Hay Group’s Annual Healthcare Compensation Study Shows More Executives Being Paid Based on Long-Term Incentive Plans, Especially at Larger Hospital Systems

- CEO, senior executive pay continue upward trend -

PHILADELPHIA--()--Long-term incentive plan utilization among integrated health systems is at its highest rate since Hay Group started tracking the data in 2006, with large organizations leading the pack, according to the 2013 Hay Group Healthcare Compensation Study released today.

Within integrated health systems (IHS), 39 percent of individual facilities had a long-term incentive (LTI) plan in place in 2013, compared to 17 percent in 2012 and only 14 percent in 2006.

“Healthcare organizations are in the midst of one of the most challenging environments in the sector’s history, driven by new reimbursement models, changes in consumer habits, and the impact of the Affordable Care Act,” said Ron Seifert, vice president and executive compensation practice leader for Hay Group’s Healthcare Practice. “To survive in this new environment, many health systems are making big investments in the acquisition of physician practices and technologies to support their long-term strategy. Correspondingly, we’re seeing an uptick in the use of long-term incentives as healthcare organizations work to align incentive plan opportunities with longer-term desired outcomes.”

According to Hay Group’s study, the larger the system, the greater the likelihood it is using LTI plans. Sixty-three percent of systems with revenue over $5 billion had LTI plans in place in 2013, compared to 38 percent of systems with revenue between $3 billion and $5 billion. Seven percent of independent hospital respondents reported having a long-term incentive plan in place in 2013.

CEO compensation continues upward trend; nursing salary increases trend downward

Hay Group’s study also found that employees holding the same position year-over-year at large integrated health systems (IHS) received median base salary increases of 2.8 percent in 2013, slightly lower than the 2.9 percent increase they saw in 2012. Median base salary increases for independent hospital employees trended upward to 2.7 percent in 2013, compared to 2.4 percent in 2012. Hospital nurses saw the smallest pay increases of all employee groups in Hay Group’s study, a 1.8 percent pay increase in base salary and a 2.0 percent increase in total cash in 2013. That’s compared with 2.5 percent increases in both base salary and total cash in 2012 and 2.0 percent in 2011.

The largest base salary increases continue to be reported at the chief executive officer and “senior executive” level. Median base salary increases were 4.0 percent for CEOs and 3.0 percent for senior executives at not-for-profit IHS organizations in 2013; CEOs and senior executives at non-system hospitals saw base salary increases of 3.0 percent, steady with last year for CEOs but a drop for senior executives who saw 6.0 percent increases in 2012.

“We’re seeing temperance in the area of executive pay, amidst continued scrutiny from stakeholders, government and the public alike,” Seifert said. “Even so, it’s more critical now than ever that hospitals and health systems properly incentivize and retain their executive talent. The environment has never been more complex: systems are becoming insurers, insurers are partnering with health systems, and CEOs are being charged with pushing the organization toward pay-for-performance and population health management. To succeed, healthcare organizations must have the right leadership guiding the ship.”

About Hay Group’s 2013 Hay Group Healthcare Compensation Study

The 2013 Hay Group Healthcare Compensation Study is in its 30th year and results in two separate reports: the Integrated Healthcare Systems report and the Hospital report. Originally chartered by eight core companies, the report now provides data from 99 integrated healthcare systems as well as an additional 40 integrated healthcare subsystems, representing over 622,288 incumbents. There are 1,162 participating hospitals in this report, covering more than 600,000 incumbents; 994 of these hospitals are acute care facilities. The range of jobs covered in this study makes it the only top-to-bottom healthcare compensation database in the market.

In recognition of the difference in scope of responsibilities of similarly titled positions between organizations, jobs matched to the corporate and regional positions by participants are content evaluated using Hay Group’s proprietary job evaluation methodology. Making pay comparisons on the basis of job title alone can produce comparisons that do not reflect job content or complexity. Hay Group’s job evaluation methodology eliminates the potential of an inaccurate outcome by examining compensation relative to job content and complexity rather than merely by job title or company size. The data in these reports has an effective date of January 1, 2013.

Additional information about Hay Group’s reward information services can be found at www.HayGroup.com. Media inquiries and interview requests can be directed to Liz DeForest at liz@blissintegrated.com or at 212-584-5477.

About Hay Group

Hay Group is a global consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective, and motivate them to perform at their best. With 86 offices in 48 countries, we work with over 8,000 clients across the world. Our clients are from the private, public, and not-for-profit sectors, across every major industry and represent diverse business challenges. Our focus is on making change happen and helping people and organizations realize their potential.

Contacts

For Hay Group
Liz DeForest, 212-584-5477
liz@blissintegrated.com

Release Summary

Long-term incentive plan utilization among integrated health systems is at its highest rate since Hay Group started tracking the data in 2006, with large organizations leading the pack.

Contacts

For Hay Group
Liz DeForest, 212-584-5477
liz@blissintegrated.com