Healthcare executive retention plans can be justifiable and effective
Genesis HealthCare came under scrutiny this week when The Washington Post reported that its CEO retired just months after receiving a retention bonus of $5.3 million. At the time of the arrangement, the nursing home chain was already in financial crisis and facing a higher coronavirus death rate than its competitors.
Competition for healthcare executive talent continues to increase, making retention packages important. But when they aren’t well designed, they can be ineffective or even disastrous. It’s important for healthcare organizations to build a retention strategy that doesn’t cause more harm than good, especially now that the appropriateness of high executive pay is being called into question.
At MaxWorth, we believe all healthcare executive compensation programs should be reviewed frequently with two things in mind: defensibility and effectiveness.
Build a program that’s justifiable in times of financial crisis
At a time when most healthcare organizations are strapped for cash, it’s a good idea to be able to demonstrate your organization’s ability to recoup a portion of your executive compensation expense. That’s why our Healthcare Executive Advantage Plan (HEAP) utilizes a cost-containment vehicle that allows an organization to do just that. The ability to recoup expenses allows an organization the freedom to offer rewards that attract and retain executives without compromising its moral obligation to safeguard its financial wellness so it can continue to provide care in its community. For rural facilities that have a hard time retaining talent and an even harder time justifying large incentives, this feature can be a lifeline.
Build a program that’s effective
It’s important for healthcare organizations to understand that they don’t have to choose between justifiable compensation and executive retention. Even though it’s financially sustainable, HEAP offers an appealing combination of short-term rewards that attract and long-term rewards that retain. Short-term rewards are effective at deflecting recruiting calls, which are to be expected in an environment of high executive turnover.
Long-term rewards are equally important because they can be tied to organizational goals, which means executives can be held accountable and rewarded for performance and loyalty. If Genesis HealthCare had tied their retention incentives to goals like quality of care and longevity, they might not have landed in the news. No matter what a compensation package looks like, poor care outcomes are sure to invite scrutiny.
With years of experience designing benefit and compensation programs for the healthcare community, MaxWorth can help your organization review its executive retention strategy. To learn more about our Healthcare Executive Advantage Plan, download our white paper or contact us today.
REQUEST OUR WHITE PAPER:
Complete the form below and receive a copy of our latest white paper: Rewarding Excellent Administrators
Want to Learn More?
The hidden cost of executive turnover Executive turnover, which has held steady at 18% for the past five years now, is taking a toll on healthcare organizations. From a financial perspective alone, turnover can be devastating. The replacement of a CEO, for example, can cost anywhere between four and eight…
Communication strategies to improve benefit plan participation in 2020 It’s re-enrollment season here at MaxWorth, which means we’re traveling throughout the country to help our plan participants make their 2020 elections. For the past thirteen years, we’ve worked exclusively with physicians and administrations on their benefit plans. During that time,…
Practice Executive Compensation: Strategies to improve attraction, performance, and loyalty Medical practices are becoming larger and more competitive, and, like hospitals, they’re looking for creative and cost-effective strategies to help them achieve their organizational goals. Compensation is a great place to start. In fact, medical practice executive compensation is the…
Strategic Executive Compensation in Medical Groups By: Kyle Worthy As we’ve discussed in the past, dynamic hospital compensation programs can be the key to attracting and retaining top executive talent, which ultimately impacts the continuity of care in america. As we transition to new delivery models, there is a…