INFOGRAPHIC | Benchmarking Resources for the Medical Group Workforce

Gain access to critical medical group benchmarking data for the entire health care workforce - including executives, physicians, advanced practice providers and other health care staff

This year more than ever, medical groups require access to critical data-driven insights as they look to address the impact of COVID-19 on workforce compensation and productivity, prepare for the 2021 Physician Fee Schedule changes, and balance the need for competitive total reward programs against pressure on operating margins.

Learn more about SullivanCotter’s growing suite of medical group benchmarking resources for all your workforce needs – including annual compensation data and incentive award opportunities for executives, detailed productivity reporting for physicians and advanced practice providers, and market data by organization size, region, state and more for other health care staff positions.

Our suite of 2021 health care compensation surveys are now open for participation! 

View highlights from the 2020 results to learn more about SullivanCotter's proprietary benchmarking data and resources available to medical groups.

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ARTICLE | 10 Best Practices for the Board's Human Capital Committee

Featured in McDermott Will & Emery's new e-book from its Governing Health series

SullivanCotter's Kathy Hastings, Executive Workforce Practice Leader, and Tim Cotter, Manging Director, have contributed to a new e-book from McDermott Will & Emery entitled Key Agenda Items for Board Committees: A Briefing for Governance and Executive Leadership.

Their chapter focuses on the board human capital committee and the key role it plays in guiding human resources strategies as health care organizations face today's challenges. Human capital is critical to organizational strategy, and the committee should test whether the components of the human capital strategy – namely people, process and technology practices – can sustain the organization.

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INFOGRAPHIC | 2020 Endowment and Foundation Investment Staff Compensation Survey

Featuring data from more than 50 not-for-profit organizations nationwide

This survey offers a comprehensive look into compensation and pay practices for investment staff positions among college and university endowments, private foundations, health care and other not-for-profit organizations. It also includes detailed insight into the chief investment officer position.

View highlights from the 2020 results, including average year-over-year increase in base salary for key investment positions, incentive compensation as a percentage of salary for the chief investment officer position, and investment office size by asset category.

Don't miss your chance to participate - the 2021 survey is now open! The final deadline to submit is February 26, 2021.

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PRESS RELEASE | Results from SullivanCotter's Annual Health Care Executive Compensation Survey

Offering insight into pandemic-related pay actions and considerations for 2020 and beyond as health care organizations plan for what lies ahead

November 5, 2020 – ChicagoSullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs, workforce solutions, and technology and data products for the health care industry and not-for-profit sector, recently released results from its 2020 Manager and Executive Compensation in Hospitals and Health Systems Survey which is now in its 28th year. This year’s results include information from more than 2,300 organizations. More importantly, the survey contains the last set of benchmark data compiled prior to the onset of COVID-19 and provides important pre-pandemic reference points for assessing executive compensation programs.

“While pay actions are being impacted by the pandemic, the foundational structure of executive compensation programs has generally remained unchanged. The 2020 survey data can be used to assess the competitiveness of base salaries, the level of incentive opportunities and other program design considerations. In light of the impact of the pandemic on business operations, now is an appropriate time to evaluate the broader implications of COVID-19 on your talent strategy, compensation philosophy and program design to ensure they reflect your organization’s new priorities,” said Tom Pavlik, Managing Principal, SullivanCotter.

Executive Base Salaries in 2020

In recent years, executive salaries were trending upward due to the focus on recruitment and retention of key leadership talent and an increasingly complex health care market. When comparing data reported by organizations that participated in SullivanCotter’s survey in both 2019 and 2020, median base salaries going into 2020 increased at a rate of 3.4% to 5.6% for the most senior executives of independent health systems (Vice Presidents, Senior Vice Presidents, CFOs, COOs and CEOs) as opposed to 0.8% to 4.1% for those executive positions at system-owned hospitals.

However, due to the financial impact of COVID-19, many organizations have implemented temporary executive base salary reductions. According to SullivanCotter’s COVID-19 Executive and Employee Compensation Practices Survey series, which was conducted between April 2020 and August 2020 to provide insight into the current practices of more than 100 large health systems, only 14% of organizations were considering or had implemented executive base salary reductions as of April. By May, this number had risen to 31%. Through August, implemented salary reductions reached 45%. However, of this 45%, nearly half had already reinstated the pre-pandemic salaries with the remainder expected to do so by the end of the year.

Executive Base Salary Increase Budgets

An analysis of the survey data indicates that, prior to COVID-19, median salary increase budgets for health care executives were expected to remain consistent with recent years at 2.7% for independent health system executives and 3.0% for system-owned hospital executives. The pandemic has impacted the financial condition of many organizations and is moderating salary increase plans for FY2021.

According to SullivanCotter’s proprietary COVID-19 research, about 40% of organizations had determined their FY2021 executive salary increase budgets by mid-August. The preliminary median executive salary increase budget is 2.5%, with 15% planning to freeze executive salaries. The other 60% of organizations had not yet determined their salary increase budget, and 20%-25% are delaying the timing of these increases. These figures may change over time as financial performance will impact the ability to fully fund planned budgets, and it is anticipated that more organizations may consider executive salary freezes for FY2021.

Executive Annual Incentive Plans

Executive annual incentive plans (AIPs) are still the norm as organizations are increasingly focused on system-wide alignment and pay-for-performance. Prior to COVID-19, 89% of independent health systems and 67% of system-owned hospitals utilized AIPs with award opportunities varying by health system size based on net revenue.

According to SullivanCotter’s research, however, COVID-19 has had a significant impact on executive incentive plans for FY2020. As of mid-August, more than half of the participating organizations had implemented or were still considering changes to FY2020 plans. While one-third did not yet know how they will handle their FY2020 annual incentive payouts, approximately 20% are eliminating or considering eliminating payouts, nearly 30% expect to pay below target, and only about 20% expect to pay at target or above.

Considerations for 2020 and Beyond

As hospitals and health systems plan for what lies ahead and look to support financial sustainability and mitigate risk, organizations should consider both market practices and their individual financial circumstances when determining their executive compensation and workforce-related actions moving forward.

“SullivanCotter’s 2020 survey reflects the most recent normative year prior to COVID-19. Due to the current pandemic and the extremely dynamic environment, the survey data should be used thoughtfully, with appropriate context, and with sound business judgement as you are planning and considering your pay decisions for FY2020 and beyond,” said Bruce Greenblatt, Managing Principal, SullivanCotter.

There are a number of important executive compensation considerations for organizations to consider as they move forward:

  • Be mindful of how to appropriately use 2020 survey data. Understand the timing of the data and consider what you are trying to assess before using them. The data can be helpful in benchmarking the competitiveness of compensation program elements and award opportunities.
  • Rely on sound business judgement and discretion when evaluating base salary actions and incentives for FY2020.
  • Plan to revisit incentive performance goals for FY2021 to ensure they are tailored to the current environment.
  • Assess the broader impact of COVID-19 on executive talent strategy and review the compensation philosophy and program design.
  • With continued uncertainty in FY2021 and beyond, remain mindful of the environment and be flexible.

For more information on SullivanCotter’s surveys, please visit our website at www.sullivancotter.com, email us or contact us by phone at 888.739.7039.

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, data and technology products to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.


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INFOGRAPHIC | 2020 Manager and Executive Compensation in Hospitals and Health Systems

Considerations for using the 2020 survey data in light of COVID-19

As the last set of benchmark data available prior to the onset of COVID-19, SullivanCotter shares results from its 2020 Manager and Executive Compensation in Hospitals and Health Systems Survey. This analysis also includes insight into pandemic-related pay actions, important considerations for 2020 and beyond as organizations plan for what lies ahead, and using this year's benchmark data to help navigate future executive compensation decisions in light of COVID-19 and other market dynamics.

Now in its 28th year, this survey is the largest and most comprehensive of its kind for hospitals and health systems nationwide. Information was collected from over 2,200 organizations comprising 460 health systems and 1,800 hospitals and includes data for more than 42,000 individual managers and executives.

The 2021 survey is now open for participation!

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Modern Healthcare | 2020: Annual Executive Compensation Article

SullivanCotter helps to examine how health care organizations are adapting their executive compensation practices in response to COVID-19

As costs surge and revenue declines for health care organizations amidst the COVID-19 pandemic, many are re-evaluating their executive compensation programs as they focus on organization-wide equity, recovery and what lies ahead in such an uncertain environment.

Featured in an August 2020 edition of Modern Healthcare, SullivanCotter's Bruce Greenblatt and Tom Pavlik share data from SullivanCotter's recent COVID-19 research and highlight some of the key executive compensation changes being implemented or considered in response. This includes actions on base salaries, adjustments to current year incentives to account for the impact of the pandemic, and adjustments to future compensation programs and talent strategies to incorporate recovery considerations and ongoing uncertainty.

In order to focus on the need for financial sustainability, cost efficiencies and revenue growth, all of which have been accelerated by COVID-19, organizations should adopt a more flexible and fluid approach as they move into 2021 and beyond.

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PRESS RELEASE | SullivanCotter Launches Suite of Health Care Benchmarking Solutions

SullivanCotter Launches Innovative Suite of Products to Help Benchmark Health Care Workforce Compensation and Clinical Productivity

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July 30, 2020 – Chicago – SullivanCotter, the nation's leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, is pleased to announce the launch of Benchmarks360TM. Powered by SullivanCotter's proprietary survey data and research, Benchmarks360TM is a suite of intelligent, web-based products that enables health care organizations to analyze and visualize workforce compensation and clinical productivity.

Designed to address enterprise-wide benchmarking needs for employees at all levels – including executives, physicians, advanced practice providers and other clinical and non-clinical staff positions – Benchmarks360TM provides critical industry-leading data, analyses and reporting to support the compensation decision-making process in an increasingly complex operating environment.

"Amidst a rapidly evolving global pandemic, hospitals and health systems are struggling to navigate a number of unprecedented financial and workforce challenges. Strengthening compensation practices and clinical workforce productivity through unique, data-driven intelligence and insights can help to support long-term sustainability in today's ever-changing marketplace. With the ability to conduct a wide variety of quantitative reviews and custom benchmarking analyses, Benchmarks360TM allows organizations to interactively assess clinical productivity and changes in compensation against national market data," said David Schwietz, Chief Information Officer, SullivanCotter.

As one of the most comprehensive products of its kind, it includes two distinct modules to help balance pay and clinical productivity across the organization:

Workforce Compensation and Clinical Productivity Manager

Compare your organization's compensation and clinical productivity benchmarks to the nation's largest health systems and medical groups. Utilize SullivanCotter's proprietary benchmarking information, representing over one million total incumbents, along with other third-party data sources. This module comes in both a Standard (offered with the purchase of SullivanCotter survey data) and a Pro version (upgrade available for additional licensing fee).

Clinical CPT Manager

Analyze and measure your organization's Current Procedural Terminology (CPT) coding distribution against national physician and advanced practice provider clinical benchmarks at the specialty, work RVU and CPT level. This module can be purchased and added separately.

Benchmarks360TM is offered exclusively to organizations who purchase SullivanCotter survey reports. To learn more, including important licensing information and a full list of features and functionality, visit sullivancotter.com/benchmarks360 or call 888.739.7039.

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 and expertise to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.


WEBINAR RECORDING | COVID-19: Managing Human Capital and Ensuring Sustainability

Hosted by the Health Forum/American Hospital Association

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Hospitals and health care systems across the United States face significant financial and workforce challenges resulting from the COVID-19 pandemic. As this situation continues to evolve, organizations will need to review compensation-related practices across their workforce to identify modifications required to support changes in deployment and organizational sustainability while also ensuring the wellbeing of employees and patients.

In this webinar, you’ll learn how health care organizations are adjusting their compensation practices and human capital strategies in response to COVID-19. We will present data from recent SullivanCotter research highlighting the impact of COVID-19 on related practices for executives, physicians, advanced practice providers (APPs) and other health care employees. We will also share SullivanCotter’s interpretation regarding how the human capital landscape may change key components of talent management and total rewards after the crisis subsides.

This session includes a discussion of:

  • Emerging workforce compensation practices that organizations have implemented or are considering implementing to help address the financial and operational issues related to COVID-19
  • Specific practices for physicians and APPs, such as premium pay for those on the front lines, salary guarantees for other providers, paid time off (PTO), redeployment, extra shifts and more
  • Specific practices for executives and other employees, such as emergency PTO, premium pay, deferring salary increases or implementing temporary reductions, revisiting incentive plans to reflect current situation, re-evaluating retention incentives and more
  • How changes in the regulatory landscape have already impacted or may impact decision-making around compensation practices
  • What the post-COVID-19 human capital landscape may look like

Navigating the Uncertainty of COVID-19

Considerations for the Not-for-Profit Board Compensation Committee

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The COVID-19 pandemic is impacting the not-for-profit sector in a myriad of ways. The crisis is placing an enormous strain on both financial and workforce resources by creating uncertainty on current/future revenue, employee safety and job security.

The Board Compensation Committee serves a critical governance role in organizational efforts to navigate uncertainty by advising management on talent risks, supporting a focus on the key success factors to survive and recover from this crisis, and ensuring that the executive compensation program reflects best market and governance practices.

In this article, SullivanCotter addresses some of the compensation-related issues these organizations are facing and provides a number of guiding principles for the Compensation Committee during this unprecedented time.


Addressing COVID-19: Key Considerations for the Board Compensation Committee

Enhancing Board Governance of Talent Management and Compensation During COVID-19

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The COVID-19 crisis is impacting not-for-profit hospitals and health systems in a myriad of ways. The crisis is placing an enormous strain on both financial and workforce resources by creating uncertainty regarding current/future revenue, volume, employee safety and job security. The Board Compensation Committee (Committee) serves a critical governance role in the organization’s efforts to navigate uncertainty by advising management on talent risks, supporting a focus on the key success factors to survive and recover from this crisis, and ensuring that - if scrutinized - the executive compensation program reflects best governance practices, given market dynamics and the need for Compensation Committees to move quickly.

Guiding principles for the Committee in these unpredictable times may include:

  • Relying on sound business judgment and discretion in compensation decision-making by considering organizational finances, employee health and safety, broader workforce impacts (e.g., furloughs, layoffs), talent risk and burnout, local and industry market responses and competitive market positioning.
  • Basing decision-making on the organization’s specific circumstances with due consideration of market practice intelligence and optics.
  • Being flexible to adapt to a dynamic and fluid environment that will continue to evolve over the coming months.
  • Considering the organization’s compensation strategy and the short/long-term impact of major changes to the compensation program in response to the crisis.
  • Defining key success factors for managing through this crisis, and anticipating the post-crisis changes to strategic and operating priorities, in preparation for discussions on incentive plans that may no longer have relevance due to the disruption caused by COVID-19.
  • Balancing internal and external perceptions of compensation decisions, especially if the organization is receiving financial assistance and/or implementing furloughs/layoffs, with the need to honor previous compensation commitments.
  • Mitigating any immediate key talent risks while maintaining a long-term focus on talent retention and
    succession planning.
  • Ensuring transparency to the full Board on any compensation actions taken during the crisis.

SUCCESSION PLANNING

If within the Committee’s purview, consider the development of an emergency succession plan that identifies the individuals who can serve as interim replacements for key executives who may require an extended quarantine period or experience severe burnout. It is also important to consider whether the current succession plan requires any changes given the emerging organizational challenges as well as the skill sets and qualifications of the current candidates. The crisis will allow for the identification of individuals who are stepping up and exhibiting leadership, which will help to inform the Committee’s succession planning efforts. Prepare for a longer-term review of the talent strategy that will be needed to adapt to and thrive in the post-COVID-19 environment as strategic priorities shift and operating models change.

COMPENSATION DECISIONS DURING COVID-19

The Committee should consider the competitiveness of total compensation while also evaluating retention risks. This requires a facts-and-circumstances approach when evaluating potential compensation reductions. If a long-service executive’s total compensation is high relative to the market with limited variable compensation, the impact of a salary reduction is much different than in a situation involving a short-service executive with below-market compensation and higher variable pay (with incentives unlikely to be paid).

Consider market intelligence on COVID-19-related compensation practices of similarly-situated organizations. To date, the not-for-profit health care sector’s actions related to temporary executive salary reductions, increased deferrals and salary freezes have been modest compared to the more aggressive approach of publicly-held companies. These practices are subject to change as financial challenges increase and the impact on the health care workforce continues to evolve.

A major focus area for the Committee is the annual incentive plan given the economic uncertainty facing hospitals and health systems. Since incentive plans can be helpful in focusing executives on key priorities, rather than suspending or eliminating the plan, give consideration to a more discretionary and flexible approach to performance measurement. This may include re-setting goals, assessing performance pre- and post-COVID response, eliminating irrelevant goals, and/or including measures that focus on restarting the organization and near-term recovery. If utilizing a discretionary approach, guiding principles should be established to help inform decision-making. In some cases, the Committee would be well-served to delay the finalization of incentive measures and goals for forthcoming incentive plans until there is less organizational and market uncertainty. The timing of the conclusion of the performance period will impact the Committee’s options. Those with calendar year-ends may have more time to plan.

While most organizations have not taken any action to date regarding long-term incentive plans (LTIPs), we expect that, similar to annual incentive plans, the negative financial impact and potential reassessment of strategic plans will impact future goal setting and LTIPs that are already in place. As some organizations are considering postponing the implementation of new LTIP cycles, most are waiting until the crisis starts to subside before making any decisions on these plans.

Given the number of new and emerging financial challenges, the Committee should explore actions that will help to control costs without creating significant talent retention risks or sending unintended messages to the workforce. In addition, such actions need to be assessed in light of any implications related to employment agreements and 457(f) and 409A deferred compensation rules.

If your organization is considering loans and loan guarantees available under the CARES Act or the Main Street Lending Program (as available to not-for-profits), assess the required compensation restrictions and their implications for executive and physician recruitment and retention for individuals with CY 2019 total compensation exceeding $425,000.

ACTIONS FOR ENHANCING RECOVERY POST-COVID-19

After addressing issues requiring immediate attention, the Committee should consider actions for enhancing organizational recovery. The definition of performance in the new environment post-crisis continues to evolve, and it may be appropriate to refine the way organizational and individual performance is assessed. The Committee should work with management to define both short and long-term goals required to support recovery (e.g., cost reductions, financial stability, workforce engagement, care redesign) and, if appropriate, include these in incentive plans. Given changes in the delivery model, it may be time to assess organizational structure, spans of control and the scope and definition of various executive roles. Underlying all these actions is the need to identify critical talent and update succession plans and talent management strategies.

COMPENSATION COMMITTEE GOVERNANCE

The Committee should review approval procedures and processes and modify if necessary to ensure critical executive and physician compensation arrangements can be acted upon in a timely fashion. The Committee should consider adjusting its calendar to include more regular discussions on compensation and talent implications over the coming months since the environment is dynamic and circumstances are rapidly changing. If virtual Committee meetings are being considered for the first time, the General Counsel should ensure the desired method is acceptable under state law.

PHYSICIAN COMPENSATION

The Committee should review approval procedures and processes and modify if necessary to ensure critical executive and physician compensation arrangements can be acted upon in a timely fashion. The Committee should consider adjusting its calendar to include more regular discussions on compensation and talent implications over the coming months since the environment is dynamic and circumstances are rapidly changing. If virtual Committee meetings are being considered for the first time, the General Counsel should ensure the desired method is acceptable under state law.

MOVING FORWARD

Although the future is uncertain, an active and focused Compensation Committee will help to ensure that the organization can retain, manage and develop highly effective individuals for key roles who can lead the way in the post-crisis world. The market dynamics around executive compensation are very fluid. Any major program design changes should be carefully considered before implementation as this may impact leadership retention, recruitment and succession planning initiatives in an environment where exceptional health care leaders will be highly sought after.


INFOGRAPHIC | COVID-19 Executive and Employee Compensation Practices Survey

August 2020 - Market Response to COVID-19: Executive and Employee Compensation

In response to COVID-19, hospitals and health systems have taken various actions related to compensation and workforce practices to help mitigate certain financial challenges and plan for the “new normal.” As the pandemic continues, organizations are starting to revert to pre-COVID-19 compensation levels while at the same time preparing for potential future surges by building a more flexible workforce.

SullivanCotter’s COVID-19 Executive and Employee Compensation Practices Survey series, which includes data from 108 hospitals and health systems, highlights the compensation and workforce-related actions organizations have implemented or are considering.

We expect that workforce practices will continue to evolve as the calendar year-end approaches and organizations begin planning for 2021. In order to keep health care organizations up to date on emerging trends related to COVID-19, we will monitor developments in real time.

Please note: Data reflect responses as of August 13 - 20, 2020.

You can also view the May and April data as a point of comparison.

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PRESS RELEASE | SullivanCotter Welcomes Health Care Industry Consultant Russell L. Wilson

Leveraging more than 12 years of industry insight and first-hand knowledge of the evolving health care environment

March 17, 2020 – Chicago – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of total rewards programs and workforce solutions for the health care industry and not-for-profit sector, welcomes new Principal Russell L. Wilson to the firm’s Executive Workforce Practice.

Russell is an industry expert with over 12 years of experience in advising leading health care organizations on key issues in talent management and total rewards. Leveraging this deep insight and first-hand knowledge of the evolving health care environment, Russell leads a number of client consulting teams in the development of executive compensation strategies designed to drive performance and enhance organizational outcomes.

“The role of the health care executive in today’s operating environment is changing as the principles of value-based care continue to take shape. To help advance key system-wide objectives, leadership is now tasked with developing targeted approaches to improving quality, outcomes and performance across the entire care continuum. Designing integrated talent management and total rewards strategies to support these goals is critical, and Russell will play a vital role as a trusted advisor in helping our clients to implement customized programs aligned with their mission, vision and values,” said Ted Chien, President and CEO, SullivanCotter.

As a member of the firm’s Executive Workforce Practice, Russell works closely with hospitals, health systems and medical groups nationwide to develop long-standing relationships and understand organizational needs and objectives in the ever-changing marketplace. He specializes in aligning executive pay and performance, including short- and long-term incentive plans, with an organization’s strategic initiatives and advises on implementation to help ensure the delivery of competitive and sustainable workforce solutions. Russell also works directly with boards and compensation committees to provide education on best practices for effective and compliant executive compensation approaches, decision-making processes and governance procedures.

Prior to joining SullivanCotter, Russell served as a senior director at global consulting firm where he led talent and rewards for the Health Care Provider National Industry Team.

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 and expertise to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.

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Health Care Executives: 2020 Actions for the Board Compensation Committee

Take time in 2020 to reexamine your executive compensation program

The health care sector continues to undergo unprecedented transformation, and the challenges faced by not-for-profit hospitals and health systems are not abating. As organizations look to navigate these changes, the board compensation committee is well served to evaluate the impact of this rapidly evolving environment on the executive compensation program and related committee practices.

Periodic assessment is critical to ensure compensation programs and talent strategies remain aligned with organizational goals and objectives.

Featured in the March edition of the American Hospital Association's Trustee Insights, SullivanCotter highlights a number of important considerations for the compensation committee to focus on in today's complex operating environment.

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PODCAST | Executive Compensation Committee Update

Tim Cotter featured in McDermott Will & Emery's Governing Health Podcast Series

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Health care continues to evolve at a rapid pace, and executives with the skills and competencies to navigate complex change and lead transformation are in high demand. As a result, boards of directors are increasingly focused on the supervision, compensation and retention of the senior executive leadership team.

In this episode, the first in a two-part series, Michael Peregrine welcomes Tim Cotter, Chairman and Managing Director of SullivanCotter, and Ralph DeJong, Partner at McDermott Will & Emery, for a discussion on the latest trends and developments impacting the executive compensation committee's decision-making process.

This episode includes a discussion of the following:

  • Where health care executive compensation is trending in 2020
  • Impact of today's high CEO turnover on board oversight standards and talent retention practices in health care
  • How coordination between the executive compensation committee and other board-level committees is increasing
  • Impact of certain environmental factors on health care executive compensation decisions

PRESS RELEASE | Industry Disruption and New Talent Requirements are Impacting Health Care Executive Pay

Results from the 2019 Manager and Executive Compensation in Hospitals and Health Systems Survey

November 4, 2019 – Chicago – SullivanCotter, the nation’s leading independent consulting firm in the assessment and development of rewards programs and workforce solutions for the health care industry and not-for-profit sector, recently released survey results showing that industry disruption and new talent requirements are impacting executive compensation levels and incentive programs.

The drivers of these changes are: (1) increased complexity of health care organizations due to consolidation, mergers and acquisitions, and new partnerships; (2) changing models of care, as organizations transform to integrate care across the continuum, enhance access, deliver an improved patient experience, and focus on population health/value based care; (3) pressures for cost efficiency; and (4) entry into new businesses to pursue revenue diversification and growth. C-suite leaders of health care organizations must possess the skills and competencies to manage the increased complexity, uncertainty and change. Proven talent is in high demand. Aggressive senior leadership recruitment and retention efforts are being observed in the market, particularly among the largest organizations, which is causing upward pressure on pay. At the same time, less senior roles within health systems and leaders of system-owned entities are experiencing less upward pressure on compensation due to the operational focus of these roles and more talent availability. There is also a growing emphasis on performance-based compensation for senior leaders to tie rewards to attaining short-term and long-term goals.

An analysis of the survey data indicates that median base salaries for the most senior executives of independent health systems with enterprise-wide responsibility (CEOs, COOs and CFOs) increased at a rate of 3.5% to 4.0%, versus 3.0% for these same roles at system-owned hospitals. For senior vice presidents, however, median base salary increases were more aligned at 3.1% for independent health systems and 3.0% for system-owned hospitals.

When considering organization size, salaries are rising faster for CEOs, COOs and CFOs at larger, more complex organizations. For health systems with more than $3B net revenue, median base salaries for these top executives rose between 4% and 5%, compared to 3.0% to 3.5% for smaller independent health systems with less than $3B net revenue. The median change in salaries for management, vice president, and senior vice president roles across both systems and hospitals was almost consistently 3.0% across the board (except senior vice presidents of larger health systems, which was 3.5%).

In addition, performance-based incentive levels are increasing for senior health system leaders. In most executive roles, total cash compensation (TCC, equal to base salary plus annual incentives) increased faster than base salary. Additionally, changes in TCC differed by type of organization, with health systems rising faster than system-owned hospitals. Median change in TCC for CEOs, COOs, CFOs and senior vice presidents at independent health systems ranged from 4.7% to 6.5%. In contrast, the median increase for these roles at system-owned hospitals ranged from 3.0% to 3.9%. As with base salaries, both the level of senior executive TCC increases and target incentive opportunities were higher for larger independent health systems (i.e. revenues greater than $3B) compared to smaller ones.

Furthermore, larger health systems use long-term incentive plans (LTIPs) more commonly for top executives to support the attainment of critical organization-wide objectives. Among health systems with greater than $5B in net revenue, 47% utilize LTIPs, versus 30% for health systems with greater than $1B in net revenue. “Large health systems are shifting their performance focus from individual facility success to measuring outcomes system-wide in the areas of population health management, alignment, integration, quality/patient safety and financial stewardship. Well-designed annual and long-term incentive programs can be effective in supporting these efforts and driving desired performance outcomes,” said Bruce Greenblatt, Managing Principal, SullivanCotter.

“We are seeing upward movement in compensation for health system executive positions, especially those in larger health systems and those located in cities with a high cost of living, reflecting the highly competitive market for talent and the difficulties faced by these organizations to attract talent. Increases are more modest for hospital executive positions, especially those at system-owned hospitals. This speaks to the broader availability of talent for these positions and the increasing operations focus at the hospital-level as shared services and administrative functions are aligned at the system-level,” explains Tom Pavlik, Managing Principal, SullivanCotter.

SullivanCotter’s 2019 Manager and Executive Compensation in Hospitals and Health Systems Survey is now in its 27th year.  It provides critical benchmarking data on compensation levels and pay practices, and is the largest and most comprehensive of its kind for hospitals and health systems nationwide. The survey includes data from over 2,200 organizations, comprising 460 health systems and more than 1,800 hospitals, and captures information for more than 42,000 incumbents. For more information on SullivanCotter’s surveys, please visit our website at www.sullivancotter.com, email us at surveys@sullivancotter.com or contact us by phone at 888.739.7039.

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 and expertise to help organizations align business strategy and performance objectives – enabling our clients to deliver on their mission, vision and values.

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INFOGRAPHIC | 2019 Manager and Executive Compensation in Hospitals and Health Systems

Evolving executive compensation and performance programs

With a renewed focus on executive talent strategy and performance, health care organizations continue to evolve their compensation programs to keep pace with a rapidly changing industry. Challenges such as ongoing consolidation, the transition to value-based care, downward pressure on reimbursements, and rising consumerism and patient engagement require thoughtfully designed programs and pay practices in order to align executive compensation with overall organizational objectives.

View related highlights from SullivanCotter’s 2019 Manager and Executive Compensation in Hospitals and Health Systems Survey. Now in its 27th year, this survey is the largest and most comprehensive of its kind for hospitals and health systems nationwide. Information was collected from over 2,200 organizations comprising 460 health systems and 1,800 hospitals, and includes data for more than 42,000 individual managers and executives.

Don't miss your chance to participate. The 2020 survey is now open!

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Financial Investment News | Study Reveals Compensation Levels for Nonprofit Investment Staff

Driven by the demand for talent across the not-for-profit sector

In a recent article from Financial Investment News, SullivanCotter discusses how performance-based compensation continues to be a key component of pay for investment staff at private foundations and university endowments. The article features new data from SullivanCotter's 2019 Endowment and Foundation Investment Staff Survey as well as insights from Not-for-Profit Practice Director Nanci Hibschman.

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Modern Healthcare | 2019: Annual Executive Compensation Article

Hospitals and health systems focus on annual and long-term incentive strategies to help attract, retain and engage key executives

UPDATE: Don't miss the 2020 article


The industry goals of improving quality, access and satisfaction while also reducing costs remain a top priority in the transition to value-based care.  Hospitals and health systems continue to explore bold new ideas impacting who administers care and how it is delivered, and must have executive leadership in place with the skills and experience necessary to lead such transformation.

With qualified talent in short supply as roles and responsibilities expand, a more deliberate approach to attracting, retaining and engaging key executives is required. Aligning pay with performance is critical, and organizations continue to focus on annual and long-term incentive strategies in order to keep pace in a rapidly evolving health care environment.

Learn more from Modern Healthcare's annual executive compensation article, featuring data from SullivanCotter's 2019 Manager and Executive Compensation in Hospitals and Health Systems Survey and insights from Managing Principals Bruce Greenblatt and Tom Pavlik.

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INFOGRAPHIC | 2018 Not-for-Profit Manager and Executive Compensation Survey

Featuring compensation and benefits data from 121 different not-for-profit organizations

Competitive compensation, benefits and talent strategies are essential to delivering on the mission of high-performing not-for-profit organizations. As organizations look to remain competitive in today's complex operating environment, attracting, retaining and engaging key talent is both a top priority and a constant challenge. Access to the right data is critical, and understanding key compensation benchmarks and pay practices can help to address the complexities that mission-based organizations are facing.

View highlights from the results of our 2018 Not-for-Profit Manager and Executive Compensation Survey, which features data from 121 organizations and focuses exclusively on compensation and benefits practices in service and charitable organizations, trade and professional associations, research institutes, health plans, education and more.

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INFOGRAPHIC | 2018 Benefits Practices in Hospitals and Health Systems Survey

INFOGRAPHIC | 2018 Benefits Practice in Hospitals and Health Systems Survey

Data to to benchmark executive, physician and employee benefits programs

Uniquely focused on only hospitals and health systems, this survey helps organizations address challenges related to executive, physician and employee benefit programs. This includes comprehensive benchmarking data and insights as it relates to optimizing benefit offerings, implementing retirement plans for evolving executive and physician roles, and keeping pace with emerging trends in paid time off allowances, continuing medical education, severance policies, disability programs and more.

View highlights from two different sections of SullivanCotter’s 2018 Benefits Practices in Hospitals and Health Systems Survey, featuring data from more than 200 health care organizations.


Executive Benefits Practices

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Physician Benefits Practices

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