14 Statistics on Healthcare CEO Severance Packages

Roughly 83 percent of hospitals and healthcare organizations have a written severance agreement with their CEO, according to a healthcare CEO severance survey from Mercer, Witt/Kieffer and Hunton & Williams.

The firms received responses from 196 standalone hospitals, multihospital health systems and health plans across the United States on how their CEO severance packages are structured and how they compare to other industries.

Roughly half of responses came from organizations with $100 million to $999 million in annual revenue. About 35 percent of CEOs worked at providers with more than $1 billion in annual revenue. Examples of respondents included Advocate Health Care in Downers Grove, Ill., Hartford (Conn.) HealthCare, Grady Health in Atlanta, Catholic Health Initiatives in Englewood, Colo., Sutter Health in Sacramento, Calif., Cedars-Sinai Medical Center in Los Angeles and Anna Jaques Hospital in Newburyport, Mass.

Here are 14 statistics from the report.

•    Terms of the CEO's severance benefits are outlined in the employment contract for 75 percent of organizations.

•    The two most-common triggers for severance are involuntary termination without cause (90 percent) and a change in control (65 percent).

•    Most severance periods last for at least year, and 49 percent said their CEO severance period stretches over 24 months.

•    Continued compensation was defined as follows: 73 percent said severance pay only included base salary, 18 percent said severance pay includes salary and annual incentives and 9 percent said severance pay includes salary, annual incentives and long-term incentives.

•    Roughly 40 percent of organizations said annual incentives within CEO severance packages are determined by a target bonus.

•    At least 82 percent of health systems continue one benefit or more. Health insurance was the most common continued benefit (99 percent), ahead of dental/vision insurance (88 percent) and life insurance (54 percent).

•    According to the survey, 37 percent of CEO severance agreements provide for "mitigation," or the reduction or end of benefits if the CEO finds another employer during the severance period.

•    Most packages (53 percent) stipulate that CEOs cannot work for a direct competitor within 50 miles or less.

More Articles on Hospital CEO Compensation:
California Governor Signs Hospital CEO Pension Reform Bill
Severance for Fired CaroMont CEO Could Reach $1.2M
Should Hospital Execs Receive Severance on Voluntary Resignation?

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