Skip to main content

Analysis

Healthcare Executive Level Salary Reductions Ranged from 10% to 30% During Pandemic

By Melanie Blackman  
   September 23, 2020

A new report from Gallagher's Human Resources & Compensation Consulting Practice found 90% of the healthcare executive salary reductions are temporary.

Around half of healthcare organizations have implemented, or may implement, a salary reduction program for executive level leaders, according to a survey released by Gallagher's Human Resources & Compensation Consulting Practice this week.

The study surveyed 160 healthcare organizations across the U.S., where half of those organizations have implemented salary reduction programs ranging from 10% to 30% to "strengthen their financial position by moderating expenses."

CEOs in the 75th percentile took a 25% reduction to their base salary, those in the 50th percentile took a 15% reduction, and those in the 25th percentile took a 10% reduction.

Although uncommon, a few organizations "reduced [the CEOs'] base salary by as much as 50%," according to the survey.

The COVID-19 pandemic temporarily shut down elective procedures earlier this year, which resulted in widespread loss of revenue.

Healthcare organizations have used a number of strategies to save money during the pandemic including "a combination of furloughs, layoffs, hiring freezes, salary freezes, salary reductions, incentive/bonus reductions, and in some cases, a reduction in benefits," according to the study.

C-suite officers, executive vice presidents, and senior vice presidents in the 75th percentile took a 20% reduction in their base salary, those in the 50th percentile took a 15% reduction, and those in the 25th percentile took a 10% reduction.

90% of the salary reductions are on a temporary basis of less than six months, with the remaining 10% on a "to-be-determined" basis. The study noted that participants indicated that no salary reduction will stay permanent.

Related: HCA Healthcare CEO Implements Pandemic Pay Program for Employees

Related: UI Health Care CFO on Analyzing Expense Control Measures During COVID-19

Related: 3 Ways to Increase Revenue and Reduce Bad Debt During COVID-19

Melanie Blackman is the strategy editor at HealthLeaders, a Simplify Compliance brand.


Get the latest on healthcare leadership in your inbox.