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CEO Incentive Pay Gets a Makeover

Philip Betbeze, for HealthLeaders Media, September 20, 2013

"It's getting easier to measure [quality and safety] because it's being defined for them by their payers," he says. "They can argue with docs about what quality really is, but they're being measured by these metrics."

Chastain says that looking at the past three years of measures pertaining to one client provides an illuminating view of how compensation is changing, and bonus compensation is getting more complex as boards start to implement long-term bonuses based on as much as three years' rolling average of the metrics that are being measured.

"So in this example, for years 2013-2016, the board is saying 'we want you to accomplish these things: Establishing a medical group, rolling out an IT plan'—these are multiyear things. There are other buckets of dollars associated with those three-year arcs," he says. "And next year, they will establish goals for another three-year arc."

The idea is that the three-year arcs create an incentive for the CEO and his or her team to stay in place, Chastain says.

Leadership stability is a good thing in an industry that's undergoing such massive changes that require hospitals and health systems to basically redo their business model. Instead of being measured on volume, boards are starting to measure their leaders on value creation. Sound familiar?

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3 comments on "CEO Incentive Pay Gets a Makeover"


Edward Reed (9/20/2013 at 2:13 PM)
The idea of an BONUS is appalling in this health care atmosphere. Everyone is expected to sacrifice (patients and staff) except the ones who can do with less and not sacrifice anything. A simple definition of Bonus is>something in addtion to what is expected. Why should a CEO/CFO expect something is addition to what is expected. They are being payed like everyone else. They simply are doing what they are hired for. Like the RN, LPN, CNA and other health care workers. I know>>they think they deserve it!!!

bettynoyes (9/20/2013 at 1:46 PM)
I see tremendous ramification of this with the managers ability to lead each department. That skill set is often lacking

bob sigmond (9/20/2013 at 1:25 PM)
How about providing other incentives, instead of or beyond financial incentives? Like more time off for further study, support for greater impact and involvement in local, state and national health policy, etc. Some of the financial incentives are becoming embarrassing