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Does Executive Compensation Structure Need an Overhaul?

John Commins, for HealthLeaders Media, March 15, 2013

Michael Ugwueke 
Executive vice president and COO 
Methodist Le Bonheur Healthcare 
Memphis, Tenn. 

On incentives. Incentive compensation works. Many organizations have different philosophies about where they set their base pay slightly below the median. But to really engage folks, more should be done on the incentive compensation side to change the behavior and make people really earn it for remarkable work, not just making the averages.

On margins. The margins are getting a little tighter for hospitals, and the IRS and the media and everybody is looking at executive compensation. When people earn through incentives it makes everybody more aware, and working more together as a team because their incentives are tied together. As margins get smaller, we will see more of this.

On improvements. But those incentives have to be tied to remarkable improvements, not just marginal improvements based on quality metrics such as reductions in length of stay and improvements in patient satisfaction. I would suspect that in the next two or three years we will see some specific things coming out along those lines.

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