Good afternoon and thank you for joining us. CEO compensation has been a hot topic in the media since Time magazine writer Steven Brill published his treat.ise on the state of the hospital industry, hospital costs and CEO compensation. Stories continue to cycle through high profile publications and put pressure on Board comp committees.
Additionally, the IOM scope of work and the desire to engage Trustees in the Triple Aim has led to interest on the part of academic researchers. The findings of Karen Joynt et al at Harvard received heavy press coverage. She found by using the IRS Form 990 for CEO compensation and linking public data that CEO compensation was significantly correlated with Size of hospitals and Teaching Status, use of high technology and good HCAHPS scores. The study found no correlation with financial or clinical outcomes or community benefit.
Another Harvard study led by Jha and Epstein that while over half of not for profit board chairs thought quality was one of the two top priorities for board oversight - - - but interestingly, they found that 56% of the Board chairs did not consider quality to be one of the top two priorities for CEO comp
Further pressuring boards are federal and state politicians proposing to cap pay of CEOs in not for profit hospitals a t the same time the IRS 990s are making CEO compensation transparent
While comparables have been routinely used by board comp committees for many years, to mitigate risk with the IRS, to protect the tax exempt status and guide acquisition of top talent, the use of comparables has not satisfied those who are interested in policy and achievement of the triple aim.
As a consequence, Truven and Integrated Health Strategies elected to perform a a study that better reflected what the board’s real responsibility is and similarly what the CEO is responsible for doing in his or her job.
Therefore HIS provided CEO compensation data for more than 487 hospitals and 89 health system CEOs which Truven matched to the hospitals composite scores on the 100 top balanced scorecard. The detail of the study is in the Trustee magazine article that you can download today at no charge – courtesy orf the AHA helath Forum.
More important the results showed that for every unit increse ijn performance, compensatoin rose accordingly.
What his
In other words – what the study suggested is that board look at the progress of the whole organization across a variety of metrics. The emphasis or proiority set at any one point in time is dependent on environmental conditions, the mission and the goals of the orgaznition. The CEO is responsibole for keeping performance balanced and the organizational healthy. The people responsible for individual domains are accountable for their direct reposnsibilities.