SullivanCotter Co-Sponsors "Governance in Large Nonprofit Health Systems" Study

In the United States, the health care field and society-at-large are in the midst of enormous turbulence. An aging and increasingly diverse population, global and nationwide economic problems of unprecedented complexity, a federal government beset with political conflicts that harm its ability to address important issues, growing evidence of major disparities in health care access, affordability, and quality, and the continuing explosion in medical science and technology are among the powerful forces that are affecting health care providers, payors, and consumers.

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SullivanCotter's Article "Life Insurance Versus Traditional Deferred Compensation Designs: 7 Key Questions" Published in Becker's Hospital Review

Life insurance has often been marketed as a tax-efficient way to minimize or avoid the solvency risk and "substantial risk of forfeiture" required by traditional deferred compensation designs in tax-exempt organizations. Split-dollar life insurance was once the answer: What could be better than the employer paying premiums, then getting those premiums back later? For many participants in these plans — and the sponsoring employer — it was too good to be true, with many employers taking large financial losses and participants not receiving the anticipated benefit.

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David Cohn describes "Fiduciary Responsibilities: Understanding the Risks" in Enrolled Actuaries Report

Michael Holderman, a senior consultant at Towers Watson in Charlotte, N.C., WilliamBelanger, a senior consultant at Towers Watson in Philadelphia, and Keith Mong, an attorney with Buchanan Ingersol and Rooney in Washington, discussed some of the hot topics in fiduciary and governance oversight that currently are bringing increased scrutiny to this area. They also examined the basics of fiduciary compliance and best practices in structuring proper governance.

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Kim Mobley quoted in American Medical News article, "Hospital Hiring of Physicians Picks Up Steam"

The January 30th article details how health systems also are looking at ways to hold onto their existing doctors as competition for their services heats up. The article includes data from SullivanCotter surveys.

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7 Trends for NonProfit Hospital Executives Salaries

After a report was released on the pay packages of Cleveland-based MetroHealth System's top executives — ranking it in the top 25 percent of similarly sized health systems — county officials and board members showed concern about the high compensations. Hospital officials defended the raises, but MetroHealth also announced it plans to cut 450 jobs.

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Where are Physician Salaries Heading? 5 Current Trends

Hospital CEOs sent a clear message in a recent Thomson Reuters survey that physician alignment and cost reductions will be at the top of their priorities over the next few years.

However, as more physicians are becoming hospital-employed, will cost reductions and physician alignment come at the expense of physician compensation? Opinions among physician specialists vary on whether their compensation is fair already, and hospitals will have to continue to grapple with the valuation of those salaries, one of the biggest chunks of a hospital's budget.

SullivanCotter and Associates' 2011 Physician Compensation and Productivity Survey recently gathered data from more than 60,000 physicians, residents, mid-level providers and medical group executives. Kim Mobley, principal at SullivanCotter and Associates, gives some insight on growing trends in the world of physician compensation.

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How Hospital Executives Can Use Performance, Negotiations to Increase Earning Power

Hospital leaders need to distinguish themselves through performance and negotiate with the board to increase their earning power. Jim Nelson, a managing principal of SullivanCotter, and Deedra Hartung, executive vice president and managing principal of Cejka Executive Search, discuss six ways hospital leaders can increase their earning power.

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Why Hospital Board Involvement in Physician Compensation is Critical

In the July 13th edition of Becker's Hospital Review, SullivanCotter Principal Kim Mobley explains the necessity and means of hospital board oversight of physician compensation. As more and more physicians align with hospitals due to decreasing reimbursement, increase costs of managing a physician practice, limited access to capital, increasing regulatory challenges and shifts in lifestyle, the involvement of hospital boards is critical to compensating physicians in a way that benefits both physicians and the hospital.

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Five Things to Consider in Completing Form 990: Tips from an Expert

A guest blog post by Warren Kerper, Managing Principal in the Boston office of SullivanCotter, appearing on Verrill Dana, LLP's Benefits Law Update.

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Health Care On-Call Pay Continues To Rise

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

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

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

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

Competitive Physician Compensation Models

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

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

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

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Dodd-Frank: The Spillover Impact on Nonprofit Healthcare

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

So why should we care? Why read any further?

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

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

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