Executive Compensation

HealthLeaders Media Council members discuss their organizations’ executive compensation structure.

This article first appeared in the June 2017 issue of HealthLeaders magazine.

Debra Palmer
Chief Human Resources Officer and Corporate Compliance Officer
Fairfield Medical Center
Lancaster, Ohio

I think we’re in the majority of organizations, in that we have a strong structure for our compensation. We do an annual review of it, so unless the market changes significantly, I don’t see a large change in actual structure of the program.

For our C-suite, our base salary is set at the 50th percentile of the regional market and then modified based on years of experience for each candidate. All usual employee benefits apply, plus we give a leadership fringe of $100 monthly, which they can use to offset benefits costs, deposit into their 401(k) or 403(b) plan, or enter into their 457(b) plan.

We provide C-suiters with a 20% bonus structure, with organizational goals comprising 85% of the bonus, and 15% of the amount around individual goals. We all have the same organizational goals, and most of us have one to two personal goals. We also give them additional PTO of 40 hours yearly, long-term care is paid for and provided by the organization, and we give them 2.5 times their annual salary in life insurance.

I’d say that you need baseline compensation as a part of your incentive plan. Also, if the candidate is moving to accept this job, you need to support their moving expenses. If the new executive is not moving and their current residence is driving distance, you might substitute a sign-on bonus for relocation fees. But I think the most important thing to attract new talent is competitive base compensation. 

Lewis Marshall Jr., MD, MS, JD
Chairman, Ambulatory Care and
Community Health Services,
Brookdale University Hospital Medical Center
Brooklyn, New York

On why the time is now to update compensation structure: One of the greatest indicators that now is the right time for a change is the movement to value-based purchasing. As organizations move to the new process with their managed care organizations and payers, executive compensation structure should change, too.

With value-based purchasing, an executive compensation package might look at some type of incentive based upon the organization’s ability to meet the goals of the value-based payment program. It should be set up so that executives are compensated, but you need to have some type of incentives to incentivize the executives to do the best they can and to improve the system from within.

On the impact of value-based care on compensation: I don’t think value-based care has really impacted executive compensation for the majority of executives in the healthcare industry yet, but some leading organizations are starting to look at executive compensation as it relates to value-based payment programs they are developing, and whether they should and can weather the storm between inpatient-centric and ambulatory-centric systems, as well as developing the criteria or the benchmarks for their value-based purchasing programs. 

Right now, I think this is in the beginning stages; I don’t really think a lot of organizations are making significant changes in that direction just yet. But I think there are some, and ours is one of them. 

Brian Wetzel, CNMT, RT, RN
Administrative Director, Diagnostic Imaging, Cardiology, and Vascular Lab
Our Lady of Lourdes Hospital
Binghamton, New York

Because we’re part of a larger organization called Ascension Health, we’ve incorporated its policies regarding local, state, and national markets around titles that are particularly difficult to recruit, and around the task of ensuring our compensation is at the right level to fit the market as it currently stands. We don’t have to be at the top of said market for our region, but we at least like to be at the middle of the pack, or slightly above. 

This is an area where we’re going out there and trying to utilize the market analysis to adjust salaries of potential executives appropriately while staying within the budgetary guidelines of the hospital, which is sometimes hard to do in this competitive, often uncertain healthcare situation we’re in as a country right now. 

You want to look at the degree of leadership turnover, the availability of qualified individuals to fulfill these roles, and, of course, you’ll want to look at how in demand these roles are in your specific region and adjust accordingly.  

We’re currently analyzing and utilizing the knowledge that is out there to adjust our recruiting methods so that we can meet these leaders’ salary needs while staying true to both our budget and culture.