Healthcare executive pay rises 4.6%
Executives at the system level saw greater gains as compared to subsidiary hospital executives, survey shows.
Photo: Martin Barraud/Getty Images
Despite challenges, healthcare executive pay increased 4.6% this year, on par with the 4.4% growth rate seen last year, though executives at the system level saw greater gains as compared to subsidiary hospital executives, according to SullivanCotter's 2024 Health Care Management and Executive Compensation Survey.
Due to the increasing complexity of operations, organization size and scope of responsibility, median increases for executives at the system level (5.2%) continue to outpace those for executives at subsidiary hospitals (3.5%), as has been the case for years now, authors said.
Health system positions with median base salary increases of 5% or greater tend to be those focusing on business strategy, information technology and security, integration, care delivery excellence and legal/regulatory compliance, the survey found.
Top roles include chief executive officer, chief administrative officer, chief strategy officer, and executives focused on managed care, information security, population health, professional services, quality, legal services and compliance.
WHAT'S THE IMPACT
Despite some improvements in operating margin performance, health systems continue to confront several challenges, according to the survey. Pressures such as ever-increasing labor costs combined with a tight market for talent, high inflation, and threats to cybersecurity are still prevalent.
The demand for skilled executive talent remains high given the complexity of managing care in the current climate, and the heightened scrutiny and regulatory activity surrounding executive compensation is affecting how compensation committees achieve balance across financial, operational and talent risks, said SullivanCotter.
Incentive awards, meanwhile, were greater for 2023 performance as compared with 2022, reflecting an overall improvement in the operating environment. As a result, total cash compensation (equal to base salary plus annual incentives) increased at a higher rate than base salaries in 2024.
Median TCC for system-level executives increased by 8.3% while their base salaries rose by 5.2%. This trend is the same for subsidiary hospital executives, as incentive awards were achieved at or near target levels.
Median annual incentive payouts for 2023 performance were closer to target than those provided for 2022 performance, when they were moderately below target. Given that there were no shifts in annual incentive plan prevalence or award opportunity levels, year-over-year changes in TCC can be attributed to higher levels of performance, authors said.
THE LARGER TREND
SullivanCotter highlighted a number of recommendations, including preparing for a competitive talent market by anticipating the need to provide more robust compensation offers for external recruits, as well as market adjustments to current leaders who are critical and in demand.
The firm also advised health systems and their boards to review and update executive compensation programs to meet evolving needs by differentiating competitive pay positioning based on role criticality, impact and performance. It's also important, it said, to ensure peer groups represent the most relevant talent markets, even those outside of healthcare.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
