.

Looking at the executives themselves proved interesting as well. In the case of organizations with medium to higher levels of net patient revenue, a majority of executives received a greater portion of team-based incentives. Additionally, 43 percent of executives surveyed admitted that their organization had not taken steps to match incentives with values such as clinical outcomes.

Operating margins played a role in compensation also. Nearly half of all those surveyed said that operating margin targets formed the very basis of their individual incentive payments. To learn more, you can download a complimentary version of the report here:
http://healthleadersmedia.com/intelligence/detail.cfm?content_id=310136&year=2014