Retaining Hospital Executives with Better Rewards

Retaining Hospital Executives with Better Rewards

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Motivated by the success of our Physicians’ Advantage Plans, our clients recently began asking us to design a similar plan for executives.

 

In today’s environment, it’s only natural for hospitals to seek better ways to reward their leadership. Hospitals are competing with one another for top talent. Studies have shown that 67% of executives who leave their organizations are recruited away. Executive turnover has become so prevalent, the long-term tenure is nearly unheard of. The average tenure of a CEO is 5.6 years with a median of 3.6 years, and only 3.4% of CEOs have tenures lasting 20 years or longer.

 

The importance of leadership stability

 

This trend could threaten the continuity of healthcare delivery in the United States. Leadership change can be disruptive for organizations in any industry, but the complexities of healthcare make it an even bigger challenge for hospitals. Stability in executive leadership is vital to the performance and growth of a hospital. Rural and community-based providers, which are more dependent on administration for day-to-day operations, are particularly vulnerable to the negative effects of executive turnover.

 

Compensation as a tool to attract and retain executives

 

We believe in using compensation as a tool to attract and retain talent in the healthcare community, so the application of our process to this growing problem made perfect sense. We listened to our clients and developed the Hospital Executive Advantage Plan to provide them with a way to transform executive compensation into a more meaningful reward that benefits both the hospital and its leadership. Compensation structures like ours are growing in popularity across many industries, and for good reason.

 

As an enhancement to an executive’s overall rewards, the plan does not interfere with or coordinate with other benefits such as qualified plans. Most importantly, it can be customized to support organizational goals, allowing compensation to be linked to loyalty, performance, and/or other quality metrics. Doing this encourages alignment and establishes a culture of continuity, which better positions hospitals for the future.

 

This plan also provides an alternative approach for those affected by the passing of the new tax reform legislation. This legislation placed limits on the amount of compensation nonprofits are allowed to offer their executives. By taking a limited amount of compensation and making it more impactful, nonprofit facilities can still compete for and retain their top talent, allowing them to continue to thrive in an increasingly competitive landscape.

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