Employers Choose Bonuses Over Raises
SullivanCotter Featured in the Wall Street Journal
In today's competitive talent market, organizations are looking for ways to attract and retain talent while controlling costs. The increasing use of incentives over traditional raises in base pay is trending across all industries. As health care organizations continue to focus on driving performance and enhancing organizational alignment, incentive compensation remains a key component of competitive total rewards programs. SullivanCotter was proud to contribute to this recent article, published in the Wall Street Journal, highlighting this shift in pay practices.
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INFOGRAPHIC | Physician Executive Compensation
Emerging Compensation Trends for Physician Executives
Health care leaders with strong clinical backgrounds are in high demand as the focus on value-based care intensifies. As a result, there are more opportunities than ever before for physicians to move into executive positions at hospitals, health systems and medical groups across the country.
Gain additional insight from SullivanCotter's Physician Executive Compensation Survey and Medical Group Executive Compensation Survey.
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INFOGRAPHIC | 2018 Manager and Executive Compensation in Hospitals and Health Systems Survey
Market Uncertainty and Change Requires Good Business Judgment
In today's unprecedented health care environment, organizations remain focused on two fundamental issues: optimizing clinical care and ensuring financial stability. These new performance priorities are setting the agenda for executive talent and rewards, and require good business judgment when designing and implementing “best fit” pay programs and setting compensation.
Learn more and view highlights from our Manager and Executive Compensation in Hospitals and Health Systems Survey.
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SullivanCotter Hires David Schwietz as Chief Information Officer
Integrating technology solutions, systems and services across the organization
MINNEAPOLIS, Aug. 29, 2018 -- SullivanCotter, the nation's leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, announces the hire of David Schwietz to serve as the firm's first Chief Information Officer.
"Health care continues to evolve at a rapid pace, and innovation is now the cornerstone of driving efficiency in an industry that is highly focused on improving the total cost of care. To help navigate an increasingly complex operating environment, hospitals and health systems are actively looking to integrate technology solutions, systems and services across the organization. David's longstanding expertise and knack for cutting-edge solutions will play a vital role in helping our clients stay ahead of the curve," said Ted Chien, President and CEO, SullivanCotter.
David has over 25 years of consulting, entrepreneurial and executive management experience and has helped to develop strategy and lead key information technology initiatives at some of the nation's most prominent financial, medical and federal organizations. He also has specialized knowledge in blockchain technology and business intelligence, understanding their potential for transforming the way health care organizations manage, store and secure data.
With a particular focus on enhancing data security, expanding infrastructure to enable firmwide solution and information strategies, and developing new and innovative software services, David is responsible for leading SullivanCotter's technology growth initiatives and related resources in a way that helps to drive greater value for clients.
David joins SullivanCotter from the Federal Reserve Bank of Minneapolis, where he served as the Vice President of Information Technology and was responsible for managing the systems, people and platforms required to ensure the safety and stability of the bank's day-to-day technical operations. He frequently speaks on blockchain and other emerging technologies, and is currently co-authoring a book on artificial intelligence.
About SullivanCotter
SullivanCotter is the leading independent consulting firm in the assessment and development of performance-based total rewards programs and workforce solutions for the health care industry and not-for-profit sector. For over 25 years, the firm has provided unbiased advice to executives and boards to help attract, retain and motivate executives, physicians, advanced practice providers and employees at all levels. Through the Center for Information, Analytics and Insights, SullivanCotter has developed the most widely recognized compensation surveys in the United States. Combining data-driven intelligence with national insights, we act with integrity to help organizations fulfill their missions, business objectives and regulatory requirements.
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Modern Healthcare | Annual Executive Compensation Article
Prioritizing performance-based incentive strategies
Providing high-quality care and driving greater value for patients while also keeping costs in check remains one of the greatest challenges for hospitals and health systems nationwide - placing a premium on top executive talent with the skills and experience necessary to lead such efforts.
Amid these ongoing cost-containment initiatives, organizations continue to prioritize executive pay and new performance-based incentive strategies in order to attract, retain and engage leadership and keep pace in a world where the demand for talent outweighs supply.
Learn more from Modern Healthcare's annual executive compensation analysis, featuring data from SullivanCotter's 2018 Manager and Executive Compensation in Hospitals and Health Systems Survey and insights from Kathy Hastings, Managing Director, and Tom Pavlik, Managing Principal.
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Q&A | What Comes After Physician Compensation Design?
Developing physician and APP compensation plans
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As health care revenue sources continue to shift from volume to value and organizations take on more risk, new physician and advanced practice provider (APP) compensation strategies are emerging. The health care industry is adapting to new payment and care delivery structures with increasingly complex compensation models to match. Organizations must now consider a growing number of components when developing these plans, including recruitment, retention and engagement, patient satisfaction, access, quality of care, governmental regulations and more.
You’ve put time and effort into designing an effective physician compensation plan. How can you make your implementation equally transparent, accurate and successful?
SullivanCotter experts Dr. Mark Rumans, Chief Medical Officer, and Courtney Dutton, Principal, recently answered questions on physician compensation design and implementation - helping to uncover emerging trends and address the increasingly complex challenges health care organizations are facing today.
What are some common challenges organizations face when designing an effective physician compensation program?
CD: Organizations are dealing with a significant number of moving parts when it comes to physician compensation programs. There is both a regulatory environment that focuses on pure productivity and a reimbursement environment that is rapidly changing to focus more on cost efficiencies and value. Because of the proximity of these two realities, along with their varying degrees of complexity, health care leaders often feel like they are living in two different worlds. As organizations start to incorporate more value and quality-based metrics into their plans, physician alignment and engagement becomes more challenging. Historically, physicians have often been isolated relative to the strategic initiatives of the hospital, health system or medical group. But organizations are now recognizing the importance of aligning system-wide goals across all workforces – executives, physicians, advanced practice providers and employees – and must consider a shared vision between each when developing new compensation plans.
MR: It’s very difficult to make changes to physician compensation when the physicians (or the medical group) do not fully understand the reason for the change. Physicians are not always fully aware of all the financial pressures in today’s changing health care environment, and thus don’t understand why change is needed – especially if the physician group is happy with the current program. You need to be able to communicate what you are trying to accomplish and why, and explain how the new compensation plan is aligned with the mission, vision and values of the organization.
After identifying the need for change, the question many organizations struggle with is how far and how fast can you move at any one period of time? Organizations need to consider the gap between current and desired performance and, while they may have some aggressive goals, need to recognize that change to a compensation plan can only move so fast. Significant variation from the current state can cause disruption and unintended consequences if not carefully implemented.
CD: Another common challenge is that the health care industry has been slower to embrace many of the administrative technologies that support infrastructure change and enhanced reporting capabilities of major initiatives such as compensation programs. As a result, there is no clear line of sight for physicians to understand their total performance and how changes in performance can impact their compensation. Right now, physicians are relatively comfortable with the accuracy of their personal productivity as measured in work relative value units (wRVUs). However, as organizations incorporate non-productivity elements into compensation payment models, lack of confidence in the data as well as insight into its impact on outcomes creates challenges when trying to gain physician support for new compensation model.
MR: I agree. Physicians prefer compensation that is related to things they can control or influence - which makes having data points at the hands of a physician so critical. Physicians need a trusted reporting mechanism with accurate and timely data to help track how their actions directly impact their performance.
When you consider some of these common challenges in physician compensation, what key things do organizations need to think about in the design and planning process to help ensure a successful implementation?
MR: I cannot stress enough the importance of compensation committee member selection. Organizations need to include influential thought leaders on the compensation committee who are respected by their colleagues and who can effectively communicate the need for change. Ideally, your compensation committee should include a number of physician leaders who can set aside their personal and departmental compensation and consider the goals of the entire organization. Once your committee has been selected, laying out a framework for success and coming to agreement on what you’re trying to do and why you’re doing it is critical. This can be difficult at first because the committee will not likely have all the technical details about the new plan. Throughout the design process, there are four important things to keep in mind:
- Define the need for change with respect to the shared vision of the organization
- Select the process for change with consideration to what decisions need to be made
- Decide who is going to make these decisions and what data is needed to support them
- Define and begin implementation of a communication plan to providers
CD: Identifying strong physician leaders to champion the change is vital to success. These strong physician leaders need to have an active voice in the development of the compensation plan. Physicians have a front-line care delivery perspective and can speak to issues that may hinder or enhance the move to a performance-based compensation model. Physician leaders who serve on compensation committees need to take ownership of the plan, inform and educate the committee, synthesize data that pertains to the plan and champion the change within the physician workforce throughout the entire process (development, testing, rollout, implementation and annual review).
MR: As medical groups continue to grow, implementing compensation plan changes for groups with 200 or more physicians/providers is no longer an easy task. Imagine doing it with thousands of physicians! So, in addition to strong leadership, the compensation committee must also be mindful of the organization’s ability to implement a new plan from a “nuts and bolts” perspective. They need to assess what type of systems are required to implement the plan well before the plan has been approved. Working out the physical implementation of the plan well in advance of it going live has many benefits and allows you to course correct should there be any technical issues.
Additional questions to consider are:
- What is needed from an IT standpoint to implement the plan?
- What tools do we currently have and what is our capability in regards to reporting performance metrics to physicians in real-time?
- How will comparisons of the current compensation structure to the new model(s) be communicated and what tools are needed to administer this change?
How critical is communication when implementing changes to a compensation program?
MR: Communication is as critical as the plan itself. Committees and administration need to develop a communication plan in tandem with the development of the compensation plan. The questions the compensation committee considers in the plan development will typically be the same questions asked later by providers. Anticipating these questions will help encourage plan adoption, drive engagement and serve as your roadmap to a successful launch.
CD: Building a communications plan at the beginning of a compensation redesign helps set expectations regarding the project’s timeline and identify the major milestones. Once the milestones are identified and agreed upon by the compensation committee, it is important to plan the frequency and mode of communication. Be sure to establish a process to allow for feedback and be flexible should changes need to occur based on that feedback.
MR: What you communicate and how frequently you communicate are also very important factors to consider. An ideal communications plan will allow for several “touchpoints” to share (on paper, in person and electronically) the basics: who, what, where, when, why and how. Equally important is clearly articulating who the decision makers are, and why, to ensure expectations are set as to how feedback will be used throughout the process. You can do some of this communication via email, but ideally your communications plan will allow (early on and throughout the process) for several one-to-one and oneto-many communication opportunities.
Consider the following opportunities in your communications plan:
- Town Hall meetings
- Lunch and Learn presentations
- Dinner with your Chief
- Monthly or weekly communication from the CMO and/or compensation committee
- Online communication (such as a website that outlines the plan and process, stores important documents, Q and A and a managed chat room)
CD: Setting context is an important first step. Providing opportunities for physicians to understand changes in reimbursement and compensation structures and how market influences are impacting and/or apply to your organization is very important. Be prepared to explain your organization’s short-term and long-term strategy and what is driving the need for change. This is where physician champions are key. Allowing them opportunities to reinforce the need for change with peers lays the groundwork for physician engagement and involvement as opposed to a top-down approach when the message is delivered only by administration.
Once the compensation plan is developed and agreed upon, how can an organization drive provider engagement throughout the implementation and transition to a new compensation program?
MR: As new compensation plans are implemented, it is important for providers to have the opportunity to understand what the new performance expectations are and how a change in performance will impact their compensation. Give specific examples and allow physicians time to ‘shadow’ the new plan without any impact to their current compensation. During this shadow period, be able to show where there are gaps in performance and what changes are needed to mitigate any downturns. It is important that physicians understand the organization wants them to be successful and will work with them to understand and close any gaps in performance.
CD: During the shadow period, it is also important to communicate how the plan will be administered once it is fully implemented. This should include how often physicians can expect performance reports, the process for identifying data discrepancies and availability of subject matter experts that can address questions. Additionally, after the completion of the shadow period, many organizations implement a phase-in of the new compensation plan, which provides protection for providers with significant changes in compensation and allows for additional time to adjust behaviors and adapt to the new model.
What are some tactics (or examples) for increasing provider acceptance and support of proposed changes to a compensation program?
CD: Establishing a formal compensation review committee and governance process allows physicians the opportunity to present concerns or raise valid pushback/unintended consequences of the new compensation plan. This committee would be responsible for reviewing the plan on an annual basis to ensure continued alignment with system goals and strategic initiatives, recommending plan changes, reviewing non-productivity metrics and vetting provider or departmental requests for plan modifications.
MR: In addition to establishing a governance process, any tools that make the plan more transparent will help to generate more support. Whether it is a report or online dashboard, you need to how physicians how they are performing and how this relates to the new compensation model. There is often apprehension surrounding this process, and the fear of change is often more harmful than the change itself. Be sensitive to this and utilize as many tools as possible to help make the transition as smooth as possible.
Once the new compensation program is fully implemented, how do you sustain provider engagement?
Continued transparency is vital. The most successful systems allow for ongoing feedback on the program and continue to monitor the impact after it has been fully implemented. Don’t be surprised if subtle program changes are required. Small changes to the plan over time may help with overall adoption, so be open to the idea of ongoing engagement for long-term improvement. The governance and physician compensation committees, ideally staffed with both physicians and administrative stakeholders, are the best resources for plan development and adoption. They review the plan, identify outliers, and put into place policies and procedures to help support the values of the organization. There is a high-level of built-in trust with this model as those developing and implementing the plan understand the unique complexities associated with being a physician.
CD: Along those lines, communicate that this is not a “once and done” plan. Physicians will have a greater appreciation for the plan and process knowing that there will be an ongoing review process and a willingness to make changes as necessary. Let physicians know that you understand the bigger picture and that as health care evolves, the compensation program will need to flex over time to align with these changes.
Why and how can technology be used to support this effort?
CD: Change is often perceived as happening too fast. Having the use of technology to enable that change, especially when it comes to communicating and administering the plan, is key to its success. In this age of viral communications, things can spiral out of control quickly. We cannot rely on wRVUs to improve performance, nor can we rely on spreadsheets as a way to communicate and administer physician compensation. To engage physicians and gain trust when tying new non-productivity measures to compensation, organizations need to provide them with one place to access clear and concise performance data.
MR: Being able to show physicians all the components that impact their pay is key. You need to be clear about how the plan is structured, what components are being measured, the goals of the organization, what is expected from providers, the source of your reported data and the actual compensation calculations. Technology can provide a platform that is both accurate and transparent – allowing people to really see and understand how their compensation is tied to value. Many organizations are now accessing and assembling compensation data from multiple different systems, which is timeconsuming and can lead to human error. Data-driven technology transforms a lengthy and arduous process into one system that provides actionable insight and allows physicians and their managers to see as much or as little information as they want. This level of transparency creates an opportunity for course correction if needed.
CD: A strong technology platform can really act as the cornerstone for change. Just as EMRs have improved patient care, diagnostics, patient outcomes, and practice efficiencies, provider performance technologies can support organizations in the transition from volume to value by aligning pay with performance and serving the diverse needs of leadership, administrators and physicians.
SullivanCotter’s Provider Performance Management TechnologyTM
Provider Performance Management TechnologyTM (PPMTTM) is a market-leading, cloud-based solution that enables provider engagement through transparent performance-based compensation administration and analytical capabilities.
Utilizing best-in-class technology and decades of physician compensation and health care expertise, PPMTTM is designed to support organizations in the transition from volume to value. PPMTTM is offered as part of a comprehensive portfolio of advisory, information and technology services to address client needs.
John Putnam Joins SullivanCotter’s Executive Workforce Practice
SullivanCotter Welcomes New Principal, John Putnam
Jun. 19, 2018 – Minneapolis – SullivanCotter, the nation's leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, welcomes new Principal, John Putnam, to the firm's Executive Workforce Practice.
John is an emerging leader in the field with more than a decade of health care consulting experience, and serves as a trusted advisor to many of the nation's top hospitals and health systems. He works closely with not-for-profit health care organizations to align executive pay, performance and talent strategy with overall business goals – helping clients to remain competitive, agile and adaptable in an increasingly complex marketplace.
"In order to address the industry's new value-based performance goals and guidelines, executives are now tasked with measuring and assessing performance across the care continuum, developing targeted approaches to improve quality and patient outcomes, and working towards the advancement of overall organizational objectives. John has many years of experience in designing executive compensation strategies to support these goals, and will play a vital role in helping our clients to engage leadership in driving incremental change and helping to deliver long-term, sustainable results," said Ted Chien, President and CEO, SullivanCotter.
As the transition to value-based care intensifies, John specializes in the development of competitive executive total rewards programs, including both short and long-term incentives, tailored to the unique needs of each organization. He advises boards and compensation committees on best practices in governance to help ensure regulatory compliance, reasonableness and appropriate oversight of executive pay and benefits, and works closely with organizations to implement effective recruitment, retention and engagement practices.
Prior to joining SullivanCotter, John was a Senior Principal in Korn Ferry Hay Group's Executive Compensation Practice, where he worked primarily with health care board members and management on the design, administration and governance of executive pay programs.
About SullivanCotter
SullivanCotter is the leading independent consulting firm in the assessment and development of performance-based total rewards programs and workforce solutions for the health care industry and not-for-profit sector. For over 25 years, the firm has provided unbiased advice to executives and boards to help attract, retain and motivate executives, physicians, advanced practice providers and employees at all levels. Through the Center for Information, Analytics and Insights, SullivanCotter has developed the most widely recognized compensation surveys in the United States. Combining data-driven intelligence with national insights, we act with integrity to help organizations fulfill their missions, business objectives and regulatory requirements.
Contact: Becky Lorentz
SullivanCotter
beckylorentz@sullivancotter.com
314.414.3719
PODCAST | Governing Health - Director Compensation in Nonprofit Health Systems
Health care executive compensation trends
In an industry that continues to undergo unprecedented change, the role of the nonprofit health system director is now more important than ever. Engaging employees at this level is a major concern as their scope of responsibility grows more complex. In a seller's market for director services, devising competitive compensation packages is critical and can be used as a key talent development, recruitment and retention tool.
In the most recent edition of the Governing Health Podcast Series, Michael Peregrine, Partner, of law firm McDermott Will & Emery, welcomes two of the leading voices on executive compensation trends and practices in health care: Ralph DeJong, Partner, McDermott Will & Emery and Tim Cotter, Chairman and Managing Director, SullivanCotter.
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Modern Healthcare | Higher Stakes: Boards Play Pivotal Role in Hospital Direction
Evolution of the health care boardroom
As hospitals and health systems learn to navigate an increasingly consumer-driven marketplace for health care, the scope of the board's responsibility continues to expand in kind.
To help organizations align with the industry's new value-based performance goals and guidelines, trustees are now tasked with providing greater insight into emerging areas of focus such as consumer engagement, data analytics, information security and recruitment and retention.
Featured in the June 4th edition of Modern Healthcare, SullivanCotter discusses the evolution of boardroom activities from traditionally transactional into something much more complex.
In addition to overseeing executive compensation programs, boards are also taking the lead on other important issues such as cultural integration, leadership diversity, pay equity and more. Many are even diving deep into performance benchmarking and analyzing key quality metrics to help ensure alignment with and progress towards overall organizational goals.
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Fundraising Talent Strategy in 2018 and Beyond
Attract and retain high-performing fundraising professionals
As the saying goes, you need money to have a mission. Whether through in-kind donations or the receipt of funds from public or private sources, most not-for-profit organizations rely to some degree on philanthropy to obtain the funds needed to sustain their mission.
For some not-for-profits, the fundraising professionals vital to this process are considered the lifeblood of the organization, and the loss of key talent could mean a loss of momentum and/or continuity in donor relationships. In today’s environment, these organizations are also faced with the decline of both governmental and non-governmental funding sources and, in the wake of the Tax Cuts and Jobs Act (which doubled the standard deduction and will result in fewer itemized returns through which tax-deductible donations are claimed), a reduced incentive to donate. Attracting and retaining people with the critical skill set to perform fundraising successfully has become arduous as not-for-profit organizations face these realities, along with costs of replacing talent as high as 100% of salary in as often as every 18 months.
In developing a fundraising talent strategy for this year and beyond, consider proactive strategies to attract and retain high-performing and high-potential professionals, while also enhancing the capabilities of existing staff. Immediate efforts should focus on:
Auditing the skills and capabilities of the existing team
Complete a skills assessment to ensure the development office includes the types and number of staff necessary to achieve its goals. These types of assessments often reveal the need for:
- Different or additional leadership with the ability to cultivate meaningful relationships among donors and the leadership skills to grow and develop talent. Accomplished fundraising professionals will be drawn to and remain at an organization where leadership in this area is strongest.
- Innovative donor research capabilities and advanced donor analytics to ensure effective data mining. These skill sets can be developed in-house or outsourced.
- Advanced social media expertise. Branding and marketing in the era of social media presents increasingly sophisticated and unique ways to share the organization’s mission with potential donors. Ensure the right resources are in place to keep pace with the market.
Evaluating and expanding recruiting practices
Changes may not be needed for organizations that have identified proven strategies to attract top fundraising talent who stay for more than three years. However, it is worth considering that a tighter labor market for fundraising professionals may require a different approach to sourcing talent:
- For larger organizations, the market for top fundraising executives is primarily national in scope. Other fundraising positions are commonly recruited locally or regionally, though the market segments from which talent are drawn appears to be evolving.
- Universities that have historically looked only to higher education to draw talent are now recruiting fundraising staff from large health systems. Large health systems, in turn, are now including universities and other organizations—such as large charities—in the search for talent.
Evaluating the effectiveness of the compensation program
This is an important consideration, particularly in an environment where certain organizations have become increasingly aggressive in their efforts to recruit and retain high-caliber fundraising professionals.
An important first step in the evaluation of the program is to identify a compensation strategy that will support the organization’s current and anticipated recruitment, retention and performance objectives. Advanced compensation vehicles such as retention plans and/or deferred compensation arrangements may be needed to maintain a competitive edge in today’s market. Implementing such changes may represent a shift in culture and practice that will need additional socialization and buy-in from key stakeholders.
Providing performance-based pay in the form of incentives is legally permissible and more prevalent than ever. Organizations that offer incentives find that these programs can help to:
- Motivate people and teams to meet or exceed fundraising targets. This often requires a “both/and” approach of increasing revenue through effective fundraising strategies and operating more efficiently to reduce costs.
- Improve teamwork and collaboration. In some cases, the introduction of incentives brings a new discipline around fundraising that engages more staff in the development of strategies for securing new donors.
- Limit the amount of fixed costs. Since incentives are paid only when goals are met or exceeded, including incentives in the mix of pay provides a self-funding feature. From an optics perspective, the organization promotes a performance-based culture and demonstrates the sound management of fixed costs. Incentives are no longer considered lavish or unusual. Rather, they are a necessary component of a well-designed compensation strategy.
- Reinforce a culture of performance and accountability. The plan will be most effective when all team members are held to rigorous goals, develop strategies and operating plans by which to meet them, and work together to accomplish results.
- Address gaps in performance areas. After conducting a performance benchmarking study to identify gaps that may exist with respect to various fundraising targets (e.g., total funds raised, number of donors, transformational gifts received, cost per dollar raised), incentives can redirect efforts to fill those gaps.
Increase the focus on — and funding of — talent development strategies
Many organizations provide only basic opportunities for growth and limit talent development budgets in the spirit of cost-saving. By increasing the dollars allocated to skills building and the professional development of fundraising talent, the return on investment can be multifold and differentiate an organization in the minds of prospective and current development staff.
A thoughtful and disciplined approach to the activities outlined above can lead to dramatically improved attraction and retention in a highly-competitive market for fundraising talent. When deploying any new strategy, the key to a successful outcome lies in the design, implementation and communication efforts surrounding the strategy. In advance of proposing modifications to a current approach, traditional wisdom applies: include key stakeholders in the process, consider both current- and future-state needs as plans are developed, and assess the impact of any anticipated program changes. Ultimately, a program that successfully attracts and retains fundraising talent is one that is marketcompetitive, cost-effective, engaging and reinforced as a strategic differentiator for talent both inside and outside of the organization.
PODCAST | Governing Health - Executive Compensation Trends Update
With the new provisions set forth by the Tax Cuts and Jobs Act and recent trends associated with pay equity, the use of clawbacks and the expansion of incentive compensation goals and objectives, the governance of executive compensation remains a critical boardroom concern.
In the most recent edition of the Governing Health Podcast Series, Michael Peregrine, Partner, of law firm McDermott Will & Emery, welcomes two of the leading voices on executive compensation trends and practices in health care: Ralph DeJong, Partner, McDermott Will & Emery and Tim Cotter, Chairman and Managing Director, SullivanCotter.
CMS Star Ratings Highlight Need to Compare Performance by Hospital Type
Understanding what drives performance
As the marketplace for health care grows increasingly complex, organizations must develop a greater understanding of what drives performance to remain competitive.
The Centers for Medicare and Medicaid Services (CMS) recently published its newest Star Ratings, designed to measure and report hospital quality. These ratings have provoked a number of questions and concerns as more than 3,600 hospitals - regardless of size, breadth of services, or geographic location - are benchmarked against a collective average.
SullivanCotter was recently featured in a Modern Healthcare article which addresses these differences. As organizations use these ratings to help drive improvement efforts, it is important to consider the following:
- Using national benchmarks like the CMS Star Ratings can be a great way for hospitals nationwide to help drive quality improvement, but only if they understand the nuances and complexities in the data and how to best analyze it.
- Not all hospitals are the same. To truly identify areas of meaningful improvement, hospitals must be compared to like hospitals.
- Organizations cannot improve what they cannot measure, and the new CMS Star Ratings continue to provide transparency in health care quality and performance as the industry shifts from volume to value.
- To drive improvement efforts and help organizations more effectively benchmark performance against their direct peers, the market requires a standard set of national quality metrics that is stratified by hospital type.
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Using CMS Star Ratings to Drive Improvement at Specialty Hospitals
Using national benchmarks to drive quality performance
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In order to remain competitive in an increasingly complex marketplace, health care organizations must develop a greater understanding of what drives performance and improves outcomes in the transition from volume to value. Although the overall aim to enhance patient satisfaction, improve quality and reduce the cost of care is the same, specialty hospitals, academic medical centers, community hospitals, and major and minor teaching hospitals each operate under very distinct circumstances.
The conditions they treat are as different as the populations they serve and it cannot be assumed that patient experience at one type of hospital will be commensurate with the other. The Centers for Medicare and Medicaid Services (CMS) published its most recent Star Ratings in December 2017. While designed to measure and report hospital quality, these ratings have provoked a number of questions and concerns as more than 3,600 hospitals - regardless of size, breadth of services, or geographic location - are benchmarked against a collective average. The complexities and nuances of the new ratings can make it difficult for hospitals to truly understand how they compare to their peers and where there are still opportunities for improvement.
CMS defines specialty hospitals as those that are primarily or exclusively engaged in the care and treatment of patients with a cardiac condition; patients with an orthopedic condition; or patients receiving a surgical procedure. While CMS bases these ratings on 57 different quality measures across seven areas of performance, specialty hospitals only reported an average of 27.2 of the 57 measures. For example, 97% of specialty hospitals reported patient experience metrics. On the other hand, only 5% of specialty hospitals reported data on acute ischemic stroke 30-day mortality and 30-day readmissions because they do not typically treat this condition.
The same is true for patients with complex medical conditions such as pneumonia, coronary artery bypass graft, chronic obstructive pulmonary disease and acute myocardial infarction. Only 20-25% of specialty hospitals that were rated included measures for mortality and/or readmissions for this patient population. Additionally, less than 25% of specialty hospitals reported data for the majority of the NHSN infection rates in the Safety of Care measure group, excluding C. Difficile. The CMS ratings require additional stratification by hospital type in order to paint a more accurate picture regarding how organizations are performing in relation to their direct peers.
However, the impact of further stratification could be significant for specialty hospitals as 83% of the 74 specialty hospitals included received a four- or five-star rating. With a small number of metrics to report, specialty hospitals have fewer variables to address to help improve their scores within this ranking system and, more importantly, the care delivered to patients that can be benchmarked with publicly-reported data. All hospitals, including specialty hospitals, need to understand their variation to national benchmarks as well as the variation to their peers.
Specialty hospitals using CMS Star Ratings to drive improvement efforts should focus on the following steps:
DEFINE YOUR PEER GROUP
In addition to reviewing benchmarks for like hospitals, specialty hospitals must also consider how their ratings compare to other relevant local and regional competitors. Patient experience scores, for example, can vary widely by region. As the highest weighted measure in the CMS Patient Experience group, “Overall Rating of Hospital” had a national average of 89.01 in the December 2017 Star Ratings. On average, Nevada hospitals show a linear score of 86.90 while Wisconsin hospitals show a linear score of 90.78 - a 4.5% difference between the two states. Regional differences are important to consider when evaluating performance compared to a set of benchmarks.
BENCHMARK YOUR PERFORMANCE AGAINST PEERS
Do not underestimate the importance of peer group selection. Not all hospitals are the same – and to truly identify areas of meaningful improvement, hospitals must be compared to like hospitals. Hospitals will often have more than one peer group. For example, a specialty orthopedic hospital will want to benchmark itself against other orthopedic hospitals. However, it might also want to benchmark specific metrics like patient experience against other local hospitals that offer orthopedic services.
IDENTIFY AREAS FOR IMPROVEMENT
It is critical that organizations develop a better understanding of their variation to the CMS benchmarks. If a specialty hospital is performing above or below average, the key is to identify ‘how’ and ‘why’. Individual metrics that have a negative variance to peer group benchmarks highlight potential opportunities for improvement. Additionally, identifying areas that are important to patient outcomes and the mission of your organization will resonate most with staff and have a higher likelihood for improvement.
ALIGN REWARDS WITH TARGETED IMPROVEMENTS
Once an organization selects a specific area to target in improvement efforts, it is important to determine how employees can be motivated or incentivized to engage in these activities. As organizations shift from volume to value, quality metrics are becoming more prevalent in provider compensation plans. For example, according to SullivanCotter’s Physician Compensation and Productivity Survey, quality incentive compensation for physicians increased in 2017 from an average of 5.9% to 7.4% of total cash compensation. Aligning quality improvement efforts with compensation is an effective approach to driving change and helping to reach overall organizational goals.
REEVALUATE REGULARLY
While it is difficult to generate significant progress on one metric in a single year, organizations should not overlook the need to review these benchmarks in aggregate on a periodic basis. If there is a noticeable shift in the data, changing direction and adjusting improvement efforts accordingly is important.
CMS Star Ratings continue to provide transparency in health care quality and performance as the industry maintains its focus on value-based care. Perhaps the adage that best applies is “you can’t improve what you can’t measure” - and these ratings are certainly a step in the right direction. Despite the myriad of differences in the 3,600+ hospitals included in the CMS ratings, all share a common goal of advancing the overall quality of health care. However, to truly drive improvement and help organizations more effectively benchmark performance, the market requires a standard set of national quality metrics that is stratified by hospital type.
Organizations like the National Quality Forum and others are helping to establish these national benchmarks. Standardizing the process would help to facilitate more meaningful comparisons, allowing specialty hospitals to focus more on individual opportunities for improvement and less on their variance from the collective national average.
INFOGRAPHIC: 2017 Hospital-Based Physician Compensation and Work Effort Survey
Benchmarking hospital-based specialties
With the demand for hospital-based physicians on the rise, organizations must understand emerging trends in compensation and clinical work effort standards that are unique to this practice setting.
Learn more and view highlights from our 2017 Hospital-Based Physician Compensation and Work Effort Survey, which includes data on 13 specialties from more than 30 different health care organizations.
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INFOGRAPHIC: 2017 Advanced Practice Provider Compensation and Pay Practices Survey
The role of the advanced practice provider (APP) is changing to reflect increasing specialization and variation by practice setting as care models evolve. Hospital-based roles continue to grow, primary care practitioners are starting to function more independently, and roles in medical and surgical specialties are helping to improve patient access and efficiency of service lines.
This diversity of roles means a 'one size fits all' compensation model is no longer effective and can create obstacles to delivering high-quality and effective care.
As the demand for APPs continues to grow, compensation strategies should be tailored to align with overall provider optimization and organization strategies.
Learn more and view highlights from the 2017 Advanced Practice Provider Compensation and Pay Practices Survey.
Alex Barker, Principal, Joins SullivanCotter's Employee Workforce Practice
Jan. 18, 2018 – Minneapolis – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, welcomes Alex Barker, Principal, to the firm’s Employee Workforce Practice.
Alex is an innovative industry leader with more than 20 years of experience in the strategic management of health care operations. Having held leadership positions at some of the nation’s largest hospitals and health systems, Alex is well-positioned to help clients navigate the rapidly changing health care environment as payment models evolve and organizations take on more risk. With direct insight into how large and operationally complex organizations are aligning their compensation and benefits programs as the industry continues its shift from volume to value, Alex specializes in the development of integrated total reward programs for employees at all levels.
“With strategic, value-based goals such as improved quality, access, service and affordability, organizations must look beyond physicians as the only drivers of clinical performance. Understanding how to better support key organizational goals across all segments of the health care workforce is critical. Alex’s unique combination of experience in the executive, provider and employee workforces is rare, and will be a great asset to our clients as they look to implement a more holistic approach to aligning compensation and performance across the board,” said Ted Chien, President and CEO, SullivanCotter.
Alex also has an impressive range of additional experience that will help him to better assist clients, including governance, operational due diligence, post-merger integration and alignment, workforce resource planning and recruitment, onboarding and retention strategy.
Alex joins the firm from his previous role as a Senior Client Partner in Korn Ferry Hay Group’s Physician Compensation and Governance Practice. Prior to this, he served as the VP of Compensation, Benefits and Physician Services at Lahey Health, where he was responsible for managing both provider and non-provider total reward programs for the entire system.
SullivanCotter Expands Physician Workforce Consulting Services
Jan. 16, 2018 – Minneapolis – SullivanCotter, the leading independent consulting firm in the assessment and development of performance-based total rewards programs and workforce solutions for the health care industry and not-for-profit sector, announces the expansion of the firm’s physician workforce services with the hiring of industry leaders Ron Vance, Patty Bohney and an additional team of five talented consultants. All associates were previously with Navigant’s Healthcare Practice, and bring specialized expertise in physician compensation and workforce performance.
“In the rapidly changing health care environment, we continue to scale our services and broaden our expertise in ways that help our clients address an increasingly diverse set of strategic challenges. With extensive experience in physician alignment and compensation design, Ron and Patty’s team will be a tremendous asset in delivering long-term, sustainable value to the organizations we advise,” said Ted Chien, President and CEO, SullivanCotter.
Ron Vance joins SullivanCotter as a Managing Principal and will help to lead the firm’s client engagements in enterprise workforce alignment alongside newly-appointed Chief Medical Officer, Dr. Mark Rumans. As an attorney, consultant and certified valuation analyst with more than 30 years of experience in strategic planning, physician-hospital alignment and the development of progressive physician compensation arrangements, Ron has advised a wide variety of health care organizations — including community health systems, private physician practices and academic medical centers — through periods of transformative change.
Patty Bohney joins the firm as a Principal in the Physician Workforce Practice. She has nearly 30 years of combined industry experience as a registered nurse, in addition to a variety of operational, management and consulting roles. Leveraging this unique breadth of expertise and a deep working knowledge of the evolving provider landscape, Patty will work closely with clients on the design, implementation and management of strategic, performance-driven physician compensation programs. She is also a certified valuation analyst and will assist a growing team of consultants in determining fair market value and commercial reasonableness.
In addition to Ron and Patty, SullivanCotter welcomes Kevin Hendrickson, Jaclyn Zurawski, Tony Francis, Kaizad Daruwala and Benjamin Shamis to the firm’s Physician Workforce Practice.
INFOGRAPHIC: 2017 Physician Compensation and Productivity Insights
Physician Reward Strategies Evolving to Align with Performance Drivers and Organizational Goals
In a rapidly evolving health care environment, organizations are faced with a number of key industry trends affecting the way in which health care is delivered and accessed - including a growing interest in population health, physician alignment, continued industry consolidation and more. These activities are scaling the industry in unprecedented ways.
Understanding how these trends impact organizational strategies and their effect on the design of physician compensation programs, including fair market value and commercial reasonableness, is critical as hospitals and health systems nationwide continue to navigate the transition from volume- to value-based care.
Dr. Mark Rumans Joins SullivanCotter as Chief Medical Officer
Nov. 28, 2017 – Minneapolis – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, announces the addition of Dr. Mark Rumans as the firm’s first Chief Medical Officer.
With over 30 years of combined experience as a practicing Gastroenterologist and key physician leader, Dr. Rumans brings a wide breadth of both clinical and executive leadership experience to his new role at SullivanCotter. He has a unique background in leading large, multispecialty health care organizations through transformational change, and specializes in enhancing organizational performance through improved access, quality, service and affordability.
As health care continues its shift from volume to value, Dr. Rumans will help organizations align their compensation plans accordingly. He will leverage his understanding of the evolving health care marketplace, including changes in care delivery, the emerging focus on improving population health and the role of value-based reimbursement to assist clients in the development of integrated and holistic compensation and workforce performance strategies.
“In order to better align business and compensation strategy in the new value-based health care environment, organizations must understand how to support clinical performance drivers across all segments of the workforce. With deep working knowledge of current productivity-based compensation plans and direct insight into emerging quality measures and practices, Dr. Rumans will work closely with clients to develop value-based transition plans tailored to the unique needs of each organization,” said Ted Chien, President and CEO, SullivanCotter.
Prior to joining SullivanCotter, Dr. Rumans was the Chief Medical Officer for Vidant Health in North Carolina, where he was responsible for system-level strategy and implementation of physician leadership and integration, value-based care delivery and population health initiatives. He also served as the Physician in Chief for Billings Clinic, Montana’s largest health care organization with approximately 4,000 staff and a growing provider network of 400 physicians and advanced practice clinicians.
About SullivanCotter
SullivanCotter is the leading independent consulting firm in the assessment and development of performance-based total rewards programs and workforce solutions for the health care industry and not-for-profit sector. For 25 years, the firm has provided unbiased advice to executives and boards to help attract, retain and motivate executives, physicians, advanced practice clinicians and employees at all levels. Through the Center for Information, Analytics and Insights, SullivanCotter has developed the most widely recognized compensation surveys in the United States. Combining data-driven intelligence with national insights, we act with integrity to help organizations fulfill their missions, business objectives and regulatory requirements.
INFOGRAPHIC: Designing Health Care Executive Compensation
Drive Performance and Engage Leadership
As health care undergoes unprecedented change and the marketplace for talent grows increasingly competitive, hospitals and health systems must design executive compensation programs that effectively support the organization's talent management strategy. The same trends impacting care delivery, such as ongoing industry consolidation and integration, the focus on population health, and the shift to value-based reimbursement, also have significant implications executive and leadership positions. Aligning compensation with organizational goals in a way that drives performance and engages leadership is critical in such a highly competitive environment and requires the proper tools and programs to help build, buy and protect key executive talent. Learn more about the right questions to ask and actions to consider to help ensure your programs properly support the executive talent strategy.