As provisions of the healthcare reform law are implemented and the economy stabilizes, certain skill sets or experiences are coming to the forefront in executive searches and influencing compensation for hospital CEOs. Eric Dickerson, partner with Dallas-based Kaye/Bassman International, shares insight on four factors currently influencing CEO compensation.
1. Experience with unions. There is a need for hospital executives to have strong backgrounds or levels of experience in working with unions in certain regions — particularly the upper Midwest and Eastern region where unions are prevalent. Either pre- or post-unionization relations with employees and unions are valuable when determining compensation. For instance, some executives can refer to past work with employees prior to unionization. CEOs who satisfied employee needs so they did not feel as a strong of a need to unionize may be attractive to hospitals that fear unionization is likely in the near future. Other leaders may work well with unions, and were able to negotiate and avoid major conflicts in their past tenures. Both of these skill sets may act as leverage when it comes to salary negotiations, according to Mr. Dickerson.
2. Growing emphasis on financial backgrounds. While they have always been vital to the CEO role, financial skills are now emphasized more than they have been in the past. "CEOs have to talk the language with the CFO," says Mr. Dickerson. In a 2010 poll conducted by the American College of Healthcare Executives, 77 percent of hospital CEOs cited financial challenges as their number one concern — an increase from 67 percent in 2005. As the economy recovers and stabilizes, many hospitals are also facing financial turnarounds, making business backgrounds absolutely critical. "Turnarounds require a specific skill set. These leaders [with business backgrounds may] have a record of doing it in the past. Maybe it was at a smaller hospital, and now they are taking their career to the next level to turn a larger facility around," says Mr. Dickerson.
3. Ability to communicate with clinicians. "The right CEO can identify talent existing in hospital leadership and has the ability to recruit key clinical leadership into the hospital as needed," says Mr. Dickerson. "He or she must be able to match the clinical needs with the financial requirements of running a successful hospital." Related to turnarounds, many hospitals are looking to increase elective surgery volume to boost profitability. CEOs who can refer to previous accomplishments in this area will have more leverage when it comes to compensation, particularly if the hospital is looking to make a comeback with specific elective procedures. "It is all about the specific gaps in service within that particular market," says Mr. Dickerson.
4. Specific accomplishments related to quality care. Apart from recruitment, a CEO who is well-versed in quality also has considerable earning power. "If a CEO has a proven track record in improving quality, [he or she] should be able to give specific examples," says Mr. Dickerson. In today's technology market, a savvy patient can log onto a number of sites, including U.S. Department of Health & Human Services and compare up to three different hospitals to see how patients rated their experience. When a CEO can demonstrate a history of developing a culture of patient safety and quality service, his or her value will continue to rise. Specific examples may include accreditations or increases in specific quality measures that occurred during the CEO's tenure.
Learn more about Kaye/Bassman International.
Related Articles on Executive Compensation:
3 Trends Affecting Non-Profit Hospital CEO Compensation
5 Common Hospital Executive Compensation Practices
5 Recent Disclosures on Hospital Executive Compensation
1. Experience with unions. There is a need for hospital executives to have strong backgrounds or levels of experience in working with unions in certain regions — particularly the upper Midwest and Eastern region where unions are prevalent. Either pre- or post-unionization relations with employees and unions are valuable when determining compensation. For instance, some executives can refer to past work with employees prior to unionization. CEOs who satisfied employee needs so they did not feel as a strong of a need to unionize may be attractive to hospitals that fear unionization is likely in the near future. Other leaders may work well with unions, and were able to negotiate and avoid major conflicts in their past tenures. Both of these skill sets may act as leverage when it comes to salary negotiations, according to Mr. Dickerson.
2. Growing emphasis on financial backgrounds. While they have always been vital to the CEO role, financial skills are now emphasized more than they have been in the past. "CEOs have to talk the language with the CFO," says Mr. Dickerson. In a 2010 poll conducted by the American College of Healthcare Executives, 77 percent of hospital CEOs cited financial challenges as their number one concern — an increase from 67 percent in 2005. As the economy recovers and stabilizes, many hospitals are also facing financial turnarounds, making business backgrounds absolutely critical. "Turnarounds require a specific skill set. These leaders [with business backgrounds may] have a record of doing it in the past. Maybe it was at a smaller hospital, and now they are taking their career to the next level to turn a larger facility around," says Mr. Dickerson.
3. Ability to communicate with clinicians. "The right CEO can identify talent existing in hospital leadership and has the ability to recruit key clinical leadership into the hospital as needed," says Mr. Dickerson. "He or she must be able to match the clinical needs with the financial requirements of running a successful hospital." Related to turnarounds, many hospitals are looking to increase elective surgery volume to boost profitability. CEOs who can refer to previous accomplishments in this area will have more leverage when it comes to compensation, particularly if the hospital is looking to make a comeback with specific elective procedures. "It is all about the specific gaps in service within that particular market," says Mr. Dickerson.
4. Specific accomplishments related to quality care. Apart from recruitment, a CEO who is well-versed in quality also has considerable earning power. "If a CEO has a proven track record in improving quality, [he or she] should be able to give specific examples," says Mr. Dickerson. In today's technology market, a savvy patient can log onto a number of sites, including U.S. Department of Health & Human Services and compare up to three different hospitals to see how patients rated their experience. When a CEO can demonstrate a history of developing a culture of patient safety and quality service, his or her value will continue to rise. Specific examples may include accreditations or increases in specific quality measures that occurred during the CEO's tenure.
Learn more about Kaye/Bassman International.
Related Articles on Executive Compensation:
3 Trends Affecting Non-Profit Hospital CEO Compensation
5 Common Hospital Executive Compensation Practices
5 Recent Disclosures on Hospital Executive Compensation