INFOGRAPHIC | 2022 Workforce Metrics Benchmark Survey
Evaluate the size, shape and distribution of your health care employee workforce
Hospitals and health systems are in the midst of an ongoing workforce crisis
Health care organizations continue to struggle with high turnover, employee burnout, wage pressure and other recruitment and retention challenges – all of which have driven up the cost of labor and increased the competition for talent.
Utilizing data from SullivanCotter’s 2022 Workforce Metrics Benchmark Survey – which includes information on 10 job families, 6 career level stages, and 3 demographic groupings – organizations can reevaluate their employee workforce planning and distribution efforts to help offset rising costs and create a more sustainable workforce architecture.
View a highlight of this year’s results, including insight into:
Workforce Size
- While the overall health care workforce has increased modestly between 1.9% and 2.6%, headcount growth for managers, leaders and executives is far outpacing that of individual contributors.
- Nearly 70% of participants have formally reviewed, or expect to review, the size, structure and/or management spans of control of their executive groups
Workforce Cost
- Year-over-year comparisons suggest that base payroll has gone up almost 10% from 2021 to 2022 with 7.1% not attributable to headcount increases.
- For the average participating organization with an annual base payroll expense of $1.6 billion, this has added almost $115 million dollars to the bottom.
Looking for more? The 2022 survey report is available for purchase.
INFOGRAPHIC | 2023 Physician Fee Schedule Changes
The Centers for Medicare and Medicaid Services recently reduced its Conversion Factor by 2.1% for 2023.
Does your organization understand how this may affect wRVU productivity in different specialties and settings – including hospital inpatient and observation, emergency services and skilled nursing facilities?
The Centers for Medicare & Medicaid Services (CMS) released their Final Rule for the 2023 Physician Fee Schedule (PFS) in the Federal Register on November 18, 2022, and an updated 2023 Medicare conversion factor on January 5, 2023.
The final rule includes revised evaluation and management (E&M) coding guidelines that are intended to reduce administrative burden, primarily in inpatient settings and skilled nursing facilities.
These changes will further impact E&M CPT code documentation requirements, wRVU values, and resulting wRVU production levels for physicians and advanced practice providers providing these services in inpatient and skilled nursing facility settings.
Looking for additional details on the changes?
SullivanCotter recently published an article with the American Association of Provider Compensation Professionals.
Physician Fee Schedule: 2023 Changes
Considerations for Production-Based Compensation Plans
Originally published by the American Association of Provider Compensation Professionals
READ FULL ARTICLE
BACKGROUND
The Centers for Medicare and Medicaid Services (CMS) implemented sweeping changes to the Physician Fee Schedule (PFS) in 2021. This included modifications to the office-based Evaluation and Management (E&M) Current Procedural Terminology (CPT) code documentation requirements and Work Relative Value Units (wRVUs) – which had the effect of impacting reimbursement and wRVU production values for nearly every physician specialty. Experience in navigating the impact of these changes to compensation plans, particularly production-based plans, is particularly relevant as CMS embarks upon another set of PFS revisions in 2023.
UNDERSTANDING THE NEXT WAVE
CMS published the Final Rule for the 2023 PFS in the Federal Register on November 18, 2022. This includes the next set of revisions to E&M coding guidelines that are intended to reduce administrative burden, primarily in inpatient settings and skilled nursing facilities. These changes, like those implemented in 2021, will further impact:
- E&M CPT code documentation requirements
- wRVU values
- Reimbursement
- Resulting wRVU production levels for physicians and advanced practice providers (APPs) providing these services in inpatient and skilled nursing facility settings
There are also changes beyond E&M coding and reimbursement which will impact some specialties more than others – such as the increase in reimbursement and wRVU values for immunization administration. This particular change will impact pediatric physicians and APPs due to the high volume of immunizations administered to their patients.
As physician compensation professionals and health systems evaluate modifications to the 2023 Physician Fee Schedule, they must be aware of the impact on Medicare reimbursement and reported wRVUs while also addressing the scope of the changes on provider compensation plans for specialties most likely to be affected.
The Need for Competitive APP Compensation Programs
Advanced practice provider compensation is growing rapidly as organizations face ongoing staff shortages and other health care workforce challenges.
Featured in a recent article from RevCycle Intelligence, data from SullivanCotter’s 2022 APP Compensation and Productivity Survey highlights the need for more dynamic compensation practices for nurse practitioners (NPs), physician assistants (PAs) and certified registered nurse anesthetists (CRNAs).
Attracting and retaining advanced practice providers in today’s unprecedented market for talent – where the demand for care continues to outpace the supply of providers – is now more critical than ever amidst the current health care workforce crisis.
To remain competitive, hospitals and health systems are having to keep up with rapid year-over-year growth in median annual total cash compensation for NPs and PAs. The competition for CRNAs is even greater – with an increase of more than 10% in median TCC since 2019.
How are organizations responding?
- Adjusting base pay for key clinical positions
- Expanding APP salary budgets
- Increasing fixed, merit and market pay
- Exploring flexible staffing arrangements
- Addressing turnover with greater retention bonuses
Rethinking Executive Compensation and Performance Metrics
Achieving True Health Care Transformation
Health care leaders of today must strike a delicate balance that requires managing financial and growth metrics, increasing the speed of transformation, and building the health systems of tomorrow.
So how do we redefine compensation models to reward all these behaviors?
Recently published in MedCity News, SullivanCotter’s President and CEO, Ted Chien, discusses how organizations can adjust their approach to executive compensation to help deliver transformative change:
“Executive compensation might not spring to mind as a key driver of health care transformation, nor does it seem naturally connected to critical issues such as health equity, patient safety, or quality of care – just a few of the areas where significant changes can be made to transform health care. But, in fact, executives leading not-for-profit health systems today are tasked with delivering measurable results that improve the health status of their patients and their communities. And to ensure that these new performance metrics are met, we must change how we think about —and deliver—compensation.”
Hiring Gains Alone Won't Solve the Health Care Workforce Crisis
Health care workforce crisis: the industry cannot rely on hiring alone to address current workforce shortages
Despite recent hiring gains, many health care organizations are still struggling to meet staffing needs.
Health care is in the midst of an ongoing workforce crisis as the demand for care is outpacing the supply of available labor.
Recently featured in NASDAQ, SullivanCotter’s President and CEO, Ted Chien, highlights how hospitals and health systems can meet the challenge of building a better and more sustainable pipeline of talent through:
- Smarter technology: Make the path to care delivery easier for providers by helping to reduce burnout, alleviate after-hours work and streamline clinical experience operations for students
- Resilient teams: Support staff through equitable compensation, robust benefits packages, and a focus on physician and mental health
- Excellence in leadership: Recruit and retain executives capable of delivering change in such extraordinary times
Advanced Practice Providers: Highest Paid Specialties and Regions
Nurse Practitioners and Physician Assistants: Highest Paid Specialties and Regions
Utilizing data from SullivanCotter’s 2022 Advanced Practice Provider Compensation and Productivity Survey, Becker’s Hospital Review has listed the top 20 highest-paid specialties for both nurse practitioners and physician assistants. It has also listed median total cash compensation by region.
This year’s report reflects total cash compensation data from January 1, 2021 – December 31, 2021, and includes information from nearly 700 organizations on more than 100,000 individual APPs.
The survey also provides detailed insight into CRNA compensation and pay practices. As the demand for the anesthesiology workforce continues to increase but provider supply remains flat or even starts to decline, hospitals and health systems are looking to reevaluate their CRNA compensation programs in order to remain competitive and address challenges related to recruitment and retention.
INFOGRAPHIC | 2022 Health Care Staff Compensation Survey
Struggling to address the current health care staffing crisis?
As the health care staffing crisis continues and financial pressures mount, many organizations are taking this opportunity to address key employee compensation and workforce issues:
- The focus on payroll costs remain as health care organizations seek to complete for talent within and outside of the industry – especially for lower-paid, frontline jobs.
- Salary budget increases in 2023 are at a 20-year high as a direct result of the competitive labor market and record-high inflation.
- Although health care organizations have moved to more flexible or hybrid work arrangements, they are not moving to multiple geo-specific pay structures and sticking with a standard headquarters-focused base pay and premium pay approach.
- Minimum rate concerns are increasing for all industries. This adds greater pressure on health care organizations – even amongst those that have recently increased their minimum hiring rates.
SullivanCotter’s 2022 Health Care Staff Compensation Survey includes data from nearly 1,300 organizations on more than 1.2M individual employees- providing organizations with critical compensation market data, information on key employee workforce practices, and insight into emerging industry trends.
The 2023 survey is now open for submission! Register to participate in this year’s survey to gain access to critical compensation market data, information on key employee workforce practices, and insight into emerging industry trends.
PRESS RELEASE | APP Survey Results Highlight Dynamic Market for Talent
Median total cash compensation for physician assistants and nurse practitioners increased by 4.5%
Chicago, IL | December 7, 2022
SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and data products for health care and not-for-profits, has released the findings from its 2022 Advanced Practice Provider Compensation and Productivity Survey.
With median total cash compensation (TCC) up by 4.5% over last year for nurse practitioners (NPs) and physician assistants (PAs) across all major specialty categories – primary care, medical, surgical and hospital-based – this year’s results reflect a dynamic market requiring organizations to develop more competitive approaches to advanced practice provider (APP) compensation. As the health care workforce crisis continues and projected physician shortages remain a concern in this post-COVID environment, APP utilization is increasing as hospitals and health systems look to minimize disruptions to patient access, service and quality of care.
Total Cash Compensation
APP compensation continues to increase year-over-year. While all major specialty areas have seen median TCC — which includes base pay plus performance incentives — grow by over 7.3% or greater since 2019, primary care (up 10.1%) and hospital-based specialties (up 9.1%) have seen the single largest increases over this same period. After several years of minimal growth, TCC for hospital-based specialties increased by 7% from last year alone – likely due to a combination of factors such as changes in work effort, staffing shortages and delayed market increases from 2020 as a result of the pandemic. Although nearly half of organizations (48%) reported utilizing incentives for at least some of their NPs and PAs, it is important to note that this type of compensation as a percentage of base pay ranges from only 4.2% – 6.1% across all specialty categories.
Certified registered nurse anesthetists (CRNAs) have experienced even more rapid TCC growth with the median hourly rate increasing from $86.54 in 2019 to $95.57 (up 10.4%) in 2022 alone. This is driven by a continued shortage of anesthesiology providers as well as a spike in demand as post-pandemic surgical volumes increase and the need for anesthesiology support outside of the traditional operating room rises. Many organizations are experiencing CRNA recruitment and retention challenges, and this is expected to continue during the next three to five years.
“The demand for CRNAs continues to outpace supply, requiring health care organizations to reevaluate their CRNA recruitment and retention strategies in order to ensure effective and sustainable staffing and coverage. A critical cornerstone of these strategies is the establishment of competitive compensation packages and desirable practice environments aligned with evolving CRNA preferences and market trends. We believe the demand and supply mismatch will continue for the next three to five years and organizations should plan accordingly,” said Zachary Hartsell, Principal, SullivanCotter.
Work RVU Productivity
To help organizations assess the ongoing impact of the Centers for Medicare & Medicaid Services’ Physician Fee Schedule (PFS) changes, SullivanCotter includes two sets of benchmarks in the 2022 survey based on work RVU values from both the 2020 and 2021 PFS. The results show the most significant variation within primary care and some medical specialties, while productivity in hospital-based and surgical specialties remains more consistent between the 2020 and 2021 schedules.
Combined median work RVUs for NPs and PAs in 2022 are the highest in primary care at 3,620 (utilizing 2021 PFS) and 3,220 (utilizing 2020 PFS) and the lowest in surgical specialties at 1,812 and 1,725 respectively. “The market data on APP productivity continues to evolve and become more robust. When analyzing this information, however, it’s important for organizations to keep practice variation in mind – this can vary widely based on specialty and organization-specific patterns. While APPs in primary care often practice more independently and may have their own patient panels, surgical APPs spend the majority of their time conducting pre- and post-operation visits or serving as a first assist in the operating room – extremely important roles, but ones that don’t generate as many work RVUs,” said Amy Noecker, Principal and APP Workforce Practice Leader, SullivanCotter.
Planning for 2023 and Beyond
APPs continue to play a critical role in achieving greater patient access, lowering the cost of care and addressing the growing physician shortage. The market for APPs has grown increasingly dynamic and this is expected to continue in the coming years.
As it relates to APP compensation and workforce strategy, organizations should consider the following:
- Plan for pivotal regulatory changes impacting APPs including split/shared billing and additional Physician Fee Schedule modifications to the inpatient E&M codes by enhancing programs that support documentation and coding compliance, formally assessing compensation plan implications, and defining (or redefining) care team responsibilities.
- Support recruitment and retention with the establishment of competitive compensation packages and desirable practice environments focused on improving patient access and top-of-license practice for APPs. Ensure rates are competitive with local and national markets and evaluate care delivery models so that APPs have the appropriate scope of practice.
- Evaluate the effectiveness of alternative care delivery models such as virtual medicine to help address issues with patient access due to staffing and space constraints. Important considerations involving scheduling, staffing, patient demand, variation in state law and overhead costs should all be taken into account.
- Understand how changes in care delivery are affecting hospital-based providers. Due to the pandemic, burnout is on the rise and many APPs in coverage specialties are requesting either an increase in compensation or changes to annual work effort expectations. Many organizations are still short-staffed in these areas and continue to manage limited resources with additional premiums.
- Address current and future anesthesiology care team challenges by regularly assessing physician-to-CRNA staffing ratios, reviewing CRNA and physician deployment and paying special attention to work effort expectations and scheduling preferences.
SullivanCotter’s 2022 Advanced Practice Provider Compensation and Productivity Survey provides critical benchmarking data on compensation levels and pay practices. As one of the most comprehensive resources of its kind for hospitals and health systems nationwide, the survey includes information from nearly 700 organizations representing more than 100,000 individual APPs.
About SullivanCotter
SullivanCotter partners with health care and other not-for-profit organizations to understand what drives performance and improve outcomes through the development and implementation of integrated workforce strategies. Using our time-tested methodologies and industry-leading research and information, we provide data-driven insights, expertise, and data products to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.
For more information on SullivanCotter’s surveys, please visit our website at www.sullivancotter.com, or contact us via email or by phone at 888.739.7039.
Note to media: Additional data and interviews are available on request.
INFOGRAPHIC | 2022 Physician Compensation and Productivity Survey
Physician compensation and productivity survey benchmarks
Looking for greater insight into the impact of Physician Fee Schedule changes on wRVUs?
This year’s survey benchmarks for physician and advanced practice provider (APP) compensation and productivity have been materially impacted by recent modifications to the Physician Fee Schedule (PFS). In order to help organizations properly address the ongoing impact of these changes, SullivanCotter’s 2022 Physician Compensation and Productivity Survey includes two sets of benchmarks based on wRVU values from both the 2020 and 2021 schedules.
As one of the most comprehensive datasets of its kind, this survey includes data from nearly 800 organizations on more than 285,500 individual physicians and APPs across 237 specialties – providing health care organizations with critical compensation market data, information evolving workforce practices, and insight into emerging industry trends.
Key Takeaways
- 2022 survey data is impacted by the industry’s gradual adoption of the 2021 PFS wRVU values. The 2022 survey includes two wRVU and TCC per wRVU values.
- In 2022, work RVU productivity recovered to pre-pandemic levels for many specialties; as a result, TCC per wRVU ratios decreased.
- Quality incentive compensation continues to be relatively modest (< 10%); the use of panel size in primary care compensation plan design continues to increase.
- The 2023 Physician Fee Schedule final rule includes another round of significant E&M wRVU value changes in hospital and skilled nursing settings and a resulting Medicare conversion factor cut.
- Use 2022 market survey data with caution; in particular, reported TCC per RVU ratios may continue to be volatile for many specialties.
Interesting in learning more?
The 2022 report is now available for purchase!
PODCAST | Governing Health - Executive Compensation
Executive Compensation Committee Trends, Developments and Challenges
In this two-part edition of the Governing Health Podcast Series from McDermott Will & Emery, SullivanCotter's Tim Cotter, Managing Director, joins Michael Peregrine and Ralph DeJong to discuss emerging trends and practices in healthcare executive compensation.
Episode 1 >
Listen to Part I to learn more about important key topics for the board's compensation committee, market data from SullivanCotter's 2022 Health Care Management and Executive Compensation Survey, the projected impact of inflation on next year's salary increases and more.
Episode 2 >
Part II of the conversation includes insight into a number of trends and challenges facing the Executive Compensation Committee. This episode addresses considerations for special compensation arrangements, goal-setting for the upcoming year, and responding to media questions regarding executive compensation.
These episodes also include insight into:
- Increasing communication between the compensation committee and the C-Suite
- Addressing pressures felt by executive committee members
- Expectations for future CEO salary increases and organization departures
- The segmented approach to leadership plans
- Performance measures for ESG themes
- Organizational structural considerations and whether or not these should be a committee concern
- Revisiting the committee charter to ensure continued relevance
CRNA Compensation: Supporting Recruitment and Retention
Establishing competitive CRNA compensation packages
Originally published by the American Association of Provider Compensation Professionals
READ FULL ARTICLE
As the demand for the anesthesiology workforce continues to increase but provider supply remains flat or even starts to decline, healthcare organizations will need to reevaluate their CRNA recruitment and retention strategies in order to ensure effective staffing and coverage.
A critical cornerstone of these strategies is the establishment of competitive CRNA compensation packages and desirable practice environments aligned with evolving CRNA preferences and market trends. Insight into emerging compensation and pay practices, access to reliable market data, and close consideration of employment status and work effort expectations will help organizations to attract, retain and engage this increasingly hard-to-recruit workforce more effectively.
In this article, SullivanCotter provides insight into:
- Current CRNA recruitment and retention challenges organizations are experiencing
- Effectively using market data to help determine CRNA compensation - including insight into base salary, incentives, employment status, work effort and premium pay
- Additional considerations such as practice models, location-specific practice patterns and more
PRESS RELEASE | SullivanCotter Holdings, Inc. Expands Subsidiary Organizations with Strategic Leadership Hires
We're pleased to welcome such an accomplished group of leaders
Chicago, IL | November 9, 2022
SullivanCotter Holdings, Inc., the nation’s leading human capital information management holding company for health care and not-for-profits/tax-exempt organizations, announces several important new hires within its Shared Services leadership team.
“As our clients continue to address a growing list of operational, financial and workforce challenges, we’re working diligently to ensure we remain closely in tune with their needs every step of the way. We’re pleased to welcome such an accomplished group of leaders to the organization and look forward to leveraging their unique perspectives, new ways of strategic thinking, and diverse industry backgrounds as we plan for additional consulting services and innovative product enhancements next year and beyond,” said Ted Chien, President and CEO, SullivanCotter and Clinician Nexus.
New additions to the firms’ leadership teams include:
- Gina Alexander | Chief Financial and Administrative Officer – With nearly 20 years of healthcare finance and administrative experience, Gina has a deep-seated knowledge and well-rounded understanding of the industry’s major players – including providers, payers, employers and the government. She leads the transformation of the organization’s Shared Services functions in supporting new advisory and technology services to drive greater value for clients.
- Mike Erickson | Chief Technology Officer – As a dynamic technology executive with a proven track record for leading high-performing teams as they solve complex business and operational issues, Mike leverages expertise in software architecture, development and implementation to deliver new products and resources to our associates and clients as they look to grow and scale in a rapidly changing marketplace.
- Tim Goertel | Chief Marketing Officer – With a critical focus on enhancing client acquisition, retention and advocacy, Tim works cross-functionally with our consulting practices and product teams to ensure clients continue to receive best-in-class advisory services, technology solutions and workforce compensation and performance data.
- Sue Roeser | Chief Human Resources Officer – Committed to fostering a supportive and positive workplace where employee wellbeing, development and learning is a top priority, Sue is an accomplished HR executive who leads a number of strategic initiatives designed to enhance talent management, organizational culture and employee experience.
- Rachel Wilson | General Counsel – With more than 20 years of experience as a practicing lawyer, Rachel has advised some of the biggest names in health care on complex technology and commercial transactions. In her role, Rachel provides leadership with support and strategic counsel on a range of legal matters such as compliance, contracting, data use and sharing arrangements, intellectual property and more.
To learn more about SullivanCotter or Clinician Nexus, please visit us online or contact us via phone or email for more information:
- SullivanCotter, contact-us@sullivancotter.com, 888.739.7039
- Clinician Nexus, info@cliniciannexus.com, 888.254.3503
About SullivanCotter
SullivanCotter partners with healthcare and other not-for-profit organizations to understand what drives performance and improve outcomes through the development and implementation of integrated workforce strategies. Using our time-tested methodologies and industry-leading research and information, we provide data-driven insights, expertise and data products to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.
About Clinician Nexus
Clinician Nexus enables health care organizations to build thriving clinician teams with industry-leading technology products, workforce and compensation analytics, and automated workflow solutions. Backed by extensive technical expertise and industry-leading data, we deliver innovative approaches to help clients to plan, educate, and engage their clinical workforce at every stage of the lifecycle. We are committed to providing our clients with outstanding guidance and support as they focus on shaping the future of health care.
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INFOGRAPHIC | 2022 Health Care Management and Executive Compensation Survey
Understand the impact of a competitive talent market and organization-wide pandemic recovery efforts on healthcare executive compensation
Hospitals and health systems nationwide continue to face uncertainties in regard to inflation, labor costs, a competitive talent market, employee burnout, pandemic recovery and more.
As a result, health care organizations require executives with specialized skills and knowledge equipped to effectively lead through such unprecedented times, and are looking to balance the need for competitive executive recruitment and retention strategies with ongoing financial pressures. By maintaining competitive compensation for executives, organizations are able to effectively build back and restore performance and talent to pre-pandemic levels.
SullivanCotter’s Health Care Management and Executive Compensation Survey includes data from more than 3,000 organizations on nearly 42,500 individual managers and executives – providing health care organizations with critical compensation market data, information on key executive workforce practices, and insight into emerging industry trends.
The survey also provides detailed insight into base salaries, total cash compensation, annual and long-term incentives plans – including performance measures, eligibility and target and maximum opportunity awards paid. National compensation data is reported by organization type and size as well as region and subregion for hospitals.
The 2022 report is now available for purchase!
INFOGRAPHIC | 2022 APP Compensation and Productivity Survey
Gain important market insight into emerging APP compensation, pay practices and workforce trends
Advanced practice providers (APPs) continue to play an important role in enhancing patient access, lowering the cost of care, and addressing the growing physician shortage. As the talent market for these providers grows increasingly competitive, many organizations are reevaluating their APP compensation programs and care delivery models to better support recruitment and retention strategies.
SullivanCotter’s 2022 Advanced Practice Provider Compensation and Productivity Survey includes data from nearly 700 organizations on more than 100,000 individual APPs from across the country – providing health care organizations with critical compensation market data, information on key APP workforce practices, and insight into emerging industry trends.
The survey also provides detailed insight into CRNA compensation and pay practices. As the demand for the anesthesiology workforce continues to increase but provider supply remains flat or even starts to decline, hospitals and health systems are looking to reevaluate their CRNA compensation programs in order to remain competitive and address challenges related to recruitment and retention.
The 2022 report is now available for purchase!
Pay Equity and Living Wage
Pay Equity and Living Wage
Authored by SullivanCotter’s Michael O’Malley – Principal, Nanci Hibschman – Managing Principal and Not-for-Profit Practice Leader, and Amanda Wethington – Principal
There is a parable regarding a vineyard in which a landowner hires men throughout the day to work the land in exchange for a fair wage. Each person hired expects the same wage promised at the end of the day. That wage was paid to those who worked for different lengths of time. Naturally, those who worked longer hours complained but the landowner replied that he paid precisely what was promised.
This story illustrates two forms of pay equity.
One based on comparisons between the work inputs and outputs of other people and one based on expectations. In this instance, we will call the first form of equity “comparative” and the second “noncomparative.” In the case on “noncomparative” equity, if you are paid an amount that you think is right, what others get paid matters a little less. Conversely, if you are paid less than what you are expecting, then what others receive for like contributions pours salt on an existing wound.
Quite a bit of thought goes into what people think is an appropriate wage and how they form their expectations. For one, the perceived procedural integrity by which wages are set makes a difference as people are more inclined to accept their wage as fair if they agree with the process that was undertaken to set the wage in the first place. Secondly, like the landowner, wage offers and acceptances shape people’s expectations. Although workers receive what the employer promised, other factors can soon erode the perceived fairness of the deal once the work begins. The employer may have misrepresented, or the employee misunderstood, the exact nature of the work.
Additionally, employees may realize that the wage they agreed to work for is insufficient for their modest needs. In a way, the wage is seen as coercive. People need the money and accept work that fails to cover their current and future needs. The result of feeling stuck with an insufficient wage cannot easily be dismissed when an employee’s basic needs are left unmet.
The response and reaction to an insufficient wage can be both pragmatic and emotional. On the pragmatic front, people realize they cannot afford to keep the job and simply leave. A more emotional response is grounded in the belief that the wage is fundamentally unfair – which fuels ways that people try to reconcile this unfairness. Perceived injustices are exacerbated over time if others who do not appear to do or contribute more are receiving higher wages. Again, turnover is the most immediate and expeditious response – but there are other more extreme reactions such as corporate sabotage, employee theft, or unwanted viral video backlash.
So, what does a living wage do?
Establishing a living wage is an essential component of supporting employee well-being, enhancing internal equity, and elevating the operational efficiencies of organizations. For employers, it reduces turnover and heightens morale, organizational commitment, and productivity. It further reduces people’s penchant to compare themselves with others and lessens any perceived injustices. For the employee, it provides a more satisfying and healthier lifestyle by mitigating certain worries and uncertainties through a better standard of living. It allows people to be more fully present at work and home.
Legal minimum wages were initially designed to provide a wage floor that protected workers and assured a measurable quality of living. However, these wages have simply not kept pace with inflation or the changing nature of the workforce and fall short of meeting the current needs of employees. Providing a living wage fosters a multitude of organizational and personal benefits but its greatest virtue and soundest justification may be that it is simply the right thing to do.
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Looking to implement a living wage within your organization?
SullivanCotter works with mission-based clients to design a living wage program that aligns with important equity and inclusion initiatives and supports the evolution of the program as their organizations evolve.
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The Governance Institute | Executive Compensation in Pediatric Hospitals
Attracting and Retaining Key Leadership Talent in Pediatric Organizations
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In the current marketplace for talent, pediatric hospitals continue to experience challenges related to executive recruitment and retention and are growing increasingly concerned about burnout among experienced leaders, planned and unanticipated resignations, greater search firm activity, employment opportunities outside the healthcare industry, and remote work presenting more non-traditional employment opportunities.
In early 2022, SullivanCotter conducted a pulse survey to help pediatric hospitals understand how their peers are addressing 2022 executive salary increase budgets and incentive awards for FY2021 performance. It also highlights other actions organizations are taking to support recruitment and retention.
In an article written for The Governance Institute, SullivanCotter’s Tom Pavlik, Managing Principal, shares data from the pulse survey, highlights key participant responses, and provides actions for pediatric hospitals to consider as they address executive recruitment and retention in an increasingly competitive healthcare environment.
Looking for additional data and benchmarks?
SullivanCotter recently released its annual Health Care Management and Executive Compensation Survey Report.
This year's report includes data from more than 3,000 healthcare organizations on approximately 42,500 individual managers and executives. For more than 30 years, this survey has provided data-driven intelligence on executive and management compensation trends and pay practices to help inform impactful decision-making.
Pay Equity Analysis: Gaining More Than You Think
Pay Equity Analysis: Gaining More Than You Think
Authored by SullivanCotter’s Michael O’Malley – Principal, Nanci Hibschman – Managing Principal and Not-for-Profit Practice Leader, and Amanda Wethington – Principal
Many of us do not envy the work of employee compensation directors and administrators. They must maintain order and operational efficiencies amidst constantly changing demands and priorities. Jobs become “hot” while others grow obsolete. People come and go or change positions due to turnover, transfers, and promotions. Employees receive additional training and acquire valuable firm-specific knowledge over time and receive periodic pay adjustments based on merit or as counteroffers to retain their services. This dizzying array of changes necessitates frequent modifications to salaries and compensation structures.
What does a pay equity analysis have to do with this?
In addition to answering pivotal questions regarding the fairness of pay for protected groups, these analyses provide a deep dive examination into an organization’s pay practices that often cannot be seen with the naked eye.
SullivanCotter’s pay equity analyses frequently lead to additional commentary in the following areas:
Policy Confirmation. Normally, organizations like to see employees advance within their salary ranges as a function of time and performance. Given the many changes previously mentioned, we do not expect the association between pay and grade, years in the current role, and historical performance to be overwhelmingly precise. However, we do expect the analysis to show that compensation is influenced by these three components in a well-managed plan.
Structural Anomalies. Graphical representations of salaries frequently depict sections of organizations that stand out from others. We generally see four incidents of this:
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- Wage compression. Analyses show that people in adjacent grades or who have different lengths of service within the same grades have similar base salaries. This occurs when the internal market (e.g., pay raises) does not reflect true external market conditions and people entering the organization are paid the same or more than current employees with similar skillsets and lengthier tenures.
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- Hot Jobs. When organizations hire one person at a time, it can be easy to miss the cumulative effects of these decisions – especially when the hiring is decentralized. These seemingly one-off decisions make a systematic appearance in our analyses generally as clusters of wages that stand out from others. For example, hot jobs such as scarcer, technology-oriented roles push salaries higher and these seemingly isolated hiring decisions appear as collective aberrations.
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- Outliers. Our analysis often shows areas within the organization that just do not seem to conform to the existing salary structure despite many attempts to incorporate them properly. SullivanCotter often will flag certain sets of positions that appear misaligned with standard pay patterns. Those involved in broad-based pay programs often encounter difficulties with fitting new or unique roles into existing salary structures. In health care, advanced practice providers often require their own pay practices apart from other professionals.
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- Diversity. In the course of our pay equity analyses, we apply a number of different measures based on gender, race and other indicators of diversity to determine whether distributions across the organization are proportionate or not. Our analyses make it easy to see where different kinds of people reside within organizations and whether their career progression has similar trajectories or not.
Some of this information may open new lines of inquiry but, nevertheless, these studies offer a rare, in-depth look at the inner workings of organizational pay practices and how a host of tiny decisions may evolve into larger issues if they remain unrecognized and unmanaged.
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Need assistance assessing pay equity with your organization?
With years of industry experience and a deeply knowledgable team of compensation experts, SullivanCotter is uniquely positioned to address your pay equity needs.
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Modern Healthcare | 2022 Annual Executive Compensation Article
Health care organizations report changes in executive compensation to address competitive marketplace for leadership talent
SullivanCotter featured in Modern Healthcare's annual executive compensation issue
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With pandemic-related burnout and unplanned retirements both on the rise, healthcare organizations nationwide are balancing the need for competitive executive recruitment and retention strategies with ongoing financial pressures.
This year, the median base salaries for healthcare executives increased modestly while median total cash compensation grew at a higher rate as incentive award payouts reflect a recovery year from the onset of the pandemic.
Featuring data and insights from SullivanCotter's 2022 Health Care Management and Executive Compensation Survey, Modern Healthcare discusses the increasingly competitive marketplace for leadership talent and how it has impacted leadership compensation and pay practices this year.
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SullivanCotter recently released it's annual Health Care Management and Executive Compensation Survey Report.
This year's report includes data from more than 3,000 healthcare organizations on approximately 42,500 individual managers and executives. For more than 30 years, this survey has provided data-driven intelligence on executive and management compensation trends and pay practices to help inform impactful decision-making.
PRESS RELEASE | Health Care Executive Compensation
SullivanCotter's 2022 Health Care Management and Executive Compensation Survey Report highlights impact of the competitive talent market and pandemic recovery on executive compensation
Median base salaries increased by 4.5%
Chicago, IL | August 11, 2022
SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and data products for health care and not-for-profits, has released the findings of its 2022 Health Care Management and Executive Compensation Survey.
This year, the median base salaries for health care executives increased by 4.5%, reflecting an increasingly competitive marketplace for talent at hospitals and health systems nationwide. In addition, incentive award payouts reflect a recovery year from the onset of the pandemic. By maintaining competitive compensation for executives, organizations are able to effectively build back and restore performance and talent to pre-pandemic levels.
Incentive Awards
In 2021, incentive payouts for 2020 performance were below historical levels due to the unprecedented impact of the pandemic onset on both financial and operating performance. The 2022 survey, however, indicated that incentive payouts for 2021 performance returned to levels consistent with historical practices as financial and operating performance within the industry improved, increasing median total cash compensation (equal to base salary plus annual incentives) by 9.7%.
“Although total cash compensation for executives grew year over year, it is important to note that there were no shifts in annual incentive plan prevalence or award opportunity levels. The growth in reported total cash compensation is being driven by higher incentive awards that reflect improved organizational performance after a particularly challenging year. Thus, it shows that the performance-based incentive programs are operating as designed by tempering awards in challenging years and increasing them when performance improves,” said Bruce Greenblatt, Managing Director, SullivanCotter.
Base Salaries
Base salary increases provided to executives for 2021 were modest, with many organizations freezing executive salaries in response to the pandemic onset. In comparison, salary increases provided for 2022 rebounded due to successful business recovery efforts and high demand for talent that is outpacing supply due to burnout, retirements accelerated by the pandemic, and the need for highly qualified leaders to lead organizations through increasingly complex times.
As in previous years, median base salary increases reported in our 2022 survey for health system executives outpaced subsidiary hospital executives by nearly 1.0% due to the larger scope and more complex nature of a system-wide role. Additionally, while executive salary increases rebounded, the overall median annual executive salary increase of 4.5% is less than the annual growth seen in many clinical roles (5% or higher), including Registered Nurses (over 8%), as reported in our 2022 surveys. This reflects organizations’ strategy to reward staff for the day-to-day work that has put extra demand and stress on teams, as well as supporting recruitment and retention efforts.
Planning for 2022 and Beyond
Hospitals and health systems still face uncertainties in regard to inflation, labor costs, a competitive talent market, employee burnout, and more. “While these are industry-wide issues affecting the clinical workforce and staff-level positions as well, organizations must be acutely aware of the impact these challenges may have on executive compensation programs and recruiting and retention strategies. This is particularly important as they look to limit disruption and remain focused on providing the highest quality patient care, improving employee engagement, and advancing other important initiatives designed to support DE&I and ESG,” said Ted Chien, President and Chief Executive Officer, SullivanCotter.
As it relates to executive compensation and talent strategy, organizations should consider the following:
- With inflation and the talent shortage, anticipate that salary increase budgets for 2023 will likely need to exceed recent norms of 3.0% in order to retain key talent, mitigate inflation effects, and address issues of pay equity.
- Establish annual incentive plan goals and performance levels recognizing the current challenges (engagement, patient satisfaction, financial and growth) with goal setting while also ensuring that these measures align with future priorities (operational sustainability, DE&I, and ESG).
- Understand the need for experienced leaders to address response/recovery efforts as well as access, affordability, and community wellness needs. Differentiate rewards so limited dollars are directed to address retention/recruitment and reward high performers critical to the organization’s success; segment total rewards approaches as needed to meet specific business unit needs – thus moving away from a “one size fits all” approach.
- Make a point to regularly review and refine succession plans; memorialize professional development plans; ensure a strong talent pipeline; determine gaps where external hires may be necessary. Focus on internal leadership development and talent-building where possible to help engage, retain and grow the current leadership team and potentially reduce costs related to external recruitment.
- Consider all employees’ well-being needs, such as time-off and mental health benefits.
SullivanCotter’s 2022 Health Care Management and Executive Compensation Survey provides critical benchmarking data on compensation levels and pay practices. As the largest and most comprehensive resource of its kind for hospitals and health systems nationwide, the survey includes information from more than 3,000 organizations representing roughly 42,300 individual incumbents.
About SullivanCotter
SullivanCotter partners with health care and other not-for-profit organizations to understand what drives performance and improve outcomes through the development and implementation of integrated workforce strategies. Using our time-tested methodologies and industry-leading research and information, we provide data-driven insights, expertise, and data products to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision, and values.
For more information on SullivanCotter’s surveys, please visit our website at www.sullivancotter.com, or contact us via email or by phone at 888.739.7039.
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