The Politics of Pay

Why nonprofit hospitals boards must be prepared to defend their executive compensation

AdobeStock_191147894 [Converted]

Competition for healthcare executive talent is on the rise. This is evidenced by reports that the average tenure of a hospital CEO is only 5.6 years and that 67% of executives who leave their organizations are recruited away by competing hospitals. As competition escalates, more money is invested in recruitment and rewards packages. Imagine the financial impact this has on non-profit, community hospitals that are competing with large-market facilities for the same professionals. Smaller hospitals are oftentimes more dependent on their leadership for day-to-day operational tasks, which means that the disruption of turnover is particularly detrimental to their success. In other words, they can’t sit on the sidelines. They have to find a way to stay in the game. 

 

Competing under increased scrutiny

 

One strategy that’s certain to fail is to continuously offer executives more compensation. Beyond the matter of financial constraints, nonprofits must attend to the politics of pay. Today, the financial practices of nonprofit organizations are under more scrutiny than ever. This issue can affect an organization’s community relationships, medical staff alignment, and fundraising efforts. Board members need to be armed with better pay strategies that deliver long-term value while remaining financially sustainable and responsible. 

 

A strategy for finding the balance

 

We designed our Healthcare Executive Advantage Plan (HEAP) to be one possible strategy for achieving these two imperatives. The program uses financial vehicles to create benefits that incentivize executives to remain with the organization until retirement. Reduced turnover helps organizations avoid the cost of replacing its executives, which can be quite substantial. Some industry experts say the cost of losing a CEO, for example, can beanywhere between four and eight times the amount of the CEO salary. To ensure that the program is sustainable, HEAP incorporates a cost-recovery vehicle that allows organizations to recoup a portion of the cost of the program. 

 

By creating these financial advantages, HEAP can help nonprofit organizations hold on to their executives in an increasingly competitive environment without putting them at risk of being criticized for excessive compensation.

 

REQUEST OUR WHITE PAPER:

Complete the form below and receive a copy of our latest white paper: Rewarding Excellent Administrators

Something went wrong. Please check your entries and try again.

Want to Learn More?

Telemedicine’s impact on call pay

Telemedicine’s impact on call pay By: Kyle Worthy COVID has brought about the widespread adoption of telemedicine. This technology can be a lifeline, particularly for smaller and rural facilities. For example, KershawHealth in Camden, South Carolina has thrived since it implemented a sophisticated telehealth system after losing many of its…

Perspectives on a Pandemic: Lessons learned from our podcast series

Perspectives on a Pandemic: Lessons learned from our podcast series By: Kyle Worthy Understanding COVID-19 has been a challenge, but at least one thing was immediately clear: its impact would be far reaching. Our podcast, Courage in Healthcare, recently launched a series called “Perspectives on a Pandemic.” We’ve spoken to…

Perspectives on a Pandemic: Dr. Ben Fickenscher

Perspectives on a Pandemic: Dr. Ben Fickenscher By: Kyle Worthy Courage in Healthcare · Perspectives on a Pandemic: Dr. Ben Fickenscher The Pandemic’s Impact On The Opioid Crisis   Covid-19 has altered our world in many ways. Members of the healthcare community have overcome unforeseen challenges and, in the process, they’ve…

Perspectives on a Pandemic: Drs. Arun and Barkha Chhabra

Perspectives on a Pandemic: Drs. Arun and Barkha Chhabra By: Kyle Worthy Courage in Healthcare · Perspectives on a Pandemic: Drs. Arun and Barkha Chhabra The Pandemic’s Impact On Physicians   Covid-19 has altered our world in many ways. Members of the healthcare community have overcome unforeseen challenges and, in the process,…