Becker's Hospital Review

10 Further, they found an association of higher hos- pital CEO compensation with higher levels of advanced technology — and no significant as- sociation between CEO compensation and the hospital's performance on quality, mortality or readmission rates. This year will be critical for hospital and health system executives, as they navigate their organiza- tions through the gauntlet of reform and account- able care structures. Consequently, compensation for these leaders will be under the microscope more than ever. Here are five hospital executive compensation trends to watch in 2014. 1. Expect modest compensation increas- es in the C-suite. This past fall, consulting firm Hay Group released its 2013 healthcare compen- sation survey. The results indicated median base salaries and compensation packages for hospital and health system CEOs increased 4 percent in 2013. Similarly, other surveys have shown pay in- creases for CFOs, COO, CMOs, CNOs, CIOs and other C-suite leaders have generally oscillated be- tween 2 and 4 percent. Paul Esselman, executive vice president and man- aging principal at executive recruitment firm Cejka Executive Search, says hospital executives should continue to expect modest pay bumps. "The in- creases we are seeing really reflect the slow eco- nomic recovery, and to a certain extent, the uncer- tainty surrounding healthcare reform," he says. As for ballpark figures, the 2013 National Health- care Leadership Compensation Survey, conducted by Integrated Healthcare Strategies and co-spon- sored by the American Society for Healthcare Human Resources Administration, gives some clarity. Health system executives will continue to make between 1.5 and two times as much as indi- vidual hospital leaders. Executives of independent hospitals will also garner higher paychecks than leaders of subsidiary hospitals. The median salary of an independent health sys- tem CEO was $750,000 in 2013, compared with $539,000 for a subsidiary health system CEO. In- dependent hospital CEOs had median salaries of $380,000. Median cash compensation for health system CEOs ranges from $645,700 to $873,800, whereas cash compensation for individual hos- pital CEOs ranges from $368,700 to $402,500, all depending on the hospital's ownership status. For hospital and health system CFOs, median salaries in 2013 totaled anywhere from $203,600 for those at subsidiary hospitals to $409,000 for CFOs at independent health systems. Hospital CFOs recorded median cash compensation totals of approximately $225,000, compared with health system CFOs' totals of more than $400,000. In- dependent system CFOs saw their total packages as high as $460,000, according to the Integrated Healthcare Strategies data. COOs made more than CFOs, on average, in 2013. Health system COOs had median salaries ranging from $353,400 to $447,000, depending on hospital ownership, and median total compensation varied between the mid- to high-$400,000 level. COOs at independent and subsidiary hospitals, like CEOs and CFOs, made less, but their total compensation still hovered around $300,000 on average. 2. Nonprofit hospital executives have to win back the public by example. The JAMA study left the public wondering: Why are top hospital ex- ecutives not getting paid based on quality results and patient-centric measures and instead receive pay- checks based on hospital prestige and technology? Isn't that the point of transitioning from a fee-for- service system to a value-based system? Progressive hospital leaders and board members can buck the stigma if they tie more stringent, quality-based metrics to executive compensation packages. "The disappointment was the lack of association with patient outcomes," says Ashish Jha, MD, a researcher with the Harvard School of Public Health and co-author of the CEO compensation study. "We just don't prioritize this highly enough, and the fact that CEO compensation seems to be unlinked to his/her hospital's mortality rates, for instance, is a little bit disappointing. It also says that there is a real opportunity here if boards are willing to take it on." The Great Pay Debate: 5 Hospital Executive Compensation Trends for 2014 (continued from cover)

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