CEO Incentive Pay Gets a Makeover
"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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