Listing quality among your organization's strategic pillars is one thing. Basing your leaders' annual compensation on it is quite another.
Joe DiMaggio Children's Hospital Administrator Nina Beauchesne's annual performance review covers familiar management territory: growth, budget, staff turnover. But Beauchesne's evaluation also includes indicators on another topic: quality. From mortality to hospital-acquired infection rates, more than 35 percent of her annual raise last year was based on the safety of patients at the Hollywood, FL-based hospital.
Joe DiMaggio's compensation strategy reflects a change in focus for executives in the healthcare industry. CEOs who were once ranked and rewarded based only on their institutions' financial performance must now meet a number of quality and safety goals to receive full compensation or their annual performance bonuses. "While organizations have had these types of measures in their incentive programs in the past, they're getting much better at measuring them, they're putting more emphasis on them, and many people are putting a lot of thought into the process," says Kathy Hastings, managing partner at Sullivan, Cotter and Associates, a national compensation and human resource management firm.
Before an organization establishes an executive compensation or incentive plan based on quality and safety, leaders must have a clear understanding of where they currently stand on these measures and then establish benchmarks for where they want to be, Hastings says.
Joe DiMaggio's parent company, Memorial Healthcare System in Broward County, FL, uses an executive report card to annually evaluate and measure each manager's effectiveness in seven organizational pillars--people, finance, safety, quality, service, growth and community. Not all senior leaders are evaluated on patient safety and quality--the chief financial officer, for example, is evaluated only on the metrics related to his job--but for all administrators within the system, a significant percentage of their annual report card scores (and resulting raise) depends on clinical measures.
The process is consistent across the five-hospital system to allow for comparison; for example, all emergency department leaders are evaluated on the same basic metrics. But each leader's report card is also tailored to fit their individual organization's strategic goals, strengths or weaknesses.
"We're trying to make it somewhat the same systemwide but also somewhat individual on what a particular organization needs to improve on," Beauchesne explains.
This year, Beauchesne's report card focuses on mortality, central line infection and ventilator-associated pneumonia rates at the 133-staffed-bed hospital, but another administrator's report card might focus on patient satisfaction, for example. Each year and for each individual administrator, the safety measures change depending on organizational focus and the priorities of each individual facility. To this end, Beauchesne's report card gets more difficult year after year. Areas that receive consistent high scores receive less priority on the report card than areas that need improvement.
"We're hoping to not just keep what we've done well but to focus on things that we need to improve on," Beauchesne says.