The American College of Healthcare Executives found that hospital CEO turnover remained steady in 2011 at 16 percent nationwide, and with high CEO turnover comes large fluctuations in salaries and compensation, according to an article from Integrated Healthcare Strategies.
David Bjork, PhD, recently wrote a book on healthcare executive compensation, and one chapter focused on how turnover and external recruiting impacts executive pay. He found that the high levels of turnover are increasing salaries for executives, especially if the hospital looks for an external candidate.
"If [hospitals] recruit externally, they find out what other organizations are paying experienced executives. If they choose an external candidate, they often find they have to pay significantly more than they paid the last incumbent," Dr. Bjork wrote. "If they promote an internal candidate, they may start them at a lower salary than the last incumbent was paid, but they rarely decrease the salary range and generally bring them up to the middle of the range within a few years."
The hospital executive labor market is also influencing pay levels. For example, if a CEO is being recruited by another hospital, which is offering a higher salary, hospital boards may increase their current executive's pay in order to keep the CEO.
"[CEOs and trustees] learn that it can cost more to hire a replacement than to hold onto the current incumbent," Dr. Bjork wrote.
David Bjork, PhD, recently wrote a book on healthcare executive compensation, and one chapter focused on how turnover and external recruiting impacts executive pay. He found that the high levels of turnover are increasing salaries for executives, especially if the hospital looks for an external candidate.
"If [hospitals] recruit externally, they find out what other organizations are paying experienced executives. If they choose an external candidate, they often find they have to pay significantly more than they paid the last incumbent," Dr. Bjork wrote. "If they promote an internal candidate, they may start them at a lower salary than the last incumbent was paid, but they rarely decrease the salary range and generally bring them up to the middle of the range within a few years."
The hospital executive labor market is also influencing pay levels. For example, if a CEO is being recruited by another hospital, which is offering a higher salary, hospital boards may increase their current executive's pay in order to keep the CEO.
"[CEOs and trustees] learn that it can cost more to hire a replacement than to hold onto the current incumbent," Dr. Bjork wrote.
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