SullivanCotter Co-Sponsors "Governance in Large Nonprofit Health Systems" Study
In the United States, the health care field and society-at-large are in the midst of enormous turbulence. An aging and increasingly diverse population, global and nationwide economic problems of unprecedented complexity, a federal government beset with political conflicts that harm its ability to address important issues, growing evidence of major disparities in health care access, affordability, and quality, and the continuing explosion in medical science and technology are among the powerful forces that are affecting health care providers, payors, and consumers.
SullivanCotter Adds Two National Leaders
August 2, 2012 – CHICAGO – SullivanCotter, one of the nation’s leading independent compensation, benefits and human resources management consulting firms, is pleased to announce an expansion of its health care compensation expertise with the addition of Andrew Lewis as Principal of the Denver office and Jose Pagoaga as Managing Principal based in the Atlanta office.
Andrew Lewis will be responsible for building and managing a team of consultants in Denver as well as developing client relationships throughout the West. Prior to joining SullivanCotter, Lewis worked at Mercer Consulting with a focus on executive and broad based compensation consulting with health care organizations as well as other tax-exempt entities. He brings more than 15 years of consulting experience in human resources and compensation to the Firm. In addition to his primary work with health care organizations, Lewis has also worked extensively for tax-exempt research institutions, including Federally Funded Research and Development Centers (FFRDCs) and national labs, as well as think tanks, membership associations and foundations.
Jose Pagoaga has served as a senior executive compensation advisor to boards and compensation committees for more than 26 years, including his role as the health care performance and rewards national leader at Mercer Consulting. Based in Atlanta, he led the development of Mercer’s consulting standards and analytical methods in response to IRC §4958, and its 2010 study on the state of executive pay governance in not-for-profit health systems. At SullivanCotter, Pagoaga will focus on providing executive compensation to boards and senior management for major academic and community-based health systems, health plans, national tax-exempt organizations and for-profit and publicly traded health care management companies, and will also lead the Firm’s expansion of physician compensation consulting and employee compensation consulting in the southeast region.
“Andy and Jose bring diverse experiences to our practice and deep expertise in health care and executive compensation,” said SullivanCotter CEO, Ted Chien. “I’m confident that their knowledge and skills will be a tremendous asset to our Firm and our clients.”
SullivanCotter is the leading independent consulting firm in the assessment and development of tailored total compensation and reward programs for tax-exempt, not-for-profit organizations. For more than 20 years, the Firm has provided executive and employee compensation, governance, and physician compensation counsel to a wide variety of health care and higher education organizations, associations and foundations. A recognized leader in health care compensation benchmarking, trends and analyses, SullivanCotter has also developed the most widely recognized physician and health care executive compensation surveys in the United States. Building from this unparalleled data, the Firm works closely with executives, boards and compensation committees to devise innovative solutions to attract and retain leadership talent while satisfying not-for-profit missions and regulatory requirements.
SullivanCotter's Article "Life Insurance Versus Traditional Deferred Compensation Designs: 7 Key Questions" Published in Becker's Hospital Review
Life insurance has often been marketed as a tax-efficient way to minimize or avoid the solvency risk and "substantial risk of forfeiture" required by traditional deferred compensation designs in tax-exempt organizations. Split-dollar life insurance was once the answer: What could be better than the employer paying premiums, then getting those premiums back later? For many participants in these plans — and the sponsoring employer — it was too good to be true, with many employers taking large financial losses and participants not receiving the anticipated benefit.
David Cohn describes "Fiduciary Responsibilities: Understanding the Risks" in Enrolled Actuaries Report
Michael Holderman, a senior consultant at Towers Watson in Charlotte, N.C., WilliamBelanger, a senior consultant at Towers Watson in Philadelphia, and Keith Mong, an attorney with Buchanan Ingersol and Rooney in Washington, discussed some of the hot topics in fiduciary and governance oversight that currently are bringing increased scrutiny to this area. They also examined the basics of fiduciary compliance and best practices in structuring proper governance.
The Future of Academic Medical Centers: Strategies to Avoid a Margin Meltdown
According to a recent paper by PricewaterhouseCoopers, academic medical centers (AMCs) are the nucleus of the U.S. health system, yet they face multiple challenges.
Chief among these challenges are: the prospect of funding reductions with more than 10% of revenue under threat, new quality metrics that may weaken AMC’s market perception, and the structural inability to move quickly in a rapidly-changing environment. To survive, AMCs must reinvent themselves by embracing new types of collaboration, re-engineer operations, and use technology as a new kind of extender.
Read this article and chart pack
Kim Mobley quoted in American Medical News article, "Hospital Hiring of Physicians Picks Up Steam"
The January 30th article details how health systems also are looking at ways to hold onto their existing doctors as competition for their services heats up. The article includes data from SullivanCotter surveys.
SullivanCotters 2011 Physician Compensation and Productivity Survey Report Now Available
January 10, 2012 – Chicago – A survey released by SullivanCotter (SullivanCotter), a nationally-recognized compensation and human resource management consulting firm, reports that most hospitals and health care systems increased their physician staffing in 2011 and plan to continue to do so in 2012.
This finding is contained in SullivanCotter’s 2011 Physician Compensation and Productivity Survey Report, now available for purchase. The survey contains data from 424 health care organizations representing 66,400 health care providers and is considered the industry standard.
According to the survey, over the past 12 months, nearly three-quarters of the survey participants reported they increased their physician staffing levels; adding 12 specialists and nine primary care physicians to their staffs on average. Additionally, three-quarters also indicted they plan to increase their physician staffs and mid-level providers over the next 12 months.
“These data are consistent with the labor market shift in physician employment that has been occurring over the past few years,” noted Kim Mobley, practice leader for physician compensation. “We expect this trend to continue for some time. This shift in the labor market has resulted in what has become a highly competitive labor market for physicians as organizations and physicians align to provide services in a high quality, more efficient manner.”
aWidely acknowledged as the industry standard for physician data, the 19thAnnual edition of the survey report represents the most comprehensive physician database among major commercially-available surveys of its kind. It contains data from 424 health care organizations representing 66,400 health care providers. Total cash compensation (TCC) and productivity data are reported on over 212 physician, PhD, mid-level provider (MLP) and administrative MD and PhD specialties as well as 8 medical group executive positions.
This year’s comprehensive report also includes TCC levels paid to Staff Physicians, Program Directors, Medical Directors/Division Chiefs and, for select specialties, Department Chairs. The survey reports productivity data (wRVUs) collections and gross patient charges as well as productivity ratios (TCC to collections, TCC per wRVU, TCC to gross patient charges and collections per wRVU).
Other Key Findings
The survey also found that health care organizations are using increasingly sophisticated compensation plans. Many are basing incentives not just on productivity, but also on physician performance, most often tied to patient satisfaction (74%) and/or quality (72%). Although the amount of compensation typically tied to physician performance has been about 3-5%, it is expected to increase to about 7-10% of physician total cash compensation. According to Mobley, this trend is expected to continue as health care organizations adopt more sophisticated plans and align their physician compensation strategies to future reimbursement methodologies.
Other physician compensation trends to note include: the continued use of on-call pay, as 65% of health care organizations reported paying at least some physicians for call coverage (up from 54% in 2010); the use of non-compete agreements, as reported by two-thirds of the survey participants; and the use of hiring bonuses, as reported by nearly three-quarters of the survey participants.
The 2011 Physician Compensation and Productivity Survey Report is now available for purchase. The cost to health care organizations who participated in the 2011 survey is $500. The cost for organizations agreeing to participate in next year’s survey is $950, while the cost of health care organizations not wishing to participate next year is $2,000. Non-health care organizations must call for the price. A CD containing the survey data tables is included with the purchase of the survey. To order a copy of the survey, please visit www.sullivancotter.com or email surveys@sullivancotter.com.
Hospitals and Health Systems Report Moderate Salary Increases
November 16, 2011, - CHICAGO - SullivanCotter, a health care compensation and human resource management consulting firm, has just published the 2011 Survey of Manager and Executive Compensation in Hospitals and Health Systems. This is the nineteenth edition of the respected industry resource. More than 290 health systems and 930 hospitals participated in the survey, submitting data for nearly 23,900 executives and managers between March and July 2011.
A key finding of the survey was that among health systems and hospitals that participated in both 2010 and 2011, base salaries increased on average by 3.1% and 2.7%, respectively. These increases are consistent with the budgeted 2011 salary increases for health systems and hospitals of 2.9%.
“Salary increases continue to be moderate,” noted SullivanCotter Managing Principal Tom Pavlik. “For next year; the data indicate average projected budgets of 3.0% for executives and 2.7% for managers in health systems and hospitals although these data were collected prior to the current economic turmoil. However, we did see around a 4.5% increase in total cash compensation levels.”
SullivanCotter’s Survey of Manager and Executive Compensation in Hospitals and Health Systems provides not only cash compensation data for executive and management jobs in hospitals and health systems, but also data on pay practices, annual incentive plans, supplemental benefits, perquisites, nonqualified retirement plans, and much more.
The 2011 Survey of Manager and Executive Compensation in Hospitals and Health Systems is now available for purchase. The cost to health care organizations agreeing to participate in next year’s survey is $1,000 (includes hardcopy and CD format); for those not wishing to participate, the cost is $2,250 for a hardcopy and $250 for CD format. The survey is also available to non-health care organizations. To order a copy, please visit the Sullivan, Cotter and Associates website at www.sullivancotter.com or call 888-739-7039, or email surveys@sullivancotter.com.
7 Trends for NonProfit Hospital Executives Salaries
After a report was released on the pay packages of Cleveland-based MetroHealth System's top executives — ranking it in the top 25 percent of similarly sized health systems — county officials and board members showed concern about the high compensations. Hospital officials defended the raises, but MetroHealth also announced it plans to cut 450 jobs.
Where are Physician Salaries Heading? 5 Current Trends
Hospital CEOs sent a clear message in a recent Thomson Reuters survey that physician alignment and cost reductions will be at the top of their priorities over the next few years.
However, as more physicians are becoming hospital-employed, will cost reductions and physician alignment come at the expense of physician compensation? Opinions among physician specialists vary on whether their compensation is fair already, and hospitals will have to continue to grapple with the valuation of those salaries, one of the biggest chunks of a hospital's budget.
SullivanCotter and Associates' 2011 Physician Compensation and Productivity Survey recently gathered data from more than 60,000 physicians, residents, mid-level providers and medical group executives. Kim Mobley, principal at SullivanCotter and Associates, gives some insight on growing trends in the world of physician compensation.
How Hospital Executives Can Use Performance, Negotiations to Increase Earning Power
Hospital leaders need to distinguish themselves through performance and negotiate with the board to increase their earning power. Jim Nelson, a managing principal of SullivanCotter, and Deedra Hartung, executive vice president and managing principal of Cejka Executive Search, discuss six ways hospital leaders can increase their earning power.
Sullivan, Cotter and Associates Relocates Detroit Office
August 26, 2011 – Detroit, MI – SullivanCotter (SullivanCotter), a health care compensation and human resource management consulting firm, has announced an office relocation in the Detroit market. The new location is at 4000 Town Center, Suite 1750, Southfield, MI 48075- 1411.
“To continue meeting client needs amidst compensation practice scrutiny and healthcare reform, Sullivan, Cotter and Associates has expanded its consulting and survey offerings. The expansion is attributed to our entire team that is working so hard to make SullivanCotter one of the leaders in the healthcare compensation and human resource management consulting industry,” notes SullivanCotter Founder, Tim Cotter.
SullivanCotter Acquires McGladreys Physician Compensation Practice
(MINNEAPOLIS) August, 18, 2011 – SullivanCotter, announced today that it has acquired the Physician Compensation Practice of RSM McGladrey, Inc., a leading provider of tax and consulting services. The acquisition strengthens SullivanCotter’s physician compensation and survey practice and further positions the firm as an industry leader.
As part of the acquisition, a team of consultants from RSM McGladrey joins the firm. The consultants bring years of experience in physician compensation design and fair market value (FMV) assessments with a focus on large medical clinics. Already a leader in physician and executive compensation surveys in the health care sector, this acquisition enhances SullivanCotter’s survey capabilities for large medical clinics.
“The addition of these talented consultants and survey capabilities expands SullivanCotter’s footprint beyond its current consulting focus,” said SullivanCotter CEO, Ted Chien. “Extending our service offerings is another way that we continue to add value to our clients.”
“We believe that SullivanCotter’s deep focus and expertise in the area of physician compensation will prove to be a strong fit for RSM McGladrey’s Physician Compensation practice and its clients,” said Mike Stokke, RSM McGladrey’s national client service strategy and delivery leader.
The consultants joining SullivanCotter include Tom Dobosenski, Managing Principal; Wayne Hartley, Senior Consultant; Courtney Helmstetter, Consultant; Sara Loos, Survey Consultant; and Brad Vaudrey, Principal.
“SullivanCotter is a leader in all elements of total compensation planning for health care and not- for-profit organizations,” said Dobosenski. “My colleagues and I look forward to joining a group of trusted and tested practitioners, and we are eager to work with them to advance the breadth and depth of their physician compensation and survey practice.”
Combined with the earlier addition of Diversified Medical Management (DMM) in May 2011, this acquisition gives SullivanCotter one of the most comprehensive and largest physician consulting practices in the country, made up of more than 35 fulltime consultants.
About SullivanCotter
SullivanCotter specializes in the assessment and development of total compensation and reward programs for physicians and executives in the health care industry. Since 1992, SullivanCotter has worked closely with health care organization executives, boards and compensation committees to devise innovative compensation solutions that attract and retain leadership talent while satisfying not-for-profit missions and regulatory requirements. A leader in independent consulting, benchmarking, trends and analyses, SullivanCotter has also developed the most widely recognized physician and executive compensation surveys in the United States. For more information, visit sullivancotter.com or call (888) 739-7039.
About McGladrey
McGladrey is the brand under which RSM McGladrey, Inc. and McGladrey & Pullen, LLP serve clients’ business needs. Together, they rank as the fifth-largest U.S. provider of assurance, tax and consulting services, with 7,000 professionals and associates in more than 80 offices. The two firms operate as separate legal entities in an alternative practice structure. McGladrey & Pullen is a licensed CPA firm that provides assurance services. RSM McGladrey is a leading professional services firm providing tax and consulting services. Both firms are members of RSM International, the sixth-largest global network of independent accounting, tax and consulting firms. For more information, visit the McGladrey website at mcgladrey.com, join our Facebook fan page at McGladrey News and/or follow us on Twitter @McGladrey.
Why Hospital Board Involvement in Physician Compensation is Critical
In the July 13th edition of Becker's Hospital Review, SullivanCotter Principal Kim Mobley explains the necessity and means of hospital board oversight of physician compensation. As more and more physicians align with hospitals due to decreasing reimbursement, increase costs of managing a physician practice, limited access to capital, increasing regulatory challenges and shifts in lifestyle, the involvement of hospital boards is critical to compensating physicians in a way that benefits both physicians and the hospital.
Five Things to Consider in Completing Form 990: Tips from an Expert
A guest blog post by Warren Kerper, Managing Principal in the Boston office of SullivanCotter, appearing on Verrill Dana, LLP's Benefits Law Update.
SullivanCotter Expands Services - New Physician Practice Business Valuations Group Opens Office in Pittsburgh
(Pittsburgh) May 4, 2011 -- SullivanCotter, an independent consulting firm specializing in Executive, Employee, and Physician Compensationand Governance in the tax-exempt, not-for-profit industry with a specific focus within health care, announced today that it has expanded its Physician Compensation Practice with a team of seven associates who join the firm from Diversified Medical Management (DMM), the health care consulting division of McCrory & McDowell LLC.
In conjunction with this expansion, SullivanCotter has also opened its newest business location in Pittsburgh, Pennsylvania. The new location is at 20 Stanwix Street, Suite 502, Pittsburgh, PA 15222.
“The addition of Diversified Medical Management’s professional team gives us additional content expertise to supplement our already talented Physician Practice,” said SullivanCotter CEO, Ted Chien.
Timothy Reed, CPA/ABV, CVA formerly of DMM, opens the Pittsburgh office as a Principal and Practice Leader for SullivanCotter’s Physician Practice Business Valuations Group. Reed has considerable experience evaluating and negotiating purchase and sale transactions of community-based and academic physician practices to ensure that clients receive professional independent valuations in conformity with industry standards.
“Tim and his team bring to SullivanCotter many years of experience in Valuation Services including Physician Practice Business Valuations, Fair Market Value Assessments and industry benchmarking,” said Chien. “With the addition of these associates, SullivanCotter will be able to significantly enhance the breadth and depth of services we offer our clients and prospects in the area of Physician Compensation.”
SullivanCotter specializes in the assessment and development of total compensation and reward programs for physicians and executives in the health care industry. Since 1992, SullivanCotter has worked closely with health care organization executives, boards and compensation committees to devise innovative compensation solutions that attract and retain leadership talent while satisfying not-for-profit missions and regulatory requirements. A leader in independent consulting, benchmarking, trends and analyses, SullivanCotter has also developed the most widely recognized physician and executive compensation surveys in the United States.
Becker's Hospital Review examines SullivanCotter's latest Compensation Insight in the article "Report Outlines Healthcare Reform's Effect on Executive Compensation"
Section 125 of the Internal Revenue Code provides a framework for employee tax-advantaged benefits. Within Section 125 is a prohibition that disallows discrimination in favor of highly compensated individuals. This poses a potential risk for employers who provide their executives with "richer" health benefits than other employees. For instance, executives are often provided continued healthcare coverage through the severance period, a benefit that is not typically offered to other employees.
SEC Proposed Rules on Compensation Committee and Consultant Independence
FACT SHEET
Listing Standards for Compensation Committees
SEC Open Meeting
March 30, 2011
Background
In 2010, Congress passed the Dodd-Frank Act that among other things sought to address issues regarding the compensation that companies pay their executives. Section 952 of the Act addresses the compensation committees formed by corporate boards as well as the compensation advisers that these committees retain.
In particular, this provision requires the SEC to direct the exchanges to adopt certain “listing standards” relating to the independence of the members on a compensation committee, the committee’s authority to retain compensation advisers, and the committee’s responsibility for the appointment, compensation and work of any compensation adviser. Once an exchange’s new listing standards are in effect, a listed company must meet these standards in order for its shares to continue trading on that exchange.
In addition, the provision requires each company to disclose in its proxy material for an annual meeting of shareholders whether its board’s compensation committee retained or obtained the advice of a compensation consultant. The provision also requires a company to disclose whether the work of the compensation consultant has raised any conflict of interest and, if so, the nature of the conflict and how the conflict is being addressed.
Requirements of the Proposed Rules
Independence of Compensation Committee Members
Under the SEC’s proposal, the exchanges would be required to adopt listing standards that require each member of a company’s compensation committee to be a member of the board of directors and to be independent. In developing a definition of independence, the exchanges would be required to consider such factors as:
- The sources of compensation of a director, including any consulting, advisory or compensatory fee paid by the company to such member of the board of directors.
- Whether a member of the board of directors of a company is affiliated with the company, a subsidiary of the company, or an affiliate of a subsidiary of the company.
As with all listing standards, exchanges would need to seek the approval of the SEC before adopting them.
Authority and Funding of the Compensation Committee
The proposed rules would require the exchanges to adopt listing standards providing that the compensation committee of a listed company:
- May, in its sole discretion, retain or obtain the advice of a compensation adviser.
- Is directly responsible for the appointment, payment and oversight of compensation advisers.
- Must be appropriately funded by the listed company.
Compensation Adviser Selection
The proposed rules also would require the exchanges to adopt listing standards providing that a compensation committee may select a compensation consultant, legal counsel or other adviser only after considering the following five independence factors:
- Whether the compensation consulting company employing the compensation adviser is providing any other services to the company.
- How much the compensation consulting company who employs the compensation adviser has received in fees from the company, as a percentage of that person’s total revenue.
- What policies and procedures have been adopted by the compensation consulting company employing the compensation adviser to prevent conflicts of interest.
- Whether the compensation adviser has any business or personal relationship with a member of the compensation committee.
- Whether the compensation adviser owns any stock of the company.
The exchanges themselves could impose additional considerations.
Exemptions
As directed by the statute, the proposed rules would require the exchanges to exempt the following five categories of companies from the compensation committee independence requirements:
- Controlled companies.
- Limited partnerships.
- Companies in bankruptcy proceedings.
- Open-end management investment companies registered under the Investment Company Act of 1940.
- Any foreign private issuer that discloses in its annual report the reasons that the foreign private issuer does not have an independent compensation committee.
In addition, the proposed rules would authorize the exchanges to exempt a particular relationship from the independence requirements applicable to compensation committee members.
The proposed rules also would authorize the exchanges to exempt any category of company from all of the requirements of the new compensation committee listing standards. The proposed rules would exempt controlled companies from all of the requirements of the new compensation committee listing standards.
As with all listing standards, the exchanges would need to seek the approval of the SEC before adopting any exemptions.
Compensation Consultant Conflicts of Interest Disclosure
Exchange Act registrants subject to the federal proxy rules are already required to disclose information about their use of compensation consultants, including specific information about fees paid to consultants that the SEC added in late 2009. The proposed rules would modify existing rules to require disclosure about whether:
- The compensation committee has retained or obtained the advice of a compensation consultant.
- The work of the compensation consultant has raised any conflict of interest and, if so, the nature of the conflict and how the conflict is being addressed.
The proposed rules also would eliminate the current disclosure exception for services that are limited to consulting on broad-based plans and the provision of non-customized benchmark data, but would retain the fee disclosure requirements, including the exemptions from those requirements.
What’s Next?
The SEC is seeking public comments on the proposed rules and data on matters relating to the proposed rules, including the costs and benefits associated with the proposals. Public comments on the proposed rules should be received by April 29, 2011. The SEC will review the comments it receives and consider those comments in determining whether to adopt the proposed rules.
To read the proposed rules in their entirety, click here.
Tim Cotter and Kim Mobley Chosen to Speak at the 2011 American Health Lawyers Annual Meeting held June 27-29
Also presenting at this year's In-House Counsel Meeting on Sunday June 26th is SullivanCotter Chairman, Tim Cotter who will co-present with Michael W. Peregrine, a Partner with McDermott Will & Emery LLP. More details coming soon.
Program Description
As the culmination of AHLA's educational year, the Annual Meeting provides a forum for networking and interaction with colleagues, friends and family, as well as an outstanding educational event. There are more than 35 sessions on a broad range of health law topics including Self-Disclosure under the OIG (Office of Inspector General) and CMS (Centers for Medicare and Medicaid Services) protocols, Powerful Hospital and Powerful Payor: What is the Antitrust Diagnosis, Health Insurance Exchanges, Building a Culture of Collaboration from the Ground Up, and RAC (Recovery Audit Contractors) and the Alphabet Soup Mix of Auditors.
2011 Questionnaire Now Open - Survey of Manager and Executive Compensation in Hospitals and Health Systems
SullivanCotter’s Survey of Manager and Executive Compensation in Hospitals and Health Systems provides the data to make informed decisions that assure you meet the dueling demands of regulatory compliance and attractive, performance-driven executive compensation.
SullivanCotter has launched its data collection efforts for the 2011 Survey, click here to learn more. Last year's survey report contained data from 1,194 organizations, including 288 health systems and 906 hospitals. The survey collects base salary and total cash compensation data for more than 130 system-level jobs and 150 hospital-level jobs.