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.

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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.

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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.

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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.

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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.

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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.

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SEC Proposed Rules on Compensation Committee and Consultant Independence


Listing Standards for Compensation Committees
SEC Open Meeting
March 30, 2011


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:

  1. May, in its sole discretion, retain or obtain the advice of a compensation adviser.
  2. Is directly responsible for the appointment, payment and oversight of compensation advisers.
  3. 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:

  1. Whether the compensation consulting company employing the compensation adviser is providing any other services to the company.
  2. 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.
  3. What policies and procedures have been adopted by the compensation consulting company employing the compensation adviser to prevent conflicts of interest.
  4. Whether the compensation adviser has any business or personal relationship with a member of the compensation committee.
  5. Whether the compensation adviser owns any stock of the company.

The exchanges themselves could impose additional considerations.


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:

  1. Controlled companies.
  2. Limited partnerships.
  3. Companies in bankruptcy proceedings.
  4. Open-end management investment companies registered under the Investment Company Act of 1940.
  5. 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:

  1. The compensation committee has retained or obtained the advice of a compensation consultant.
  2. 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.


Thomson Reuters Announces 100 Top Hospitals Award Winners for 2011

Last month, the 2011 Thomson Reuters 100 Top Hospitals award winners list was released.  This year's winners where chosen from nearly 3,000 U.S. hospitals and award-winning facilities which demonstrated that high-quality patient outcomes can be achieved while improving efficiency. The article accompanying the 100 Top Hospitals list includes new research and an analysis of regional performance, including five-year trends. Thomson Reuters found that all hospitals have made noteworthy improvements in mortality, core measures, and length of stay. Hospitals in the Midwest continue to dominate their winners’ list, with half of all winners located in the Midwest census region.

Learn more here.

Now Accepting Participants - 2011 Physician Compensation and Productivity Survey

The SullivanCotter survey is recognized as one of the industry’s leading and most comprehensive reports on physician total compensation and productivity.

Last year’s report contained data from 351 health care organizations comprising 215 physician, PhD, and mid-level provider (MLP) specialties as well as eight medical group executive positions.

Data were reported on the total cash compensation (TCC) levels paid to 58,626 physicians, residents, PhDs, MLPs, and Medical Group Executives. The report also contains productivity data (TCC, collections, gross patient charges, and wRVUs) and productivity ratios for staff physicians (TCC to collections, TCC to gross patient charges, TCC per wRVU, and collections per wRVU).

Learn more about how your organization can particpate today

Health Care On-Call Pay Continues To Rise

Most clinicians who provide call coverage for a hospital, whether employed by that hospital or not, have seen increases in pay for providing this service, according to the 2010 Physician On-Call Pay Survey Report, based on the sixth annual survey from compensation consultancy SullivanCotter.

The survey report, with data from 148 U.S. healthcare organizations, describes current physician on-call pay practices and rates paid for 40 physician specialty areas at both trauma and nontrauma centers. Key trends reported by survey participants include the following:

  • 55 percent said their physician on-call pay expenditures have increased within the past 12 months.
  • From 2007 to 2010, median on-call expenditures reported by trauma centers more than doubled, from $1.2 million in 2007 to $2.4 million in 2010.
  • For nontrauma centers, the median expenditure in 2007 was $433,849, compared to $798,000 in 2010.
  • 95 percent of the survey participants provide on-call pay to at least some of their nonemployed physicians with admitting privileges.
  • 65 percent provide on-call pay to at least some of their employed physicians; 27 percent who don't pay extra for call factor this duty into physicians' salaries.
  • 27 percent pay for "excess call only," meaning that providers are only compensated for call after exceeding a specified number of shifts per month or year.
  • 15 percent compensate physicians who respond to call by phone but are not required to present at the hospital.

Key variables affecting physician on-call pay rates include the rates of local and national market benchmarks, frequency of the call coverage provided, the likelihood of being called in for service, payer mix and compensation received when called. Thus, rates - and likelihood of getting paid for call - varied dramatically by specialty.

Strategic Physician Leadership Development: A White Paper for Health System Executives

The emerging healthcare environment has changed the game for healthcare organizations and for physician leadership.  That environment is going to require what could be called “agile organizations” and those organizations are going to rely on many more physicians in formal and informal leadership roles and in much more collaborative relationships with administrative leaders.

Developing that level of physician leadership will include not only building leadership competencies, but also the leadership structure and roles for physicians and the relationships that make it all work.

Fortunately, there are some shortcuts for CEOs in getting started along with guiding questions for developing physician leadership structures and roles and models of effective competency building approaches that can provide direction.

 read the full white paper

Projected Corporate Governance Trends for Nonprofit Hospitals and Health Systems - 2011

A review of current developments has led me to the following perspective on governance trends for 2011 prepared annually by Michael E. Peregrine of McDermott, Will & Emery, LLP, to assist general counsel and corporate governance executives brief senior management and the board on possible governance trends for the coming year.


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Competitive Physician Compensation Models

Healthcare financial executives need to understand valuation methodology to ensure legal and regulatory compliance. When developing and reviewing their physician compensation programs, healthcare organizations should:

  • Understand the market data
  • Test outcomes of incentive plans for fair market value
  • Check total compensation for fair market value and reasonableness

Structuring competitive physician compensation arrangements can be a challenge for healthcare organizations trying to balance complex regulatory requirements against strategic business decisions, physician satisfaction concerns, and a highly competitive physician labor market. Many healthcare organizations are employing greater numbers of physicians to achieve physicianalignment and vertical integration. These organizations are increasingly faced with developing novel and more sophisticated physician compensation programs that will attract and retain physicians, often including productivity-based incentive compensation or rewards for high-quality outcomes. As healthcare organizations develop and review their physician compensationprograms, they should keep in mind the legal and regulatory framework that governs hospital payments to physicians as well as valuation concerns.

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Dodd-Frank: The Spillover Impact on Nonprofit Healthcare

Let’s get this straight at the top: Dodd-Frank does not specifically apply to nonprofit healthcare. It wasn’t written with the healthcare sector in mind. It does not directly affect the framework that regulates nonprofit healthcare. It was not enacted to address any practices or abuses that are prevalent in nonprofit healthcare. Unlike Sarbanes-Oxley, it does not contain any general provisions applicable to public and nonprofit companies alike.

So why should we care? Why read any further?

Well, we care for a bunch of fairly significant reasons. Ultimately, we care because it is ademonstration of Congress’ ability to remake regulation of an entire industry in abreathtaking, sweeping manner—especially when there is a perception that the priorframework of industry regulation didn’t work.

More specifically, we care because the Act has the potential to have a noteable spilloverimpact on at least four key areas of nonprofit hospital operations: enterprise riskmanagement (ERM), corporate governance, corporate compliance and, perhaps mostsignificantly, executive compensation. If history serves as any guide, the basic regulatorythemes present in Dodd-Frank are likely to re-appear “somewhere down the road,” in amanner that impacts nonprofit healthcare.

Read the full article here.