Steady executive pay hikes eclipse cost-containment concerns: Modern Healthcare

“Health systems are grappling with competing priorities, trying to corral costs while still attracting and keeping top executive talent with competitive salary and benefit packages,” Alex Kacik writes over at Modern Healthcare. “Judging by the steady increase in executives’ total compensation over the past several years, it seems that health system boards are not compromising executive pay in their cost-containment efforts. Yet, that dynamic may slowly be changing as more systems emphasize lofty long-term incentives and rein in base salaries to limit their financial exposure. Base salaries used to be more flexible, said Elaina Genser, senior vice president of executive search firm Witt/Kieffer. Providers are putting more weight on the bonus side and less on base salary—one way they’re keeping costs in check, she said. … Average total cash compensation across 39 health system executive positions rose 4.8% from 2017 to 2018, compared with a 3.6% annual increase for 12 hospital executive positions analyzed, according to Modern Healthcare’s 38th annual Executive Compensation Survey. Average base salary increases for system executives rose 4.7%, outpacing hospital executives’ raises of 3.1%. Modern Healthcare’s survey included 384 health systems and 988 hospitals.  … Previous surveys indicated that executives thought that they could grow their way out of thinning margins. But for the past several years, the forces weathering providers’ finances have not been temporary. Caring for an older, sicker population, for instance, means that providers will have to implement systemic change to get by on dwindling Medicare and Medicaid reimbursement levels. That trend, coupled with the rising scrutiny of executive pay, has put more pressure on hospitals and health systems. There are tax penalties for not-for-profit providers that exceed certain executive pay thresholds and provide exorbitant parachute payments for departing executives. Some for-profit companies are releasing comparisons of chief executives’ pay with the median pay of their employees, revealing ratios exceeding 300-to-1 for some firms.” Alex Kacik, “Steady executive pay hikes eclipse cost-containment concerns,” Modern Healthcare.